BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  AB 1446|
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                                 THIRD READING


          Bill No:  AB 1446
          Author:   Feuer (D), et al.
          Amended:  8/7/12 in Senate
          Vote:     21

           
           SENATE TRANSPORTATION & HOUSING COMM.  :  7-2, 6/26/12
          AYES:  DeSaulnier, Harman, Kehoe, Lowenthal, Pavley, Rubio, 
            Simitian
          NOES:  Gaines, Wyland

           SENATE GOVERNANCE & FINANCE COMMITTEE  :  5-2, 7/3/12
          AYES:  Wolk, DeSaulnier, Hernandez, Kehoe, Liu
          NOES:  Fuller, La Malfa
          NO VOTE RECORDED:  Dutton, Yee

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8
           
          ASSEMBLY FLOOR  :  54-17, 5/21/12 - See last page for vote


           SUBJECT  :    Sales and use tax:  Los Angeles County

           SOURCE  :     Author


           DIGEST  :    This bill authorizes the Los Angeles County 
          Metropolitan Transportation Authority (MTA) to place before 
          the voters an ordinance to extend Los Angeles Measure R 
          sales tax indefinitely.

           ANALYSIS  :    AB 2321 (Feuer), Chapter 302, Statutes of 
          2008, authorized MTA to place before the voters an 
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          ordinance to increase the local transportation sales tax 
          for 30 years by 0.5%.  The statute also requires MTA to 
          allocate 20% of the sales tax revenue for bus operations 
          and 5% for rail operations, authorizes MTA to incur bonded 
          indebtedness, and requires MTA to adopt an expenditure plan 
          prior to submitting the ordinance to the voters.  Existing 
          law identifies 18 projects that MTA must include in the 
          expenditure plan and in its Long Range Transportation Plan. 
           Although state law identifies the minimum level of funding 
          for each project, MTA is allowed to increase funds to a 
          project if any funds are available after debt service 
          payments.  The expenditure plan must also anticipate the 
          completion date for each project.  MTA placed a sales tax 
          ordinance, referred to as Measure R, on the November 2008 
          ballot.  67% of the voters approved the sales tax increase. 


          This bill:

          1. Authorizes MTA to place before the voters a permanent 
             0.5% sales tax and requires that 2/3 of the voters vote 
             in favor for it to be adopted. 

          2. Requires the proposing ordinance be accompanied by a new 
             expenditure plan for the net revenues derived from the 
             tax. 

          3. Requires this new expenditure plan identify the years in 
             which the MTA anticipates net revenues derived from the 
             tax will be available to each project or program in the 
             new expenditure plan.

          4. Authorizes MTA to incur bonded indebtedness payable from 
             the revenue from the new sales tax.  

          5. Requires proceeds from the tax authorized by this bill, 
             including proceeds from bonds issued, after payment of 
             the bonded indebtedness, be used to accelerate the 
             completion of the projects and programs identified in AB 
             2321, and for the expenditure plan adopted by the MTA 
             board on July 24, 2008.

          6. Continues the set aside of 20% of sales tax revenue for 
             bus operations in Los Angeles County and 5% for rail 

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             transit operations.

          7. Requires MTA, upon completion of the specified projects 
             and the payment of outstanding debt service, to spend 
             unencumbered sales tax revenue on other projects and 
             programs in its Long Range Transportation Plan or its 
             successor plans.

          8. Requires MTA, to the extent that it deems it necessary 
             to accelerate the completion of a project or program in 
             a new expenditure plan adopted pursuant to this bill, to 
             expend funds derived from the sales tax authorized by 
             Measure R according to the schedule described in the new 
             expenditure plan adopted pursuant to this section.  
             Requires MTA make this determination by a majority vote 
             of the MTA board.

           Comments
           
           Purpose  .  67% of Los Angeles County voters authorized the 
          imposition of a 30 year, 1/2% local transportation sales 
          tax in 2008.  The decline in the state and national 
          economy, the diminishment of state and federal funding, the 
          increasing need to rely upon various debt financing 
          strategies, and unanticipated cost increases have delayed 
          project implementation.  According to the author's office, 
          this bill provides the voters an opportunity to endorse the 
          Measure R program by asking them to approve converting the 
          existing tax to a permanent tax.

           Background
           
          When Measure R was adopted, MTA estimated that the 30-year 
          program was about $40 billion.  Because of the recession 
          and general economic malaise, MTA is now estimating that 
          Measure R will generate about $36 billion by 2038.  When 
          Los Angeles Mayor Antonio Villaraigosa proposed to 
          accelerate the construction of all 12 rail transit projects 
          so that they would be completed in 10 years and not the 
          usual 30 years, MTA began a search for additional revenue 
          or funding mechanisms.  This bill endeavors to solve the 
          problem of insufficient revenue by removing the sunset on 
          Measure R.  Should the voters approve a new sales tax 
          without a sunset, MTA may be able to issue additional debt 

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          and take advantage of the federal credit assistance program 
          included in The Transportation Infrastructure Finance and 
          Innovation Act.  

           Foothill Extension Construction Authority (Authority) 
          amendment  .  The Authority contends that MTA's current 
          adopted expenditure plan incorrectly characterizes Metro 
          Gold Line Foothill Extension.  AB 2321 describes the 
          extension from east Pasadena to Claremont.  The expenditure 
          plan provides $735 million from east Pasadena to Azusa.  
          The Authority believes the termination of the project is 
          defined as Claremont and that should be reflected in the 
          expenditure plan.  The Authority proposes to amend this 
          bill to allow any sponsor of a project to submit its 
          expenditure plan for its project to MTA.  The expenditure 
          plans will include the projects' cost and construction 
          schedule.  The amendment requires MTA to include the 
          expenditure plans submitted by project sponsors in its 
          countywide expenditure plan without modification. 

          MTA's expenditure plan endeavors to harmonize competing 
          demands among projects and the revenue generated by the 
          sales tax.  It appears the amendment would allow the 
          Authority and other project sponsors to develop their 
          project expenditure plans.  The amendment requires MTA to 
          incorporate these plans into the countywide expenditure 
          plan.  It is unclear exactly how the projects would be 
          harmonized with the limited sales tax revenues.  It 
          essentially removes MTA from being the referee among 
          competing projects and appears to balkanize the project 
          development process in Los Angeles County.

           Previous legislation  .  SB 314 (Murray), Chapter 785, 
          Statutes of 2003, established a list of projects that MTA 
          was to construct with proceeds from a voter approved six 
          and one-half years half percent sales tax.  AB 2321 
          superseded SB 314.

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

           SUPPORT  :   (Verified  8/13/12)

          American Council of Engineering Companies

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          American Jewish Committee
          Associated General Contractor
          California Chamber of Commerce
          California Labor Federation
          Los Angeles Area Chamber of Commerce
          Los Angeles Business Council
          Los Angeles County Federation of Labor
          Move LA
          Sierra Club
          South Bay Cities Council of Governments
          Southern California Contractors Association
          State Building and Construction Trades Council of 
          California

           OPPOSITION  :    (Verified  8/13/12)

          California Taxpayers Association 
          City of Cerritos
          Howard Jarvis Taxpayers Association
          Metro Gold Line Foothill Extension Construction Authority


           ASSEMBLY FLOOR  :  54-17, 5/21/12
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, 
            Block, Blumenfield, Bonilla, Bradford, Brownley, 
            Buchanan, Butler, Charles Calderon, Campos, Carter, 
            Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer, Fong, 
            Fuentes, Furutani, Galgiani, Gatto, Gordon, Gorell, Hall, 
            Hayashi, Hill, Huber, Hueso, Huffman, Lara, Bonnie 
            Lowenthal, Ma, Mitchell, Monning, Nestande, Norby, Pan, 
            V. Manuel Pérez, Portantino, Skinner, Smyth, Solorio, 
            Swanson, Torres, Wieckowski, Williams, Yamada, John A. 
            Pérez
          NOES:  Conway, Donnelly, Beth Gaines, Garrick, Grove, 
            Halderman, Harkey, Jeffries, Jones, Knight, Logue, 
            Mansoor, Morrell, Nielsen, Olsen, Silva, Wagner
          NO VOTE RECORDED:  Bill Berryhill, Cook, Fletcher, Hagman, 
            Roger Hernández, Mendoza, Miller, Perea, Valadao


          JJA:k  8/13/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE


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