BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1371
                                                                  Page  1


          SENATE THIRD READING
          SB 1371 (Lowenthal and Correa)
          As Amended  June 16, 2010
          2/3 vote. Urgency

           SENATE VOTE  :30-0  
           
           TRANSPORTATION      12-0        APPROPRIATIONS      17-0        
           
           ----------------------------------------------------------------- 
          |Ayes:|Bonnie Lowenthal,         |Ayes:|Fuentes, Conway,          |
          |     |Jeffries,                 |     |Bradford,                 |
          |     |Bill Berryhill,           |     |Charles Calderon, Coto,   |
          |     |Blumenfield, Buchanan,    |     |Davis,                    |
          |     |Eng, Furutani, Galgiani,  |     |De Leon, Gatto, Hall,     |
          |     |Hayashi, Miller, Niello,  |     |Harkey, Miller, Nielsen,  |
          |     |Portantino                |     |Norby, Skinner, Solorio,  |
          |     |                          |     |Torlakson, Torrico        |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           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 or  
            to post the information on the information on the internet.  

          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  








                                                                  SB 1371
                                                                  Page  2


            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  
            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 the Assembly Appropriations  
          Committee, Caltrans 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 this bill, should a second round of stimulus dollars  
          become available, will be minor and absorbable.  
           
          COMMENTS  :  In February 2009, President Obama signed ARRA, a $787  








                                                                  SB 1371
                                                                  Page  3


          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  
          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 1371 on the Assembly  
          inactive file.  
           
           Related legislation:  AB 2703 (John A. 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.  

           








                                                                 SB 1371
                                                                  Page  4


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

                                                               FN:  0005415