BILL ANALYSIS                                                                                                                                                                                                    

          SENATOR ALAN LOWENTHAL, CHAIRMAN               AUTHOR:  lowenthal
                                                         VERSION: 2/19/10
          Analysis by:  Jennifer Gress                   FISCAL:  yes
          Hearing date:  April 20, 2010                      URGENCY:  YES


          Federal stimulus funding for transportation


          This bill prepares California to implement a second federal  
          economic stimulus bill, should one be passed by the United  
          States Congress and signed by the President.


          On February 17, 2009, President Obama signed the American  
          Recovery and Reinvestment Act (ARRA), a $787 billion economic  
          stimulus package developed with the goals of creating new and  
          saving existing jobs and investing in long-term economic growth.  
           The federal government made available $48 billion nationally  
          for a variety of discretionary grant and formula-based  
          transportation programs.  Of the formula-based funds, California  
          is expected to receive $2.57 billion for highways and $1.1  
          billion for transit. 

          On March 27, 2009, the Legislature passed and the Governor  
          signed AB 20xxx (Bass), Chapter 21, to govern the distribution  
          of ARRA's formula-based highway funds.  That bill provided that  
          all projects using ARRA funds must meet the deadlines and  
          requirements established by ARRA, but it changed how highway  
          infrastructure funds are distributed to the California  
          Department of Transportation (Caltrans) and to regional  
          transportation agencies.  It also provided additional guidance  
          on the use of Caltrans' portion of ARRA funds.  The intent of AB  
          20xxx was to facilitate the implementation of federal stimulus  
          funds under the timelines provided by the Act and to achieve a  
          number of policy objectives, including addressing a growing  
          backlog of maintenance and rehabilitation needs, supporting  


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          Proposition 1B projects that may be delayed due to the state's  
          fiscal crisis, and creating employment opportunities for young  

          In December 2009, the United States House of Representatives  
          passed H.R. 2847, known as the "Jobs for Main Street Act," to  
          provide additional stimulus funding for transportation.  The  
          Jobs for Main Street Act contains formula-based programs that  
          are similar to those that were in ARRA, but it establishes a  
          much shorter timeline for spending its funds.  Under the Jobs  
          for Main Street Act, transportation agencies must award  
          contracts within 90 days of the state receiving funds.

           This bill  would establish state law governing the implementation  
          of a second federal economic stimulus bill, should one be passed  
          by the United States Congress and signed by the President.  In  
          its current form, the bill:

           Makes findings and declarations regarding the importance of  
            funding for transportation to stimulate job creation and  
            economic development and the necessity of swift action by the  
            Legislature to develop and transportation agencies to  
            implement legislation that enables agencies to meet the strict  
            deadlines expected to be contained in a second stimulus bill.   

           Requires Caltrans to work with local transportation agencies  
            to develop a list of projects that have the potential to be  
            awarded within the 90-day period established by the Jobs for  
            Main Street Act.  

           Requires Caltrans to submit monthly reports to the Legislature  
            regarding the status of implementing the stimulus bill, should  
            one be passed by Congress and signed by the President. 

           1.Purpose  .  Congress is considering authorizing a second round  
            of federal economic stimulus funding that has the potential to  
            bring $3.7 billion to California for investment in  
            transportation infrastructure.  A stimulus bill, however, is  
            expected to contain very short timelines for awarding  
            contracts on projects funded by it.

            The statewide unemployment rate remains above 12 percent, with  
            some counties experiencing a jobless rate above 20 percent.   


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            The author asserts that the state must stand ready to use all  
            stimulus funds available to it within the timelines provided  
            by the federal act.  Legislation developed to implement a  
            stimulus bill should do the following:

                 Expedite the process by which state and local  
               transportation agencies obligate and award federal funds,  
               easing regulatory and statutory hurdles where appropriate  
               and in a manner consistent with the mobility and  
               environmental goals of the state.

                 Establish an allocation formula that provides  
               flexibility in the use of funds and ensures geographic  
               equity such that all areas of the state benefit from the  
               federal stimulus act.

            While the likelihood of receiving a second round of stimulus  
            funding for transportation is uncertain at this time, the  
            author believes it is important to prepare for a second round  
            given the short time lines expected for using the funds and  
            the critical need this state faces for creating jobs.  Moving  
            this bill helps to being that preparation.

           1.Status of federal stimulus  .  It is unclear at this time  
            whether Congress will enact a second stimulus bill.  After the  
            House of Representatives passed the Jobs for Main Street Act  
            in December, the U.S. Senate amended the bill to remove the  
            provisions related to stimulus, renamed the bill the "Hiring  
            Incentives to Restore Employment (HIRE) Act," and limited the  
            bill to extending the federal transportation bill, known as  
            the Safe, Accountable, Flexible, Transportation Equity Act - A  
            Legacy for Users (SAFETEA-LU).  The HIRE Act was signed by the  
            President on March 12, 2010.  The Senate had proposed to deal  
            with a second stimulus with a smaller amount of funding, but  
            has yet to do so.

            In response to the Jobs for Main Street Act, Caltrans worked  
            with the regional transportation agencies and the Federal  
            Highway Administration (FHWA) in January and February to  
            identify projects that could meet the short deadlines proposed  
            by the original Jobs for Main Street Act and to ensure that  
            projects that could meet those timelines were included in the  
            Federal Statewide Transportation Improvement Program (FSTIP).   
            (Projects must be included in the FSTIP to be eligible for  
            federal funding.)  Given the uncertain fate of federal  
            stimulus at this time, much of the early activity by  


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            transportation agencies at every level of government has  

           2.Urgency clause  . This bill contains an urgency clause.   
            Therefore, if this bill is passed by the Legislature and  
            signed by the Governor, it will go into effect immediately.

           POSITIONS:  (Communicated to the Committee before noon on  
                      April 14, 2010)

               SUPPORT:  None received.
               OPPOSED:  None received.