BILL ANALYSIS Ó
AB 1164
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Date of Hearing: September 8, 2011
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 1164 (Gordon) - As Amended: September 1, 2011
SUBJECT : Transportation loans: federal funds
SUMMARY : Authorizes the California Department of Transportation
(Caltrans) to loan federal funds to accelerate Proposition 1B
projects, under certain conditions and for a limited time.
Specifically, this bill :
1)Authorizes Caltrans, under certain conditions, to loan federal
funds in the State Highway Account (SHA) to accelerate
Proposition 1B projects, until September 30, 2015.
2)Provides that loans of federal funds may be made only upon
approval of the Director of Finance and the California
Transportation Commission and only if doing so will not impact
Caltrans' ability to fund programmed projects.
3)Limits the aggregate amount of the loans that may be made to
no more than the amount of unsold Proposition 1B bonds and
requires the loans to be repaid to the SHA within three years.
4)Provides that loans may be made only under circumstances where
federal funds might otherwise be lost to the state and
prohibits Caltrans from making a loan of local subvention
funds except at the request of a specific regional
transportation planning agency to which the funds had been
allocated previously.
5)Appropriates repaid funds to Caltrans for use in the local
assistance program, in a manner in which the federal funds
would have otherwise been used, or for use on projects in the
State Highway Operations and Protection Program.
6)Requires Caltrans to report to the Joint Legislative Budget
Committee within 45 days after the end of each fiscal year in
which the loan authority has been used.
7)Provides that these provisions will become inoperative when
all loans are repaid and repeals these provisions on January
AB 1164
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1, 2019.
8)Makes technical, conforming changes to related provisions of
law.
EXISTING LAW :
1)The Highway Safety, Traffic Reduction, Air Quality, and Port
Security Bond Act of 2006, (approved by the voters as
Proposition 1B), authorizes $19.925 billion in transportation
infrastructure bonds in over a dozen individual programs.
2)Authorizes Caltrans, with the approval of the Director of
Finance, to loan funds from the federal American Recovery and
Reinvestment Act of 2009 (ARRA) to fund Proposition 1B bond
projects that are ready for construction but for which bond
funds are unavailable.
FISCAL EFFECT : According to the Senate Appropriations Committee
analysis, minor administrative costs to Caltrans, the Department
of Finance, and the California Transportation Commission. The
bill could prevent the loss of federal funds.
COMMENTS : According to Caltrans, in the midst of a severe
economic downturn in early 2009, Congress enacted ARRA to, among
other things, provide states with a substantial infusion of
federal funding for transportation projects. ARRA required that
these funds be used on projects that could break ground
immediately (in most cases within 120 days). Caltrans and local
and regional agencies were successful in utilizing all of the
federal funds awarded to California and, in the process, were
able to accelerate construction of many projects. The side
effect, however, was that this major short-term infusion of
funding cleared out most of the projects that Caltrans (and many
agencies) had ready to go to construction upon funding becoming
available (often known as "shelf" projects). Consequently, the
current list of shelf projects is relatively short.
This shortage of shelf projects could pose a significant
challenge to Caltrans in utilizing all of the regular (non-ARRA)
federal funding that California receives. Under federal law,
all funds received in a federal fiscal year (FFY) have to be
obligated to projects prior to the end of the FFY. Any funds
not assigned to projects within that time frame are forfeited
and can be claimed by other states. However, funds cannot be
obligated for construction until the project is ready for bid.
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Caltrans is working to accelerate delivery of projects to ensure
that it can use all available funding. However, if any major
projects scheduled for delivery in the near future fail to meet
their targets, there is a significant risk that the department
may fall short of being able to use all available federal funds
in FFY 2011 or FFY 2012. In that case, the state would forfeit
these funds to other states.
At the same time that Caltrans is facing challenges in
obligating all of its federal funds, the state is having
difficulty in moving forward with Proposition 1B projects. By
December of 2011, the state is expected to have at least $1.3
billion in Proposition 1B projects ready to go to construction.
However, due to economic conditions and the state's fiscal
situation, California may be unable to generate adequate bond
funding to fully fund these projects and allow them to proceed.
This bill would enable a significant number of these projects to
proceed with loans of federal dollars authorized by this bill.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093