BILL ANALYSIS                                                                                                                                                                                                    


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          Bill No:  SB 1371
          Author:   Lowenthal (D)
          Amended:  As introduced
          Vote:     27 - Urgency

          AYES:  Lowenthal, Huff, Ashburn, DeSaulnier, Kehoe,  
            Oropeza, Pavley, Simitian
          NO VOTE RECORDED:  Harman

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

          SUBJECT  :    Federal stimulus funding for transportation

           SOURCE  :     Author

           DIGEST  :    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.

          ANALYSIS  :    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. 


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

          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 establishes 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:

          1. 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.

          2. Requires Caltrans to work with local transportation  
             agencies to develop a list of projects that have the  



                                                               SB 1371

             potential to be awarded within the 90-day period  
             established by the Jobs for Main Street Act.

          3. 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. 

          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.  The author's office 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:

          1. 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.

          2. 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  



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           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 transportation agencies at every  
          level of government has slowed. 

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

          JJA:do  5/4/10   Senate Floor Analyses 


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