BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           406 (DeSaulnier)
          
          Hearing Date:  05/26/2009           Amended: 04/30/2009
          Consultant: Mark McKenzie       Policy Vote: Loc Gov 3-2; T&H  
          6-4
          _________________________________________________________________ 
          ____
          BILL SUMMARY:   SB 406 would authorize the imposition of a $1 or  
          $2 fee on vehicle registrations, as specified, to pay for  
          regional land use planning activities.  This bill would also  
          revise the membership and expand the duties of the Planning  
          Advisory and Assistance Council (PAAC) within the Governor's  
          Office of Planning and Research (OPR).
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

          Major Provisions         2009-10      2010-11       2011-12     Fund
           DMV programming & admin           $300-$400   $100*     Special*

          Maximum local assessments                     ($62,728)  
          ($62,728)              Local**
            (revenue gain)
          PAAC new duties        all costs covered by 5% allocation of  
          fees collected
          ____________
          * Motor Vehicle Account (first year costs; ongoing costs  
          deducted from fee revenues)

          ** Staff notes that the local assessment revenue gain shown here  
          is based upon approval of the assessment in every region in the  
          state.  Actual revenues would depend upon the number of entities  
          approving an assessment and the number of vehicles registered in  
          those areas.  For purposes of example, if only the Association  
          of Bay Area Governments (with 6,061,374 fee-paid vehicle  
          registrations) approved an assessment of $2, annual local  
          revenues would be $12,122,748 with 5% of these revenues  
          ($606,137) transferred to PAAC to cover costs related to duties  
          imposed by this bill.  
          _________________________________________________________________ 
          ____

          STAFF COMMENTS: This bill meets the criteria for referral to the  










          Suspense File.
          
           Vehicle fee provisions
           Existing law establishes a basic statewide vehicle registration  
          fee of $34, plus a $22 surcharge that supports the California  
          Highway Patrol, and authorizes local agencies to impose separate  
          vehicle registration fee surcharges within their jurisdictions  
          for various programs, such as air quality district fees,  
          congestion management fees, and law enforcement fees.  SB 375  
          (Steinberg), Chapter 728 of 2008, requires each metropolitan  
          planning agency (MPO) to include within its regional  
          transportation plan a sustainable communities strategy (SCS)  
          designed to achieve specified targets for greenhouse gas  
          emission reduction.  If the SCS does not achieve the reduction  
          target, the MPO must prepare an alternative planning strategy.   
          In some regions, cities and counties have jointly formed  
          councils of government (COGs) to implement regional planning  
          activities.  COGs generally serve as federally recognized MPOs  
          transportation planning purposes, although some COGs, such as  
          the San Francisco Bay Area, have a separate MPO for  
          transportation planning.
          Page 2
          SB 406 (DeSaulnier)

          SB 406 would authorize an MPO, a COG, or a county transportation  
          commission and a subregional COG jointly preparing a subregional  
          SCS to impose a surcharge of $1 or $2 on a motor vehicle  
          registered within its jurisdiction, upon adoption of a  
          resolution authorizing the surcharge, as specified.  All  
          revenues derived from the new fee would be used solely to  
          develop and implement a SCS or a regional blueprint plan to  
          identify land use strategies to reduce the use of motor vehicles  
          and vehicle emissions.  The bill specifies that in jurisdictions  
          with a population exceeding 300,000 that impose the full $2 fee,  
          half of the revenues would be used to provide grants to cities  
          and counties within the region for planning and projects related  
          to the implementation of a regional blueprint plan, including an  
          SCS or alternative planning strategy.  Five percent of all  
          revenues collected, however, would be transferred to the PAAC to  
          perform the new duties imposed by this bill.

          DMV would be required to administer the collection and  
          distribution of the fees on behalf of each entity that approves  
          the imposition of the new vehicle surcharge.  Initial costs for  
          programming the new fee into DMV's processing system would  
          likely be in the range of $300,000 to $400,000, with ongoing  










          administrative costs of over $100,000.  Costs to add other  
          regions that approve the assessments in subsequent years would  
          be relatively minor.  Even though the bill provides for payment  
          of DMV's costs to administer the surcharge, initial costs would  
          be paid up front by DMV since the programming changes must be in  
          place prior to fee collection.  Ongoing administrative costs  
          would be deducted from fees collected prior to distribution to  
          the local agency.  

          DMV notes a concern about technical problems on their archaic  
          processing systems caused by the cumulative pressures placed on  
          these systems from the proliferation of fee codes.  DMV is  
          currently in the process of updating their information  
          technology systems.  This modernization project should be  
          completed by 2013, at which time transactions will be processed  
          more efficiently and with fewer errors.  Until the modernization  
          is complete, however, DMV estimates that it has current annual  
          costs of over $19 million for the manual processing of rejected  
          applications.  This bill may result in an increase in vehicle  
          transactions that must be manually processed to the extent that  
          numerous regions impose the new surcharge and transaction errors  
          occur more frequently.  

          According to DMV statistics, there were 31,363,851 fee-paid  
          vehicle registrations in the state in 2008.  This bill could  
          generate up to $62.7 million annually for regional land use  
          planning purposes if every authorized entity adopts a resolution  
          authorizing the imposition of an additional $2 vehicle  
          registration surcharge.  Five percent of these revenues, over  
          $3.1 million, would be allocated to the PAAC to pay for the new  
          duties imposed by this bill.

           Planning Advisory and Assistance Council
           Existing law establishes the Office of Planning and Research  
          (OPR) within the governor's office as the state's comprehensive  
          planning agency.  The Planning Advisory and Assistance Council  
          (PAAC) within OPR is responsible for various land-use planning  
          related activities, including development of the State  
          Environmental Goals and Policies Report.  OPR's Director  
          appoints the membership of the PAAC, which must include 
          Page 3
          SB 406 (DeSaulnier)

          three city representatives, three county representatives, one  
          representative from each of the regional planning districts  
          designated by OPR, and one representative of Indian tribes with  










          reservations in California.  SB 732 (Steinberg), Chapter 729 of  
          2008, created the Strategic Growth Council, consisting of: the  
          Director of OPR; the Secretary of the Natural Resources Agency;  
          the Secretary of the Environmental Protection Agency; the  
          Secretary of the Business, Transportation and Housing Agency;  
          the Secretary of the California Health and Human Services  
          Agency; and a public member.  The council is required to  
          recommend policies to the governor, state agencies, and the  
          Legislature to encourage the development of sustainable  
          communities and provide local governments and regional agencies  
          with data to assist in planning sustainable communities.

          SB 406 would revise the membership of the PAAC by designating  
          the representation of regional planning agencies, as specified,  
          and expanding the PAAC to include: a member of the Air Resources  
          Board; a member of the California Transportation Commission, a  
          member of the State Energy Resource Conservation and Development  
          Commission; and a member appointed by each of the houses of the  
          Legislature.  This bill would also assign the following new  
          duties to the PAAC:
           Work with the Strategic Growth Council to facilitate the  
            implementation of regional blueprint projects.
           Develop recommendations to the Strategic Growth Council and  
            specified state agencies to facilitate coordination between  
            regional blueprint plans and state growth and infrastructure  
            funding plans.
           Receive reports, including the state's five-year  
            infrastructure plan.
           Report to the Legislature, in consultation and coordination  
            with the Strategic Growth Council, on how state agencies  
            implement the state's planning priorities.
           Report to the Legislature on regional performance measures  
            that evaluate each region based on the PAAC's criteria for  
            improving the regions' employment, environmental protection,  
            education, housing, and mobility.

          SB 406 specifies that the PAAC would only perform these  
          additional duties when sufficient funding is transferred from  
          the entities that imposed the additional vehicle fee.  OPR  
          indicates that the five percent allocation of revenues collected  
          pursuant to this new fee would be sufficient to fully offset the  
          costs associated with the new coordination duties.

          Lastly, this bill would require the Strategic Growth Council to  
          consult with and coordinate with the PAAC when performing its  
          core functions.  Any costs associated with this consultation  










          would be absorbable.