BILL NUMBER: AB 1751 CHAPTERED 08/11/03 CHAPTER 224 FILED WITH SECRETARY OF STATE AUGUST 11, 2003 APPROVED BY GOVERNOR AUGUST 9, 2003 PASSED THE ASSEMBLY JULY 29, 2003 PASSED THE SENATE JULY 27, 2003 AMENDED IN SENATE JUNE 23, 2003 INTRODUCED BY Committee on Budget (Oropeza (Chair), Bermudez, Chan, Chu, Diaz, Dutra, Dymally, Goldberg, Hancock, Jackson, Liu, Montanez, Nakano, Pavley, Reyes, Simitian, and Wolk) MARCH 11, 2003 An act to add Section 14557.1 to the Government Code, and to amend Section 7102 of, and to add Section 7105 to, the Revenue and Taxation Code, relating to transportation, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 1751, Committee on Budget. Transportation finance. (1) Article XIX B of the California Constitution requires, commencing with the 2003-04 fiscal year, sales taxes on motor vehicle fuel that are deposited in the General Fund to be transferred to the Transportation Investment Fund for allocation to various transportation purposes, including allocations to particular transportation projects included in the Transportation Congestion Relief Program. Article XIX B authorizes the transfer of these revenues to the Transportation Investment Fund to be suspended in whole or in part for a fiscal year during a fiscal emergency pursuant to a proclamation issued by the Governor and the enactment of a statute by a 2/3 vote of both houses of the Legislature if the statute does not contain any unrelated provision. This bill would acknowledge that the amount of the transfer during the 2003-04 fiscal year would be limited to $289,000,000 due to partial suspension of the transfer by other legislation, and that those funds would be transferred to the Traffic Congestion Relief Fund. Of the amount transferred, $189,000,000 would be appropriated to the Department of Transportation for allocation to the Traffic Congestion Relief Program, including up to $31,000,000 for capital outlay support for that program. The remaining $100,000,000 would be transferred to the State Highway Account as a partial repayment of previously authorized loans from that account to the Traffic Congestion Relief Fund, and would be used for transportation capital purposes pursuant to the State Transportation Improvement Program. The bill would require the Controller, on or before June 30, 2009, to transfer an amount from the General Fund into a new continuously appropriated Transportation Deferred Investment Fund that is equal to the amount of motor vehicle fuel sales tax revenues that were not transferred to the Transportation Investment Fund for the 2003-04 fiscal year because of the partial transfer suspension, plus specified interest. The bill would require the revenues in the Transportation Deferred Investment Fund to be transferred and apportioned during the 2008-09 fiscal year in the same manner and amounts that would have been made in the 2003-04 fiscal year from the Transportation Investment Fund if the transfer had not been partially suspended, but taking into account the funds that were made available in the 2003-04 fiscal year. (2) Existing law, pursuant to Proposition 116 of 1990, creates the Public Transportation Account as a trust fund, and provides that funds in the account, derived from certain sales taxes on fuels, are available only for transportation planning and mass transportation purposes. These provisions may be amended by the Legislature only by a 2/3 vote of both houses if the amending statute is consistent with, and furthers the purposes of, the provisions. This bill would amend the initiative provisions to provide for the transfer of certain revenues to the General Fund that would otherwise be deposited in the Public Transportation Account. (3) This bill would declare that it is to take effect immediately as an urgency statute. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 14557.1 is added to the Government Code, to read: 14557.1. (a) Notwithstanding Sections 14556.5 and 14556.6, the money transferred from the Transportation Investment Fund to the Traffic Congestion Relief Fund during the 2003-04 fiscal year, which amount is two hundred eighty-nine million dollars ($289,000,000) pursuant to subdivision (b) of Section 14557 and paragraph (1) of subdivision (c) of Section 7104 of the Revenue and Taxation Code, shall be allocated as follows: (1) One hundred eighty-nine million dollars ($189,000,000) is appropriated to the department, for expenditure as directed by the commission, for the Traffic Congestion Relief Program, of which up to thirty-one million dollars ($31,000,000) shall be available to the department for capital outlay support for projects in that program. (2) One hundred million dollars ($100,000,000) shall be transferred to the State Highway Account, as partial repayment of loans made to the Traffic Congestion Relief Fund from the State Highway Account pursuant to paragraph (2) of subdivision (a) of Section 14556.8, for expenditure by the department as directed by the commission on transportation capital improvement projects included in the State Transportation Improvement Program. (b) The transfer from the Transportation Investment Fund to the Traffic Congestion Relief Fund under subdivision (a) shall occur on a quarterly basis, with one quarter of total funds available for the fiscal year to be transferred each quarter. SEC. 2. Section 7102 of the Revenue and Taxation Code is amended to read: 7102. The money in the fund shall, upon order of the Controller, be drawn therefrom for refunds under this part, credits or refunds pursuant to Section 60202, and refunds pursuant to Section 1793.25 of the Civil Code, or be transferred in the following manner: (a) (1) All revenues, less refunds, derived under this part at the 43/4-percent rate, including the imposition of sales and use taxes with respect to the sale, storage, use, or other consumption of motor vehicle fuel which would not have been received if the sales and use tax rate had been 5 percent and if motor vehicle fuel, as defined for purposes of the Motor Vehicle Fuel License Tax Law (Part 2 (commencing with Section 7301)), had been exempt from sales and use taxes, shall be estimated by the State Board of Equalization, with the concurrence of the Department of Finance, and shall be transferred quarterly to the Public Transportation Account, a trust fund in the State Transportation Fund. (A) For the 2001-02 fiscal year, those transfers may not be more than eighty-one million dollars ($81,000,000) plus one-half of the amount computed pursuant to this paragraph that exceeds eighty-one million dollars ($81,000,000). (B) For the 2002-03 fiscal year, those transfers may not be more than thirty-seven million dollars ($37,000,000) plus one-half of the amount computed pursuant to this paragraph that exceeds thirty-seven million dollars ($37,000,000). (C) For the 2003-04 fiscal year, no transfers shall be made pursuant to this paragraph, except that if the amount to be otherwise transferred pursuant to this paragraph is in excess of eighty-seven million four hundred fifty thousand dollars ($87,450,000), then the amount of that excess shall be transferred. (2) All revenues, less refunds, derived under this part at the 43/4-percent rate, resulting from increasing, after December 31, 1989, the rate of tax imposed pursuant to the Motor Vehicle Fuel License Tax Law on motor vehicle fuel, as defined for purposes of that law, shall be transferred quarterly to the Public Transportation Account, a trust fund in the State Transportation Fund. (3) All revenues, less refunds, derived under this part at the 43/4-percent rate from the imposition of sales and use taxes on fuel, as defined for purposes of the Use Fuel Tax Law (Part 3 (commencing with Section 8601)) and the Diesel Fuel Tax Law (Part 31 (commencing with Section 60001)), shall be estimated by the State Board of Equalization, with the concurrence of the Department of Finance, and shall be transferred quarterly to the Public Transportation Account, a trust fund in the State Transportation Fund. (4) All revenues, less refunds, derived under this part from the taxes imposed pursuant to Sections 6051.2 and 6201.2 shall be transferred to the Sales Tax Account of the Local Revenue Fund for allocation to cities and counties as prescribed by statute. (5) All revenues, less refunds, derived from the taxes imposed pursuant to Section 35 of Article XIII of the California Constitution shall be transferred to the Public Safety Account in the Local Public Safety Fund created in Section 30051 of the Government Code for allocation to counties as prescribed by statute. (b) The balance shall be transferred to the General Fund. (c) The estimates required by subdivision (a) shall be based on taxable transactions occurring during a calendar year, and the transfers required by subdivision (a) shall be made during the fiscal year that commences during that same calendar year. Transfers required by paragraphs (1), (2), and (3) of subdivision (a) shall be estimated by the State Board of Equalization, with the concurrence of the Department of Finance, and shall be made quarterly. (d) Notwithstanding the designation of the Public Transportation Account as a trust fund pursuant to subdivision (a), the Controller may use the Public Transportation Account for loans to the General Fund as provided in Sections 16310 and 16381 of the Government Code. The loans shall be repaid with interest from the General Fund at the Pooled Money Investment Account rate. (e) The Legislature may amend this section, by statute passed in each house of the Legislature by rollcall vote entered in the journal, two-thirds of the membership concurring, if the statute is consistent with, and furthers the purposes of this section. SEC. 3. Section 7105 is added to the Revenue and Taxation Code, to read: 7105. (a) The Transportation Deferred Investment Fund is hereby created in the State Treasury. (b) On or before June 30, 2009, the Controller shall transfer an amount from the General Fund to the Transportation Deferred Investment Fund that is equal to the amount that was not transferred from the General Fund to the Transportation Investment Fund for the 2003-04 fiscal year because of the partial suspension of the transfer pursuant to Section 14557 of the Government Code, plus interest calculated at the Pooled Money Investment Account rate relative to the amounts that would otherwise have been available for the transportation programs described in paragraphs (2) to (5), inclusive, of subdivision (c) of Section 7104. The money in the Transportation Deferred Investment Fund is continuously appropriated without regard to fiscal years for disbursement in the manner and for the purposes set forth in this section. (c) The Controller, from money in the Transportation Deferred Investment Fund, shall make transfers and apportionments of those funds in the same manner and amounts that would have been made in the 2003-04 fiscal year from the Transportation Investment Fund pursuant to Section 7104, as that section read on January 1, 2003, if the transfer of funds from the General Fund to the Transportation Investment Fund had not been partially suspended for the 2003-04 fiscal year pursuant to Section 14557 of the Government Code. However, in making those transfers and apportionments, the Controller shall take into account and deduct therefrom any transfers and apportionments that were made from the Transportation Investment Fund in the 2003-04 fiscal year from funds made available pursuant to subdivision (b) of Section 14557 of the Government Code. It is the intent of the Legislature that upon completion of the transfer of funds pursuant to subdivision (b) from the General Fund to the Transportation Deferred Investment Fund that each of the transportation programs that was to have been funded during fiscal year 2003-04 from the Transportation Investment Fund pursuant to Section 7104 of the Revenue and Taxation Code shall have received the amount of funding that the program would have received in the absence of the suspension of the transfer pursuant to Section 14557 of the Government Code. (d) The interest that is to be deposited in the Transportation Deferred Investment Fund pursuant to subdivision (b) shall be allocated proportionately to each program element in paragraphs (2) to (5), inclusive, of subdivision (c) of Section 7104, based on the amount that each program did not receive in fiscal year 2003-04 due to suspension of the transfer pursuant to Section 14557 of the Government Code. (e) The Legislature finds and declares that continued investment in transportation is essential for the California economy. That investment reduces traffic congestion, assists in economic development, improves the condition of local streets and roads, and provides high-quality public transportation. SEC. 4. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to ensure adequate funding for the operation of state government, it is necessary that this act take effect immediately.