BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1078| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED AB 1078 Page 2 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: CONTINUED AB 1078 Page 3 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 CONTINUED AB 1078 Page 4 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 CONTINUED AB 1078 Page 5 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 **** END **** CONTINUED