BILL ANALYSIS Ó AB 432 Page 1 Date of Hearing: August 20, 2012 ASSEMBLY COMMITTEE ON TRANSPORTATION Bonnie Lowenthal, Chair AB 432 (Dickenson) - As Amended: June 21, 2012 SUBJECT : Local public transportation funding SUMMARY : Authorizes the Sacramento Area Council of Governments (SACOG) to create a combined farebox recovery ratio for the Sacramento County transit operators (Sacramento Regional Transit District, Elk Grove transit, Folsom transit, South County Transit (Galt), and Sacramento County transit services) for purposes of determining eligibility for receiving public transportation operating subsidies. Requires the Sacramento Regional Transit District to cover no less than 23% of operating costs from fares even if the transit operators serving Sacramento County are evaluated as a group. EXISTING LAW : 1)Known as the Transportation Development Act of 1971 (TDA), provides funding for transit and non-transit related purposes that comply with regional transportation plans. Serves to improve existing public transportation services and encourage regional transportation coordination. 2)Authorizes transportation planning agencies to administer transit funding made available under the TDA. Imposes certain financial requirements on transit operators making claims for transit funds, including requirements that fares collected by the operator cover a specified percentage of operating costs. Establishes different farebox requirements depending upon population. 3)Authorizes the San Francisco Bay Area Metropolitan Transportation Commission (for transit operations serving the San Francisco Bay Area Rapid Transit District area) and the San Diego Metropolitan Transit System to make a determination as to whether transit operators for specified service areas have met the requirements for claims for transit funds by evaluating the operators as a group rather than individually. FISCAL EFFECT : Unknown AB 432 Page 2 COMMENTS : The TDA provides funding for public transportation services. Funds are allocated to each county based on population, taxable sales and transit performance. TDA is funded through local sales tax revenues that are collected by the state and returned to the local governments and transit operators through the regional transportation planning agencies (RTPA). Generating $1.3 billion dollars in the 2010/11 fiscal year, TDA is a major funding source for public transportation in California. To be eligible to receive TDA funds, a transit operator must meet a specified ratio of fare revenues to operating cost, referred to as the farebox recovery ratio. The ratio varies according to different circumstances. For operators that were providing transit services in urbanized areas in 1979, their ratio is what they achieved that year. For operators who began providing service after 1979, their ratio is the average of the first three years of operation, with a minimum ratio of 20%. New operators in nonurbanized areas have five-years to determine their farebox recovery ratio. In addition, if an operator receives funds from a local transportation sales tax or some other local revenue sources, it can meet its farebox recovery ratio by combining fare revenues with that local support. According to the author, the TDA law establishes a formula for transit operators to measure how much of their funding comes from ticket and passes. This "farebox requirement" is often difficult for smaller and rural transit operators to meet. This state-imposed requirement limits the ability of local government to meet the transit needs of the diverse communities in Sacramento County. The author contends that Sacramento County is the only county in SACOG's regional transportation planning jurisdictional area with a population greater than 500,000. Under current law, RTPA's have discretion to adjust the farebox requirement to meet local needs for counties with a population less than 500,000. The purpose of this bill is to allow SACOG to make adjustment for rural and smaller operators that are within the larger urbanized Sacramento County thereby allowing transit operations for the cities of Elk Grove, Folsom, Galt and the County of Sacramento to remain eligible to receive TDA funding by creating a regional ratio of fare revenues to operating cost. The author indicates that these operators are finding it difficult to meet AB 432 Page 3 the farebox recovery minimum requirements and asserts that "the City of Galt, as a result of a modest population increase as determined by the recent census, has gone from being considered a rural community to an urban one. The result is a requirement that doubles the farebox recovery ratio requirement for South County Transit/Link, which serves Galt and portions of Sacramento County. This is difficult for Galt to meet because it has a transit service model based on the historic share of state/local revenues and farebox revenues." This bill would provide flexibility to SACOG in determining compliance with TDA farebox recovery requirements. For purposes of establishing a group farebox recovery ratio, this bill would allow the costs and revenues of the urban and suburban operators within Sacramento County to be combined. Additionally, as the bill requires that Sacramento Regional Transit District cover no less than 23% of the regional operating costs from fares, minimum performance requirements are established for Sacramento County operators to meet as a whole. Combining farebox recovery ratios as proposed by this bill are not new TDA allowances as grouping requirements are currently authorized for the San Francisco Bay Area Rapid Transit District service area and for the service area of the Metropolitan Transit System in San Diego. Writing is support of the bill as its sponsor, SACOG indicates that RTPAs have discretion to adjust the farebox requirement to meet the local needs for counties with a population less than 500,000 and that the bill would allow it to make adjustments for rural and smaller operators within Sacramento County with a population larger than that. SACOG cites the difficulties of the Cities of Elk Grove and Folsom in meeting farebox recovery ratio requirements in addition to Galt mentioned above. REGISTERED SUPPORT / OPPOSITION : Support Sacramento Area Council of Governments (sponsor) City of Elk Grove City of Galt City of Folsom County of Sacramento Opposition AB 432 Page 4 None on file Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093