BILL ANALYSIS AB 3034 Page 1 Date of Hearing: May 7, 2008 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mark Leno, Chair AB 3034 (Galgiani) - As Amended: April 21, 2008 Policy Committee: Transportation Vote: 10-0 Urgency: Yes State Mandated Local Program: No Reimbursable: SUMMARY This bill modifies the Safe, Reliable High-Speed Passenger Train Bond Act, as originally enacted by SB 1856 (Costa) - Chapter 697, Statutes of 2002, to reflect activities and project design changes that occurred over the past six years, and to better present the bond authorization measure to voters at the November 4, 2008 statewide election. FISCAL EFFECT Potentially substantial reallocation, if voters approve the High-Speed Rail Bond on the November 2008 statewide ballot, of general obligation bond proceeds due to the changes made to the allocation and spending process outlined in 2002 by SB 1856. The total $9.95 billion bond authorization amount remains unchanged. SUMMARY CONTINUED Specifically, this bill: 1)Eliminates language specifying that, after the initial investment from the state to construct the initial segment, operating revenues and funds from the federal government and the private sector will be used to pay for expansion of the system. 2)Replaces language that requires the $9 billion of bond proceeds earmarked for high-speed rail to first be spent on the segment between San Francisco Transbay Terminal and Los Angeles Union Station, with language that requires bond AB 3034 Page 2 proceeds to be spent generally on all high-speed rail segments and the Altamont Corridor between the Central Valley and the East Bay. This bill requires the High Speed Rail Authority (HSRA) to give priority to those system segments that require the least amount of bond funding as a percentage of total cost, to consider the utility of that segment for other passenger rail services, and to ensure that other services will not result in any operating or maintenance cost to the authority. 3)References the 2005 High Speed Rail Environmental Impact Report instead of the High Speed Rail Final Business Plan of 2000. 4)Allows up to 10% of bond proceeds earmarked for the high-speed rail system (a maximum $900 million) to be used for environmental studies, planning and engineering activities. 5)Specifies that the $950 million in bond proceeds earmarked for intercity and commuter rail lines and urban rail systems can be allocated to systems that are part of the construction of the high-speed rail system. 6)Prohibits the siting of a high-speed rail station between the Merced station and the Gilroy station. COMMENTS 1)Rationale . This bill, sponsored by the HSRA, makes modifications to the original SB 1856 high speed rail bond bill to reflect activities, progress, and changes in focus and priorities that have occurred since the bill's enactment in 2002. The HSRA believes the changes made by AB 3034 will better reflect the system proposed to be designed and constructed, and give voters at the November 4, 2008 statewide election a better picture of the whole high speed rail project. 2)Legislative History . SB 1856 submitted the High-Speed Bond Act for voter approval at the November 2, 2004 statewide election. Primarily due to budgetary concerns and competition with other bond authorization priorities, SB 1169 (Murray) - Chapter 71, Statutes of 2004 delayed bond authorization to the November 7, 2006 statewide election, and AB 713 (Torrico) - Chapter 44, Statutes of 2006 delayed it again to November 4, AB 3034 Page 3 2008. 3)Train Station Prohibition . While the HSRA has never planned on siting a high-speed train station between the Merced station and the Gilroy station, there was concern that somehow a station would be located in Los Banos. This amendment eliminates those concerns. 4)November 2008 Statewide Ballot . The Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century is the only bond act currently qualified to appear on the November 2008 statewide ballot. If all $9.95 billion worth of G.O. bonds are issued and sold as 30-year bonds at an average interest rate of 5%, the total principal and interest cost over this period is $19.4 billion, or $647 million of debt service per year for 30 years. 5)Urgency Measure . The deadline for a legislative measure to qualify for the November 4, 2008 statewide ballot is June 26. If the changes proposed by this bill to the original High Speed Bond Act are to be reflected without incurring the additional costs of preparing a supplemental ballot pamphlet, AB 3034 would have to be enacted by the Legislature within the next seven weeks. Analysis Prepared by : Steve Archibald / APPR. / (916) 319-2081