BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  AB 1078|
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                                 THIRD READING


          Bill No:  AB 1078
          Author:   Feuer (D), et al
          Amended:  8/20/10 in Senate
          Vote:     27 - Urgency

           
           SENATE TRANSPORTATION & HOUSING COMMITTEE  :  8-0, 8/18/10
          AYES:  Lowenthal, Huff, Ashburn, DeSaulnier, Harman, Kehoe,  
            Pavley, Wolk
          NO VOTE RECORDED:  Simitian

           ASSEMBLY FLOOR  :  Not relevant


           SUBJECT  :    Los Angeles County Metropolitan Transportation  
          Authority: 
                      transactions and use tax

           SOURCE  :     Los Angeles County Metropolitan Transportation  
          Authority


           DIGEST  :    This bill changes the notification to Los  
          Angeles County members of the Legislature required for  
          amendments to the Measure R transportation sales tax  
          expenditure plan. 

           ANALYSIS  :    AB 2321 (Feuer), Chapter 302, Statutes of  
          2008, authorizes the Los Angeles County Metropolitan  
          Transportation Authority (MTA) to place a 1/2 percent  
          transportation sales tax proposal before Los Angeles County  
          voters.  MTA exercised this authorization in November 2008,  
          when voters there approved Measure R, a 1/2 percent sales  
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          tax for transportation improvements.  Measure R gained the  
          support of 68 percent of the voters.  It is estimated that  
          this sales tax will generate $39.4 billion before it  
          expires in 2040.  Prior to submitting Measure R to the  
          voters, existing law required MTA to adopt an expenditure  
          plan, which was part of the ballot measure, for the use of  
          sales tax revenues.  The program is summarized in the  
          following table provided by MTA:

              Voter Approved Measure R Expenditure Plan Allocations
           
              ------------------------------------------------------------- 
             |        Programs         | Est. 30-Year Amount of |Percentage|
             |                         |   Sales Tax Revenue    |          |
             |                         |       (billions)       |  Share   |
             |-------------------------+------------------------+----------|
             |Transit Capital          |        $13.790         |   35%    |
             |-------------------------+------------------------+----------|
             |Miscellaneous Transit    |         1.970          |    5%    |
             |-------------------------+------------------------+----------|
             |Highway Capital          |         7.880          |   20%    |
             |-------------------------+------------------------+----------|
             |Rail Operations          |         1.970          |    5%    |
             |-------------------------+------------------------+----------|
             |Bus Operation            |         7.880          |   20%    |
             |-------------------------+------------------------+----------|
             |Local Return (Streets &  |         5.910          |   15%    |
             |Roads)                   |                        |          |
             |-------------------------+------------------------+----------|
             |TOTAL                    |         $39.4          |100%      |
             |                         |                        |          |
              ------------------------------------------------------------- 

          In addition to the program of projects, the expenditure  
          plan has several transit and highway projects that have  
          been assigned "expected completion" dates.  Existing law  
          requires all projects in the expenditure plan must be in  
          MTA's Long Range Transportation Plan. 

          Existing law requires MTA to notify the Los Angeles County  
          legislative delegation of changes to the adopted  
          expenditure plan no later than 365-days prior to MTA  
          adopting the expenditure plan amendments.  The notification  
          applies to amendments to the expenditure plan that:

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           Affect the amount of net revenue that is proposed to be  
            spent on projects.
           Affect the schedule for the availability of funds for  
            projects.
           Affect the schedule for estimated completion date for a  
            project. 

          The notification must also include an explanation of the  
          proposed amendments and an estimate of the impact the  
          proposed amendment would have on the project scope,  
          schedule, cost, or availability of funding. 

          In addition to procedural requirements regarding the  
          expenditure plan, existing law authorizes MTA to issue debt  
          guaranteed by the net proceeds of the Measure R sales tax.
           
           This bill:

          1. Requires MTA to notify the Los Angeles County  
             legislative delegation if an amendment to the  
             expenditure plan would delay the availability of the  
             funding for a project. 

          2. Requires MTA to notify the Los Angeles County  
             legislative delegation if an amendment to the  
             expenditure would delay the estimated completion date  
             for a project. 

          3. Declares this act is an urgency statute in order to  
             provide increased flexibility to MTA for implementation  
             of its sales tax program.

          4. Requires MTA to provide prior written notice to the  
             Members of the legislature representing the County of  
             Los Angeles of any proposed amendments to the adopted  
             expenditure plan that would accelerate funding for a  
             project(s) in the adopted expenditure plan.

           Comments
           
           Purpose  .  The purpose of this bill is to waive the 365-day  
          notice for amendments to Measure R's expenditure plan when  
          they accelerate the availability of funds and advance the  

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          completion of transit and highway projects.  The 365-day  
          notice would still apply if an amendment to the expenditure  
          plan would result in a delay to either the availability of  
          funds or to the completion schedule.  This bill's  
          provisions apply to 12 transit projects and to up to  
          fifteen highway projects that have been identified as being  
          candidates for schedule acceleration.
           
          The fundamental argument underlying this bill is that  
          accelerating a project's funding and schedule is valuable  
          as the benefits from enhanced mobility occur sooner.  The  
          more serious matter of delayed projects still requires  
          legislative notification.

           30/10 Initiative  .  Since the enactment of AB 2321 and the  
          passage of Measure R, MTA has embarked upon an effort to  
          accelerate federal funding for MTA's rail development  
          program.  This program, initiated by Mayor Antonio  
          Villaraigosa, and adopted unanimously by the MTA board, is  
          popularly referred to as the 30/10 Initiative.  The 30/10  
          Initiative applies only to transit projects.  The  
          Initiative's objective is to create a financial strategy  
          allowing for the construction of 12 rail transit projects  
          in 10 years as opposed to the usual thirty years when  
          relying upon federal capital grants.  MTA estimates in its  
          Long Range Transportation Plan that the cost of the 12  
          projects over 30 years would be $17.5 billion.  This is  
          unaffordable under the Measure R Program.  Using the 30/10  
          Initiative framework, the cost of the 12 projects is  
          reduced to $13.7 billion, a 21 percent saving.  The essence  
          of this program is to use the 30-year revenue stream  
          generated by the Measure R for transit projects as  
          collateral for long-term financing.  The elements of the  
          30/10 Initiative include a combination of grants and debt  
          as indicated below: 

           $2.9 billion in federal new rail starts funding.
           $5.7 billion federal loan.
           $160 million in loans and guarantees from the federal  
            Transportation Infrastructure Finance and Innovation Act  
            (TIFIA)

          MTA is in negotiations with congressional and  
          administration officials in Washington to secure  

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          implementing federal legislation. 

           FISCAL EFFECT :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  8/20/10)

          Los Angeles County Metropolitan Transportation Authority



          JJA:mw  8/20/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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