BILL ANALYSIS Ó AB 1446 Page 1 Date of Hearing: May 9, 2012 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 1446 (Feuer) - As Amended: April 26, 2012 Policy Committee: Local GovernmentVote:7-1 Transportation 11-1 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill allows the Los Angeles County Metropolitan Transportation Authority (MTA), subject to voter approval, to extend the existing 0.5% transactions and use tax for specified purposes. Specifically, this bill: 1)Allows MTA to extend an existing transactions and use tax approved by voters in 2008 indefinitely if approved by a majority of the entire membership of MTA and two-thirds of the voters. 2)Allows MTA to incur bonded indebtedness payable from the proceeds of the tax extension, and specifies that proceeds from the bonds must be used to accelerate completion of capital projects and capital programs listed in existing law for MTA. 3)Requires, upon completion of the projects identified in 2) above, any remaining funds to be deposited in MTA's sales tax revenue fund for projects and programs contained in the expenditure plan or MTA's Long Range Transportation Plan (LRTP). FISCAL EFFECT 1)Increased revenues to the MTA if the tax is approved again by MTA and the voters. The amount of new revenues should be roughly similar to those raise by Measure R, the original sales tax, which is expected to raise $40 billion over 30 years. AB 1446 Page 2 2)Negligible direct state fiscal impact. COMMENTS 1)Purpose. According to the author, this bill is intended to give Los Angeles County voters the opportunity to extend the duration of a local source of funding for an ambitious program of transportation infrastructure projects that will transform the Los Angeles region. The author states anticipated new revenue can be used to pay for new bonds to build projects in MTA's transportation plan sooner. The author notes efforts are underway to obtain federal loans secured by Measure R revenues to expedite construction of Measure R projects. While these efforts may yet succeed, the author argues additional Measure R revenues will be necessary to accelerate Measure R projects to the maximum extent. The author notes the bill does not change the project list already contained in current law, and that all Measure R rail, highway, bus and other projects will be accelerated at the same rate, without prioritizing any one category. 2)Background . California's transactions and use tax law was adopted in 1969 to authorize the adoption of local add-on rates to the combined state and local sales tax rate. Over the years, the law was amended to provide specific authorizations for various particular cities, counties, special districts and countywide authorities. 3)Previous legislation. a) SB 314 (Murray), Chapter 785, Statutes of 2003, enacted provisions that authorized MTA to impose a 0.5% sales tax, for no more than six and one-half years, for specific transportation projects and programs. The tax was never imposed. b) AB 2321 (Feuer), Chapter 302, Statutes of 2008, authorized MTA to levy a -cent sales tax for 30 years, subject to voter approval, and required the MTA to include specified projects and programs in its long range transportation plan. In November of 2008, more than 67% of Los Angeles County voters approved this tax in a ballot measure known as Measure R. AB 1446 Page 3 4)Support. Supporters point to the Los Angeles Economic Development Council estimate made in 2008 that Measure R projects alone will create 166,000 jobs. They argue this bill will help to expedite the building of transportation projects in Los Angeles County. 5)Opposition arguments . The Howard Jarvis Taxpayers Association has concerns about the bill's intent to use the revenue stream for the purpose of incurring additional debt and believes that the risks of getting money upfront to complete projects will far outweigh the rewards. Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081