BILL NUMBER: AB 193 CHAPTERED 10/08/07 CHAPTER 313 FILED WITH SECRETARY OF STATE OCTOBER 8, 2007 APPROVED BY GOVERNOR OCTOBER 8, 2007 PASSED THE SENATE SEPTEMBER 7, 2007 PASSED THE ASSEMBLY SEPTEMBER 10, 2007 AMENDED IN SENATE SEPTEMBER 7, 2007 INTRODUCED BY Committee on Budget (Laird (Chair), Arambula, Beall, Berg, Brownley, Dymally, Feuer, Hayashi, Hernandez, Jones, Mullin, Ruskin, Swanson, and Wolk) JANUARY 25, 2007 An act to amend Sections 8879.50, 8879.51, 8879.58, and 8879.59 of, and to repeal and add Section 16965 of, the Government Code, to amend and renumber Section 39265.02 of the Health and Safety Code, and to repeal and add Section 7103 of the Revenue and Taxation Code, relating to transportation, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 193, Committee on Budget. Transportation revenues. (1) Existing law, pursuant to Chapter 173 of the Statutes of 2007, creates the Transportation Debt Service Fund and the Mass Transportation Fund, among other things, for the purpose of using transportation revenues for the payment of debt service on transportation bonds and to reimburse the General Fund for past debt service payments on transportation bonds and for certain payments required to be made by the General Fund to transportation funds governed by Article XIX B of the California Constitution. In that regard, certain transportation revenues are transferred to those funds by Chapter 173 of the Statutes of 2007, and the sum of $339,289,345 from the Transportation Debt Service Fund is appropriated for the purpose of paying debt service in the 2007-08 fiscal year on specified bond measures. This bill would delete the above-described appropriation and instead authorize the Director of Finance to reimburse the General Fund for up to $339,289,345 from the Transportation Debt Service Fund for the purpose of offsetting the cost of debt service in the 2007-08 fiscal year on specified bond measures. The bill would also authorize the Director of Finance to reimburse the General Fund for $200,000,000 from the Transportation Debt Service Fund for the purpose of offsetting the cost of debt service payments made in prior fiscal years on transportation-related bond expenditures and for $82,678,000 in the 2007-08 fiscal year from the Mass Transportation Fund for the purpose of offsetting payments made by the General Fund to transportation funds governed by Article XIX B of the California Constitution. (2) Existing law, pursuant to Chapter 181 of the Statutes of 2007, designates certain state agencies as the administrative agencies for certain bond accounts for the purpose of implementing the Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006. Under these provisions the Controller is designated as the administrative agency for the Local Street and Road Improvement, Congestion Relief, and Traffic Safety Account of 2006. This bill would delete the designation of the Controller in that regard. The bill would make various other technical, nonsubstantive changes. (3) This bill would declare that it is to take effect immediately as an urgency statute. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 8879.50 of the Government Code is amended to read: 8879.50. (a) As used in this chapter and in Chapter 12.49 (commencing with Section 8879.20), the following terms have the following meanings: (1) "Commission" means the California Transportation Commission. (2) "Department" means the Department of Transportation. (3) "Administrative agency" means the state agency responsible for programming bond funds made available by Chapter 12.49 (commencing with Section 8879.20), as specified in subdivision (c). (4) Unless otherwise specified in this chapter, "project" includes equipment purchase, construction, right-of-way acquisition, and project delivery costs. (5) "Recipient agency" means the recipient of bond funds made available by Chapter 12.49 (commencing with Section 8879.20) that is responsible for implementation of an approved project. (6) "Fund" shall have the meaning as defined in subdivision (c) of Section 8879.20. (b) Administrative costs, including audit and program oversight costs for agencies, commissions, or departments administering programs funded pursuant to this chapter, recoverable by bond funds shall not exceed 3 percent of the program's cost. (c) The administrative agency for each bond account is as follows: (1) The commission is the administrative agency for the Corridor Mobility Improvement Account; the Trade Corridors Improvement Fund; the Transportation Facilities Account; the State Route 99 Account; the State and Local Partnership Program Account; the Local Bridge Seismic Retrofit Account; the Highway-Railroad Crossing Safety Account; and the Highway Safety, Rehabilitation and Preservation Account. (2) The Office of Homeland Security and the Office of Emergency Services are the administrative agencies for the Port and Maritime Security Account and the Transit System Safety, Security, and Disaster Response Account. (3) The department is the administrative agency for the Public Transportation Modernization, Improvement, and Service Enhancement Account. (d) The administrative agency may not approve project fund allocations for any project until the recipient agency provides a project funding plan that demonstrates that the funds are expected to be reasonably available and sufficient to complete the project. The administrative agency may approve funding for useable project segments only if the benefits associated with each individual segment are sufficient to meet the objectives of the program from which the individual segment is funded. (e) Guidelines adopted by the administrative agency pursuant to this chapter and Chapter 12.49 (commencing with Section 8879.20) are intended to provide internal guidance for the agency and shall be exempt from the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3), and shall do all of the following: (1) Provide for the audit of project expenditures and outcomes. (2) Require that the useful life of the project be identified as part of the project nomination process. (3) Require that project nominations have project delivery milestones, including, but not limited to, start and completion dates for environmental clearance, land acquisition, design, construction bid award, construction completion, and project closeout, as applicable. (f) (1) As a condition for allocation of funds to a specific project under Chapter 12.49 (commencing with Section 8879.20), the administrative agency shall require the recipient agency to report, on a semiannual basis, on the activities and progress made toward implementation of the project. The administrative agency shall forward the report to the Department of Finance by means approved by the Department of Finance. The purpose of the report is to ensure that the project is being executed in a timely fashion, and is within the scope and budget identified when the decision was made to fund the project. If it is anticipated that project costs will exceed the approved project budget, the recipient agency shall provide a plan to the administrative agency for achieving the benefits of the project by either downscoping the project to remain within budget or by identifying an alternative funding source to meet the cost increase. The administrative agency may either approve the corrective plan or direct the recipient agency to modify its plan. (2) Within six months of the project becoming operable, the recipient agency shall provide a report to the administrative agency on the final costs of the project as compared to the approved project budget, the project duration as compared to the original project schedule as of the date of allocation, and performance outcomes derived from the project compared to those described in the original application for funding. The administrative agency shall forward the report to the Department of Finance by means approved by the Department of Finance. SEC. 2. Section 8879.51 of the Government Code is amended to read: 8879.51. (a) Funds for the program contained in subdivision (b) of Section 8879.23 shall be deposited in the State Route 99 Account, which is hereby created in the fund. The funds in the account shall be available to the department, as allocated by the commission, upon appropriation by the Legislature. (b) The commission shall include in its annual report to the Legislature, required by Section 14535, a summary of its activities relating to the administration of this program. The summary should, at a minimum, include a description and the location of the projects contained in the program, the amount of funds allocated to each project, the status of each project, and a description of the improvements the program is achieving. SEC. 3. Section 8879.58 of the Government Code is amended to read: 8879.58. (a) (1) No later than September 1 of the first fiscal year in which the Legislature appropriates funds from the Transit System Safety, Security, and Disaster Response Account, and no later than September 1 of each fiscal year thereafter in which funds are appropriated from that account, the Controller shall develop and make public a list of eligible agencies and transit operators and the amount of funds each is eligible to receive from the account pursuant to subdivision (a) of Section 8879.57. It is the intent of the Legislature that funds allocated to specified recipients pursuant to this section provide each recipient with the same proportional share of funds as the proportional share each received from the allocation of State Transit Assistance funds, pursuant to Sections 99313 and 99314 of the Public Utilities Code, over fiscal years 2004-05, 2005-06, and 2006-07. (2) In establishing the amount of funding each eligible recipient is to receive under subdivision (a) of Section 8879.57 from appropriated funds to be allocated based on Section 99313 of the Public Utilities Code, the Controller shall make the following computations: (A) For each eligible recipient, compute the amounts of State Transit Assistance funds allocated to that recipient pursuant to Section 99313 of the Public Utilities Code during the 2004-05, 2005-06, and 2006-07 fiscal years. (B) Compute the total statewide allocation of State Transit Assistance funds pursuant to Section 99313 of the Public Utilities Code during the 2004-05, 2005-06, and 2006-07 fiscal years. (C) Divide subparagraph (A) by subparagraph (B). (D) For each eligible recipient, multiply the allocation factor computed pursuant to subparagraph (C) by 50 percent of the amount available for allocation pursuant to subdivision (a) of Section 8879.57. (3) In establishing the amount of funding each eligible recipient is eligible to receive under subdivision (a) of Section 8879.57 from funds to be allocated based on Section 99314 of the Public Utilities Code, the Controller shall make the following computations: (A) For each eligible recipient, compute the amounts of State Transit Assistance funds allocated to that recipient pursuant to Section 99314 of the Public Utilities Code during the 2004-05, 2005-06, and 2006-07 fiscal years. (B) Compute the total statewide allocation of State Transit Assistance funds pursuant to Section 99314 of the Public Utilities Code during the 2004-05, 2005-06, and 2006-07 fiscal years. (C) Divide subparagraph (A) by subparagraph (B). (D) For each eligible recipient, multiply the allocation factor computed pursuant to subparagraph (C) by 50 percent of the amount available for allocation pursuant to subdivision (a) of Section 8879.57. (4) The Controller shall notify eligible recipients of the amount of funding each is eligible to receive pursuant to subdivision (a) of Section 8879.57 for the duration of time that these funds are made available for these purposes based on the computations pursuant to subparagraph (D) of paragraph (2) and subparagraph (D) of paragraph (3). (b) Prior to seeking a disbursement of funds for an eligible project, an agency or transit operator on the public list described in paragraph (1) of subdivision (a) shall submit to OHS a description of the project it proposes to fund with its share of funds from the account. The description shall include all of the following: (1) A summary of the proposed project that describes the safety, security, or emergency response benefit that the project intends to achieve. (2) That the useful life of the project shall not be less than the required useful life for capital assets specified in subdivision (a) of Section 16727. (3) The estimated schedule for the completion of the project. (4) The total cost of the proposed project, including identification of all funding sources necessary for the project to be completed. (c) After receiving the information required to be submitted under subdivision (b), OHS shall review the information to determine all of the following: (1) The project is consistent with the purposes described in subdivision (h) of Section 8879.23. (2) The project is an eligible capital expenditure, as described in subdivision (a) of Section 8879.57. (3) The project is a capital improvement that meets the requirements of paragraph (2) of subdivision (b). (4) The project, or a useful component thereof, is, or will become fully funded with an allocation of funds from the Transit System Safety, Security, and Disaster Response Account. (d) (1) Upon conducting the review required in subdivision (c) and determining that a proposed project meets the requirements of that subdivision, OHS shall, on a quarterly basis, provide the Controller with a list of projects and the sponsoring agencies or transit operators eligible to receive an allocation from the account. (2) The list of projects submitted to the Controller for allocation for any one fiscal year shall be constrained by the total amount of funds appropriated by the Legislature for the purposes of this section for that fiscal year. (3) For a fiscal year in which the number of projects submitted for funding under this section exceeds available funds, OHS shall prioritize projects contained on the lists submitted pursuant to paragraph (1) so that (A) projects addressing the greatest risks to the public have the highest priority and (B) to the maximum extent possible, the list reflects a distribution of funding that is geographically balanced. (e) Upon receipt of the information from OHS required by subdivision (d), the Controller's office shall commence any necessary actions to allocate funds to eligible agencies and transit operators sponsoring projects on the list of projects, including, but not limited to, seeking the issuance of bonds for that purpose. The total allocations to any one eligible agency or transit operator shall not exceed that agencies or transit operator's share of funds from the account pursuant to the formula contained in subdivision (a) of Section 8879.57. (f) The Controller's office may, pursuant to Section 12410, use its authority to audit the use of state bond funds on projects receiving an allocation under this section. Each eligible agency or transit operator sponsoring a project subject to an audit shall provide any and all data requested by the Controller's office in order to complete the audit. The Controller's office shall transmit copies of all completed audits to OHS and to the policy committees of the Legislature with jurisdiction over transportation and budget issues. SEC. 4. Section 8879.59 of the Government Code is amended to read: 8879.59. (a) For funds appropriated from the Transit System Safety, Security, and Disaster Response Account for allocation to transit agencies eligible to receive funds pursuant to subdivision (b) of Section 8879.57, the Office of Emergency Services (OES) shall administer a grant application and award program for those transit agencies. (b) Funds awarded to transit agencies pursuant to this section shall be for eligible capital expenditures as described in subdivision (b) of Section 8879.57. (c) Prior to allocating funds to projects pursuant to this section, OES shall adopt guidelines to establish the criteria and process for the distribution of funds described in this section. Prior to adopting the guidelines, OES shall hold a public hearing on the proposed guidelines. (d) For each fiscal year in which funds are appropriated for the purposes of this section, OES shall issue a notice of funding availability no later than October 1. (e) No later than December 1 of each fiscal year in which the notice in subdivision (d) is issued, eligible transit agencies may submit project nominations for funding to OES for its review and consideration. Project nominations shall include all of the following: (1) A description of the project, which shall illustrate the physical components of the project and the security or emergency response benefit to be achieved by the completion of the project. (2) Identification of all nonbond sources of funding committed to the project. (3) An estimate of the project's full cost and the proposed schedule for the project's completion. (f) No later than February 1, OES shall select eligible projects to receive grants under this section. Grants awarded to eligible transit agencies pursuant to subdivision (b) of Section 8879.57 shall be for eligible capital expenditures, as described in paragraph (2) of subdivision (b) of that section. SEC. 5. Section 16965 of the Government Code is repealed. SEC. 6. Section 16965 is added to the Government Code, to read: 16965. (a) The Transportation Debt Service Fund is hereby created in the State Treasury. Moneys in the fund shall, among other things, as provided in this section, be dedicated to payment of debt service on bonds including bonds issued pursuant to the Clean Air and Transportation Improvement Act of 1990 (Part 11.5 (commencing with Section 99600) of Division 10 of the Public Utilities Code), the Passenger Rail and Clean Air Bond Act of 1990 (Chapter 17 (commencing with Section 2700) of Division 3 of the Streets and Highways Code), and the Seismic Retrofit Bond Act of 1996 (Chapter 12.48 (commencing with Section 8879) of Division 1 of Title 2). If the moneys in the fund are insufficient to pay the balance of the debt consistent with existing obligations, the General Fund will be used to pay the balance of any debt service. (b) (1) From moneys transferred to the fund pursuant to subdivision (b) of Section 7103 of the Revenue and Taxation Code, the Director of Finance is hereby authorized to reimburse the General Fund for up to three hundred thirty-nine million two hundred eighty-nine thousand three hundred forty-five dollars ($339,289,345) for the purpose of offsetting the cost of debt service payments made from the General Fund during the 2007-08 fiscal year for public transportation-related general obligation bond expenditures in the following amounts: (A) Clean Air and Transportation Improvement Act of 1990, one hundred twenty-three million nine hundred seventy-three thousand four hundred ninety-three dollars ($123,973,493). (B) Passenger Rail and Clean Air Bond Act of 1990, seventy million nine hundred eighty-three thousand three hundred sixty-three dollars ($70,983,363). (C) Seismic Retrofit Bond Act of 1996, one hundred forty-four million three hundred thirty-two thousand four hundred eighty-nine dollars ($144,332,489). (2) From moneys transferred to the fund pursuant to subdivision (b) of Section 7103 of the Revenue and Taxation Code, the Director of Finance is hereby authorized to reimburse the General Fund in the 2007-08 fiscal year for two hundred million dollars ($200,000,000) for the purpose of offsetting the cost of debt service payments made in prior fiscal years from the General Fund for public transportation-related general obligation bond expenditures. SEC. 7. Section 39265.02 of the Health and Safety Code is amended and renumbered to read: 39625.02. (a) As used in this chapter and in Chapter 12.49 (commencing with Section 8879.20) of Division 1 of Title 2 of the Government Code, the following terms have the following meanings: (1) "Administrative agency" means the state agency responsible for programming bond funds made available by Chapter 12.49 (commencing with Section 8879.20) of Division 1 of Title 2 of the Government Code, as specified in subdivision (c). (2) Unless otherwise specified in this chapter, "project" includes equipment purchase, right-of-way acquisition, and project delivery costs. (3) "Recipient agency" means the recipient of bond funds made available by Chapter 12.49 (commencing with Section 8879.20) of Division 1 of Title 2 of the Government Code that is responsible for implementation of an approved project. (4) "Fund" shall have the meaning as defined in subdivision (c) of Section 8879.20 of the Government Code. (b) Administrative costs, including audit and program oversight costs for the agency administering the program funded pursuant to this chapter, recoverable by bond funds shall not exceed 5 percent of the program's costs. (c) The State Air Resources Board is the administrative agency for the Goods Movement Emission Reduction Program pursuant to paragraph (2) of subdivision (c) of Section 8879.23 of the Government Code. (d) The administrative agency may not approve project fund allocations for any project until the recipient agency provides a project funding plan that demonstrates that the funds are expected to be reasonably available and sufficient to complete the project. The administrative agency may approve funding for useable project segments only if the benefits associated with each individual segment are sufficient to meet the objectives of the program from which the individual segment is funded. (e) Guidelines adopted by the administrative agency pursuant to this chapter and Chapter 12.49 (commencing with Section 8879.20) of Division 1 of Title 2 of the Government Code are intended to provide internal guidance for the agency and shall be exempt from the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of the Government Code), and shall do all of the following: (1) Provide for audit of project expenditures and outcomes. (2) Require that the useful life of the project be identified as part of the project nomination process. (3) Require that project nominations have project delivery milestones, including, but not limited to, start and completion dates for environmental clearance, land acquisition, design, construction bid award, construction completion, and project closeout, as applicable. (f) (1) As a condition for allocation of funds to a specific project under Chapter 12.49 (commencing with Section 8879.20), the administrative agency shall require the recipient agency to report, on a semiannual basis, on the activities and progress made toward implementation of the project. The administrative agency shall forward the report to the Department of Finance by means approved by the Department of Finance. The purpose of the report is to ensure that the project is being executed in a timely fashion, and is within the scope and budget identified when the decision was made to fund the project. If it is anticipated that project costs will exceed the approved project budget, the recipient agency shall provide a plan to the administrative agency for achieving the benefits of the project by either downscoping the project to remain within budget or by identifying an alternative funding source to meet the cost increase. The administrative agency may either approve the corrective plan or direct the recipient agency to modify its plan. (2) Within six months of the project becoming operable, the recipient agency shall provide a report to the administrative agency on the final costs of the project as compared to the approved project budget, the project duration as compared to the original project schedule as of the date of allocation, and performance outcomes derived from the project compared to those described in the original application for funding. The administrative agency shall forward the report to the Department of Finance by means approved by the Department of Finance. SEC. 8. Section 7103 of the Revenue and Taxation Code is repealed. SEC. 9. Section 7103 is added to the Revenue and Taxation Code, to read: 7103. (a) The Mass Transportation Fund is hereby created in the State Treasury. Upon appropriation by the Legislature, moneys in the Mass Transportation Fund may be used for, but shall not necessarily be limited to, the following transportation purposes: (1) Payment of debt service on transportation bonds, or reimbursement to the General Fund for past debt service payments on transportation bonds. (2) Funding of the Department of Developmental Services for regional center transportation. (3) Reimbursement to the General Fund for payments made by the General Fund pursuant to subdivision (f) of Section 1 of Article XIX B of the California Constitution. (4) Funding of home-to-school transportation, pursuant to Article 10 (commencing with Section 41850) of Chapter 5 of Part 24 of the Education Code, and Small School District Transportation, pursuant to Article 4.5 (commencing with Section 42290) of Chapter 7 of Part 24 of the Education Code. (b) From moneys transferred to the fund pursuant to subparagraph (G) of paragraph (1) of subdivision (a) of Section 7102 in the 2007-08 fiscal year, the sum of five hundred thirty-nine million two hundred eighty-nine thousand three hundred forty-eight dollars ($539,289,348) shall be transferred to the Transportation Debt Service Fund, and the sum of eighty-two million six hundred seventy-eight thousand dollars ($82,678,000) may be reimbursed by the Director of Finance in the 2007-08 fiscal year for the purpose of offsetting payments made by the General Fund pursuant to subdivision (f) of Section 1 of Article XIX B of the California Constitution. SEC. 10. 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 make changes relative to provisions governing transportation funds to implement the Budget Act of 2007, it is necessary that this act take effect immediately.