BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Tom Torlakson, Chairman
974 (Lowenthal)
Hearing Date: 5/31/07 Amended: 5/24/07
Consultant: Mark Mckenzie Policy Vote: T.&H. 6-4, E.Q. 6-0
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BILL SUMMARY: SB 974 would impose a $30 fee on each shipping
container processed at the Ports of Los Angeles, Long Beach, and
Oakland for congestion management and air quality improvements
related to the ports.
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Fiscal Impact (in thousands)
Major Provisions 2007-08 2008-09 2009-10 Fund
CARB (3-1/2 PY startup)$200 $200 Special*
(ongoing costs funded with fee
revenue)
CTC (2PY startup) $100 $100
Special**
(ongoing costs funded with fee
revenue)
I-Bank administration costs funded through financing
agreementsSpecial***
Fee revenue ($250,000) ($500,000)
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* Air Pollution Control Fund
** State Highway Account
*** CA Infrastructure and Economic Development Bank Fund
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STAFF COMMENTS: SUSPENSE FILE.
This bill is intended to make investments in port infrastructure
and air quality to accommodate the growing freight volumes at
the Ports of Los Angeles, Long Beach, and Oakland by imposing a
user fee on the source of the growth.
Specifically, SB 974 would impose a fee of $30 for each
"twenty-foot equivalent unit" (TEU) shipping container that is
processed at the L.A./Long Beach port complex and the Port of
Oakland. The fee revenues would be collected beginning on
January 1, 2009 and deposited into accounts for northern and
southern California, based on the source of the fee, and divided
evenly in each region into congestion management and air quality
improvement accounts. Funds would be allocated by the
California Transportation Commission (CTC), and the California
Air Resources Board. These revenues would be available, upon
appropriation, to fund identified congestions management
projects that improve the flow and efficiency of container cargo
moving to and from the Ports of Long Beach, Los Angeles, and
Oakland, and to fund identified projects for mitigating the
environmental pollution caused by commercial motor vehicles,
oceangoing vessels, and trains moving cargo to and from the
ports. Contractors that construct these projects would be
required to ensure the use of "clean construction" equipment, as
specified, and state highway projects are not eligible for
funding. The bill would also allow the Infrastructure Bank to
enter into financing agreements with project sponsors to issue
revenue bonds to finance eligible projects. Fee revenue used to
secure revenue bonds would be continuously appropriated.
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SB974 (Lowenthal)
Ports are local agencies governed by port commissions that are
responsible for developing, maintaining, and overseeing the
operation of shoreside facilities for the transfer of cargo
between ships, trucks, and railroads. The Ports of Los Angeles,
Long Beach, and Oakland are the nation's first, second, and
fourth largest ports, respectively, accounting for almost half
of the seaborne cargo entering the United States. The LA/Long
Beach Port complex currently processes approximately 15 million
containers per year, and is expected to process 47 million TEUs
by 2020. Oakland processed approximately 2 million containers
last year. The transportation system supporting the movement of
goods to and from these seaports are overwhelmed and local
communities near the ports and along trade corridors experience
significant pollution and health impacts associated with goods
movement.
Staff notes that charging a $30 fee on each of the 15 million
TEUs processed annually through the Los Angeles/Long Beach port
complex would generate approximately $500 million annually,
growing to over $1.5 billion annually by 2020 if the projected
container volume growth continues as expected. The fees would
discontinue after the eligible projects are constructed and any
revenue bonds are paid off.
Staff notes that SB 974 authorizes CTC and CARB to recover
administrative costs from the container fee revenue. However,
both CTC and CARB would be required to hold public hearings and
consult with relevant entities throughout the 2008 calendar year
in developing a final list of eligible projects, requiring
approximately 2 PY for CTC and 3-1/2 PY for CARB at a cost of at
least $200,000 and $400,000 respectively (split between the
first two fiscal years). To the extent that CTC and CARB are
already performing some of the tasks required by this bill in
efforts related to the implementation of Proposition 1B,
however, these staffing requirements and costs would be reduced.
This is also dependent upon staff yet to be allocated in the
2007-08 budget act.
Staff notes that the provisions of the bill pertaining to the
functions of the Infrastructure Bank contain inconsistencies
when compared to later provisions specifying the allocation of
fee revenue to CTC and CARB. Specifically, page 8, lines 17-31,
and page 9, lines 18-32 specify that funds that are not
necessary to secure revenue bonds issued by the I-Bank would be
continuously appropriated. Staff recommends an amendment to
clarify that fee revenue shall only be available to CTC and CARB
upon appropriation by the Legislature, as specified on page 13,
lines 19 and 28, and page 14, lines 15 and 24.
RECENT AMENDMENTS would clarify that fee revenue shall only be
available to CTC and CARB upon appropriation by the Legislature
(see staff recommended amendment above).