BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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                                 THIRD READING


          Bill No:  AB 105
          Author:   Assembly Budget Committee
          Amended:  3/14/11 in Senate
          Vote:     27 - Urgency

           
          PRIOR VOTES NOT RELEVANT


           SUBJECT  :    Budget Act of 2011:  Transportation

           SOURCE  :     Author


           DIGEST  :    This bill makes statutory changes that are 
          necessary to implement transportation portions of the 
          2011-12 Budget Act.

           Senate Floor Amendments  of 3/14/11 delete the prior version 
          of the bill which expressed the intent of the Legislature 
          to enact statutory changes relating to the 2011 Budget Act.

           ANALYSIS  :    This is the transportation budget trailer 
          bill.  It contains provisions necessary to modify the 
          2010-11 budget and implement the 2011 Budget Act.  Major 
          changes include the following:

           1.  General Fund Relief and Transportation Protection  .  
              Provides General Fund relief of $1.7 billion through 
              the use of truck weight fees and other transportation 
              revenues for bond debt service and loans to the General 
              Fund.  Provides protection to safeguard billions of 
              dollars of transportation revenues by re-enacting the 
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              fuel tax swap.  Both of these components are discussed 
              in more detail in the following two items.

           2.  Re-enact Fuel Tax Swap  .  Re-enacts the fuel tax swap, 
              which was originally enacted in early 2010 by AB X8 6 
              and SB 70.  The 2010 tax swap was revenue neutral 
              overall, but increased some taxes and reduced others.  
              Proposition 26 on the November 2010 ballot was approved 
              by voters, and amended the Constitution to require a 
              two-thirds vote for such tax neutral measures.  Prop 26 
              voids any conflicting measure enacted after January 1, 
              2010, effective 12 months after the election.  Since AB 
              X8 6 and SB 70 were enacted after January 1, 2010, with 
              a simple majority vote, this bill would re-enact these 
              provisions with a two-thirds vote to ensure the fuel 
              tax swap meets the new constitutional requirements.   

              The re-enacted fuel tax swap includes four main tax 
              adjustments:

                         Exempts gasoline from the State 6.0 percent 
                   sales tax on July 1, 2010.
                         Increases the excise tax on gasoline by 
                   17.3 cents per gallon, to a total of 35.3 cents 
                   per gallon, on July 1, 2010.  
                         Increases the sales tax applied to diesel 
                   fuel by 1.87 percent on July 1, 2011.
                         Decreases the excise tax on diesel by 5.0 
                   cents per gallon, to 13.0 cents per gallon on July 
                   1, 2011.  

              The re-enacted swap is similar to last year's swap, but 
              some of the diesel rates have changed a small amount to 
              address the requirements of Proposition 22, which was 
              also approved by voters on the November 2010 ballot, 
              and to address changes in the forecast of quantity and 
              price of diesel fuel.  As before, the tax swap is 
              revenue neutral and an out-year adjustment is made each 
              July 1, to maintain the tax-neutrality.  

              The re-enacted swap excludes off-road users, such as 
              railroads, farm equipment, and aviation gasoline from 
              the certain provisions of the swap to maintain the tax 
              neutrality for those users that already enjoy certain 







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              exemptions.  

              The tax swap was not enacted to increase revenue, but 
              rather to allow the use of more existing transportation 
              revenue for highway purposes, including General 
              Obligation bond debt service (GO bond debt), where that 
              debt service was related to transportation projects.  
              Prop 22 placed new restrictions on the use of fuel 
              excise taxes for bond debt, but the fuel tax revenue in 
              this bill would backfill the other highway funds used 
              to reimburse bond debt.

              This bill specifies that the fuel tax swap would have 
              no negative effect upon the amounts that would 
              otherwise be calculated under Test 1 of the Proposition 
              98 minimum education funding guarantee.

           1.  Truck Weight Fees  .  Directs truck weight fee revenue, 
              which totals approximately $900 million per year, to 
              fund GO bond debt for transportation-related bonds and 
              for loans to the General Fund.  Over 2010-11 and 
              2011-12, total General Fund relief is $1.6 billion.  
              Truck weight fees are paid by the owners of heavy 
              vehicles and compensate the state for the damage large 
              trucks do to roadways.   This new use of truck weight 
              fees is related to prohibitions placed on gasoline 
              excise revenues by Proposition 22, approved by voters 
              in November 2010.  Under Prop 22, gasoline excise 
              revenues can no longer be used for loans to the General 
              Fund, and the use of these revenues for GO debt is more 
              limited.   However, truck weight fees can be used for 
              these purposes.  The applicable gasoline excise revenue 
              is instead directed into the State Highway Account to 
              hold harmless transportation programs that would 
              otherwise receive the weight fee revenue.

           2.  Non-Article XIX Revenues  .  Provides General Fund relief 
              of $78 million by directing non-Article XIX revenue to 
              the payment of transportation-related GO bond debt.  
              Each year, the Department of Transportation receives 
              about $78 million in revenue from the sale of state 
              property, as well as rental revenue and other 
              miscellaneous revenues.  These revenues are not 
              restricted in use by Article XIX of Constitution and 







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              are more flexible in expenditure.  

           3.  Transit Operations  :  Maintains annual ongoing funding 
              for local transit operations at approximately $350 
              million.  The 2010 fuel tax swap package of 
              legislation, specifically AB X8 9, included the 
              restoration of state funding for local transit 
              operations.  Proposition 22 placed new restrictions on 
              the base diesel sales tax that resulted in a loss of 
              funding for transit operations.  This bill would shift 
              all of the new sales tax on diesel revenue to transit 
              operations to maintain funding levels near the level 
              planned in last year's fuel tax swap.

           4.  Outstanding Transportation Loans to the General Fund  :  
              Defers payment of a $135 million loan made from the 
              State Highway Account to the General Fund in the 2009 
              Budget Act.  The loan will be repaid in 2012-13 instead 
              of in 2011-12.   Specifies that this 2009-10 loan was 
              made from truck weight fee revenue.  Specifies that a 
              $328 million loan from the fuel excise revenues to the 
              General Fund in the 2010 Budget Act be held in reverse 
              for future appropriation by the Legislature when repaid 
              in 2012-13.

           5.  Proposition 1B - Transportation Corridor Improvement 
              Funds  .  Requires the California Transportation 
              Commission (CTC) to report to the Legislature 
              semiannually on the expenditure of Transportation 
              Corridor Improvement Funds (TCIF) for railroad 
              projects.   Additionally, requires the CTC to report 
              and provide a copy of any memorandum of understanding 
              executed between a railroad company and any state or 
              local transportation agency where TCIF funds are a 
              funding source for the project.

           6.  Proposition 1B - Water Transit  .  For recipients of Prop 
              1B bond funds for regional public waterborne transit, 
              extends the expenditure period from three years to four 
              years for any funds allocated prior to June 30, 2011.  
              Proposition 1B provides $250 million to Regional public 
              waterborne transit agencies.  The funds are available 
              to build ferry terminals, among other uses.








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           7.  Proposition 1B - Local Streets and Roads  .  Provides 
              cities and counties a one-year extension to expend 
              Proposition 1B Local Streets and Roads funds for any 
              year in which Highway Users Tax Account (HUTA) funds 
              for local transportation projects are borrowed, 
              deferred, or shifted.

           8.  Inter-fund Transportation Cashflow Loans  .  Extends the 
              sunset from June 30, 2011 to June 30, 2014, for 
              cashflow borrowing among transportation special funds.  
              The transportation special funds that are eligible for 
              cashflow borrowing are the State Highway Account, and 
              the Traffic Congestion Relief Fund.
           
          9.  High-Speed Rail Authority - Exempt Positions  .  
              Authorizes the Governor to appoint six management level 
              exempt positions to the High Speed Rail Authority 
              (HSRA) upon the recommendation of the executive 
              director.  Compensation for these positions shall not 
              exceed the highest comparable compensation for a 
              position of that type, as established through a salary 
              survey, and shall require approval of the Department of 
              Personnel Administration.

           10. High-Speed Rail Authority - Reporting  .  Requires the 
              HSRA to report by February 14, 2011, on the following: 
              community outreach; the HSRA strategic plan as required 
              by the State Administrative Manual; the performance of 
              the program-manager contractor; and actions of the HSRA 
              related to the Bureau of State Audits report.  Requires 
              the HSRA to report by October 14, 2011, on a complete 
              legal analysis of the revenue guarantee and the updated 
              financial plan for the project.  In both cases, for 
              each applicable fiscal year, twenty-five percent of the 
              budgeted funding for the HSRA is contingent on 
              completion of the reporting requirements.

           11. Caltrans - Capital Outlay Support Budget Request  .  
              Requires the Department of Transportation (Caltrans) to 
              report annually to the Legislature with supplemental 
              information on the Capital Outlay Support budget 
              request, including anticipated and realized project 
              costs and schedules for the Capital Outlay Support 
              Program.







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           12. Local Transportation Subventions and Maintenance of 
              Effort  .  Provides additional clarification that local 
              governments are not subject to the same 
              maintenance-of-effort and other requirements under 
              Proposition 42 when they are apportioned fuel excise 
              tax revenues. 
           
          13. DMV - Veterans' Benefits  .  Requires the Department of 
              Motor Vehicles (DMV) to update application forms to 
              provide a space for an applicant to indicate whether 
              they served in the armed forces.  Data collected from 
              willing veterans will be shared with the Department of 
              Veteran's affairs in order to identify if they are 
              eligible for federal benefits.  

           14. DMV - Car Registration Administrative Procedures  .  
              Authorizes the DMV to make changes to its procedures 
              related to car registration for a limited period ending 
              January 1, 2012.  The new authority is related to an 
              anticipated vote of the people in June 2011, on the 
              question of whether the tax rates for the Vehicle 
              License Fee (VLF) should be maintained at current 
              levels for a five-year period.  Depending on the 
              outcome of the election, the VLF rates may, or may not, 
              change on July 1, 2011.  To avoid erroneous billing, 
              multiple billing, or other confusion, this bill would 
              allow DMV to reduce the time between the mailing of the 
              car registration bill, and the due date of that bill.  
              However, in no case would the bill be due less than 
              30-days from when the notice is mailed by DMV. 

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



          AGB:nl  3/14/11   Senate Floor Analyses 

                       SUPPORT/OPPOSITION:  NONE RECEIVED

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