BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1371
                                                                  Page  1

          Date of Hearing:   June 14, 2010

                        ASSEMBLY COMMITTEE ON TRANSPORTATION
                               Bonnie Lowenthal, Chair
               SB 1371 (Lowenthal) - As Introduced:  February 19, 2010

           SENATE VOTE  :  30-0
           
          SUBJECT  :  Federal economic stimulus funds for transportation

           SUMMARY  :  Directs the California Department of Transportation  
          (Caltrans) to develop a list of projects that may be awarded  
          within a short timeframe upon the release of a second round of  
          federal transportation economic stimulus funds; includes urgency  
          provisions.  Specifically,  this bill  :  

          1)Requires Caltrans to work with local transportation agencies  
            to develop a list of projects that meet certain criteria and  
            that may be available to award within 90 days after the award  
            of a second round of federal economic stimulus dollars for  
            transportation (a.k.a. STIM 2).  

          2)Requires Caltrans to submit monthly status reports to the  
            Legislative Analyst's Office on the implementation STIM 2.  

          3)Includes urgency provisions.  

           EXISTING LAW:   

          4)Provides for the distribution of nearly $2.6 billion in  
            federal American Recovery and Reinvestment Act (ARRA) funds  
            received last year for highways and roads from the federal  
            government to stimulate the nation's economy.  

          5)Makes legislative findings and declarations that it is in the  
            state's interest to ensure federal highway infrastructure  
            funds are fully obligated and used expeditiously, consistent  
            with the ARRA; states further legislative intent that priority  
            be given to the use of ARRA funds for repair and  
            rehabilitation of the existing highway system and to advance  
            Proposition 1B bond funded-projects that have been delayed or  
            are in jeopardy of being delayed because of the state's  
            inability to issue general obligation bonds.  

          6)Provides authority for Caltrans to loan ARRA funds to  








                                                                  SB 1371
                                                                  Page  2

            transportation projects programmed for funding from  
            Proposition 1B infrastructure bonds, within specific  
            parameters.  

          7)Directs loan repayments to be made to the State Highway  
            Account for projects in the State Highway Operation &  
            Protection Program.  

          8)Provides that the $2.6 billion in ARRA funds were to be  
            considered part of the federal Surface Transportation Program  
            (STP) and apportioned 37.5% (about $1 billion) to the state  
            and 62.5% (about $1.6 billion) to regional agencies.   
            Distribution to regional agencies is to be made by existing  
            formulae, generally based on population.  

          9)Provides legislative intent that at least 40% of the funds  
            apportioned to regional and local transportation agencies be  
            sub-allocated to cities and counties.  

          10)Requires strict reporting on the timely use of ARRA funds  
            and, if need be, redistribution of any ARRA funds in jeopardy  
            of not being used.  

           FISCAL EFFECT  :  According to Caltrans, it is already required by  
          federal law to prepare the information that this bill requires  
          to be reported to the Legislative Analyst's Office.   
          Consequently, costs to implement SB 1371, should a second round  
          of stimulus dollars become available, will be minor.  

           COMMENTS  :  In February 2009, President Obama signed ARRA, a $787  
          billion economic stimulus package developed with the goals of  
          creating new jobs, 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 received $2.57 billion for  
          highways and $1.1 billion for transit.  

          In response, the Legislature passed ABX3 20 (Bass), Chapter 21,  
          Statutes of 2009, that provided for the distribution of ARRA  
          funds for highways and roads.  ABX3 20 also included provisions  
          authorizing loans to bond-funded projects that had been stalled  
          due to the state's inability to sell bonds.  Consequently,  
          California was successful in obligating 100% of the ARRA funds  
          made available and delivered previously stalled transportation  








                                                                  SB 1371
                                                                  Page  3

          projects.  

          Earlier this year, Congress considered STIM 2, a second round of  
          economic stimulus funding for states.  As proposed in the most  
          recent version of STIM 2, states will have extremely short  
          timeframes within which to award contracts to be funded with  
          these federal dollars.  States that fail to use the funds within  
          the timeframes prescribed will forfeit their share of the  
          federal economic stimulus dollars and those funds will be  
          redistributed to other states.  

          The federal legislation has since stalled and it is unlikely  
          that it will move any further through Congress.  However, in the  
          event that it does move, and given the short timeframes proposed  
          in STIM 2, this bill is intended to make it easier for  
          transportation agencies and Caltrans to use federal economic  
          stimulus funds on ready-to-go projects and to ensure no federal  
          funds are forfeited for lack of use.  If STIM 2 does not move  
          through Congress by the end of California's legislative session,  
          it is the author's intent to hold SB 1348 on the Assembly  
          inactive file.  
           
          Suggested amendment:   To minimize costs and improve access to  
          the data, Caltrans should be given the opportunity to post  
          monthly status reports, or links to the reports, on its website,  
          rather than having to transmit the reports in hardcopy format,  
          as follows:  

          On page 3, at line 29, after the period add, "In lieu of  
          submitting the monthly report to the Legislative Analyst  
          Office's, the department may elect to post the information, or a  
          link to the information, on its internet site on a monthly  
          basis."  

           Related legislation  :  AB 2703 (J. Perez) authorizes loans of a  
          second round of federal economic stimulus funds to advance  
          projects scheduled to be funded from Proposition 1B  
          infrastructure bonds.  AB 2703 is currently pending in the  
          Senate Transportation and Housing Committee.  

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          None on file








                                                                  SB 1371
                                                                  Page  4


           Opposition 
           
          None on file

           
          Analysis Prepared by  :   Janet Dawson / TRANS. / (916) 319-2093