BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1203
                                                                  Page  1

          Date of Hearing:   April 30, 2009

                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
                              Curren D. Price, Chairman
                   AB 1203 (Ma) - As Introduced:  February 27, 2009
           
          SUBJECT  :   Transportation bond funds: transit system safety

           SUMMARY  :   This bill would require the California Emergency  
          Management Agency (Cal EMA), by February 1 of each fiscal year,  
          to select eligible applicants for transit system safety projects  
          from the Transit System Safety, Security, and Disaster Response  
          Account (Account)  pursuant to the Highway Safety, Traffic  
          Reduction, Air Quality, and Port Security Bond Act of 2006  
          (Proposition 1B) and provide the Controller with a list of the  
          projects and sponsoring agencies eligible to receive an  
          allocation.  Specifically,  this bill  :   

             1)   Requires, no later than February 1 of each fiscal year,  
               Cal EMA to select eligible projects to receive grants under  
               the Account and shall provide the Controller with a list of  
               the projects and the sponsoring agencies eligible to  
               receive funding from the account.  Upon receipt of this  
               information, the Controller's office shall commence any  
               necessary actions to allocate funds to those agencies,  
               including, but, not limited to, seeking the issuance of  
               bonds for that purpose [Government Code Section 8879.59  
               (f)].

             2)   Makes technical conforming changes to state law. 

           EXISTING LAW   

             1)   Establishes the Highway Safety, Traffic Reduction, Air  
               Quality, and Port Security Bond Act of 2006 (Proposition  
               1B) and authorizes the issuance of $19.925 billion of  
               general obligation bond funds for the mobility, safety, and  
               air quality improvements, as specified.

             2)   Requires the deposit of $1 billion of the bond proceeds  
               in the Account to be used, upon appropriation, for capital  
               projects that provide increased protection against a  
               security and safety threat, and for capital expenditures to  
               increase the capacity of transit operators to develop  
               disaster response transportation systems that can move  








                                                                  AB 1203
                                                                  Page  2

               people, goods, and emergency personnel and equipment in the  
               aftermath of a disaster.

             3)   Requires the allocation of 25 percent of these funds for  
               capital expenditures to regional public waterborne transit  
               agencies authorized to operate a regional water transit  
               system and requires the Cal EMA to administer a grant  
               application and award program for transit agencies eligible  
               to receive funding.

             4)   Requires the Cal EMA to select eligible projects to  
               receive those grants by February 1 of each fiscal year in  
               which funds are used for this purpose.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   The Highway Safety, Traffic Reduction, Air Quality,  
          and Port Security Bond Act of 2006, approved by the voters as  
          Proposition 1B at the November 7, 2006, general election,  
          authorized the issuance of general obligation bonds for specified  
          purposes, including, but not limited to transit security  
          projects.  

          According to the author, this bill provides clarifying language  
          to allow the 25 percent waterborne element of the Transit System  
          Safety, Security and Disaster Response program to be administered  
          by way of an up-front grant allocation program, instead of a  
          reimbursable grant program.

          Chapter 12.491, Article 6 of Division 1 of Title 2 of the  
          Government Code, titled: Implementation of the Highway Safety,  
          Traffic Reduction, Air Quality, and Bond Act of 2006, provides a  
          description of the eligibility criteria and program management  
          requirements for the Account funds.

          Based on Article 6 requirements, 25 percent of available funds  
          are to be allocated to regional public waterborne transit  
          agencies for eligible capital expenditures that enhance the  
          capacity of regional public waterborne transit agencies to  
          provide disaster response transportation systems that can move  
          people, goods, and emergency personnel and equipment in the  
          aftermath of a disaster or emergency.  These funds are awarded to  
          transit agencies through a reimbursable grant program, as opposed  
          to an up-front allocation of funds as is the procedure with the  
          majority of funds provided under this Article.








                                                                  AB 1203
                                                                  Page  3


          State reimbursement processes are such that grant program  
          reimbursements for the 25 percent waterborne element have taken  
          several months to process, requiring the project sponsor to cash  
          flow the cumulative program costs over several months at a time.   
          This has required the project sponsor to tie up significant  
          amounts of cash to carry expenses while waiting for  
          reimbursement.  Once project activity ramps up, it will be  
          impossible for the sponsor to carry the cost of project expenses  
          over multiple months due to limited cash on hand. 

          This bill provides clarifying language that directs the  
          administration of the 25 percent waterborne component of the  
          Account funds to be administered by way of an up-front  
          "allocation" of funds as opposed to on a reimbursement basis.

          According to the author, this provides consistency with the way  
          in which 60 percent of the program funds are administered across  
          the state, and addresses recipient issues with long-lead times in  
          receiving state reimbursements. 

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          San Francisco Bay Area Water Transit Authority (WETA) (Sponsor)
          California Conference Board of the Amalgamated Transit Union
          California Conference of Machinists
          International Longshore and Warehouse Union
          California Labor Federation
          California Teamsters Public Affairs Council
          San Francisco Chamber of Commerce

           Opposition 
           
          None on file
           
          Analysis Prepared by  :    Rod Brewer / G. O. / (916) 319-2531