BILL ANALYSIS Ó
SB 517
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Date of Hearing: August 17, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 517 (Lowenthal) - As Amended: June 30, 2011
Policy Committee:
TransportationVote:9-3
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill restructures the governing board of the High-Speed
Rail Authority (HSRA) and establishes conflict of interest
restrictions on board members and authority employees and
contractors. Specifically, this bill:
1)Places the HSRA within the Business, Transportation, and
Housing (BT&H) Agency and requires the BT&H Secretary to
propose the authority's annual budget in consultation with the
authority.
2)Makes the following changes to the authority board
composition:
a) Expands the board from nine to 10 members by adding the
BT&H Secretary as a non-voting member.
b) Requires the governor's five appointees to be confirmed
by the Senate and requires each to have a specified
expertise: engineering, economics, environmental
protection, project financing, and an attorney,
respectively.
c) Requires two of the four Senate and Assembly appointees
to represent organized labor.
d) Provides the terms of all current board members expire
on January 1, 2012, and establishes one- to four-year
terms, as specified, for each of the new appointees.
3)Prohibits anyone holding elected or appointed office from
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becoming a board member.
4)Prohibits, from becoming a board member or an employee of the
authority, anyone who received a substantial portion of their
income in the previous two years from a firm either under
contract with the HSRA or that supplies or builds rolling
stock or other equipment particular to high-speed rail
systems, and prohibits former board members from being
employed by such firms for two years after leaving the board.
5)Prohibits a board member or employee from participating in
decisions in which the member, their spouse, minor child, or
partner has had a financial interest within two years of the
member's or employee's appointment.
6)Requires the authority's the executive director to be
confirmed by the Senate, and requires the executive director's
employment agreement not be executed prior to Senate
confirmation.
FISCAL EFFECT
1)Given the size and complexity of the significant issues
involved with the high-speed rail project, BT&H would likely
require at least a deputy secretary or assistant deputy
secretary position at an annual cost of around $150,000 (bond
funds).
2)By adding another layer of bureaucracy between the authority
and the governor and Legislature, HSRA believes the bill would
create inefficiencies and resulting staffing pressures and
delays in developing policies, submitting budgetary documents,
and approving reports. To the extent this additional
coordination resulting in staffing demands equivalent to one
position, annual costs to the HSRA would be around $80,000
(bond funds).
COMMENTS
1)Purpose . The HSRA was established by SB 1420 (Kopp)/Chapter
796 of 1996. Its chief responsibility at that time was to plan
for a high-speed train network. Today, the authority's
responsibility is to implement the plan. The initial phase of
the project is currently estimated to cost $43 billion, though
recent estimates have increased this cost by several billion
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dollars. Voters approved $9 billion in state general
obligation bonds for the project, and the federal government
has approved an additional $3 billion.
The author introduced SB 517 to incorporate the Authority into
the structure of state government, ensure there is relevant
expertise on the board to provide informed policy direction to
the staff, and to reduce the likelihood of conflicts of
interest by imposing incompatible office restrictions and pre-
and post-employment restrictions.
2)Outstanding Issues . In its analysis of this bill, the Assembly
Committee on Transportation raised the following concerns,
which have not been addressed:
a) Though the HSRA would be placed under the BT&H Agency,
the executive director would continue to be appointed by
the authority, which the analysis argued was incongruous
with the enhanced oversight being provided by the agency
secretary. The analysis suggested the governor appoint the
executive director.
b) The abrupt elimination of the entire board, and
replacement with all new appointees could disrupt the
project and cause delays.
c) Reforming, though essentially maintaining the structure
of the authority board, when the Legislative Analyst's
Office (LAO) asserts in its recent report, High Speed Rail
at the Critical Junction, "Ýa]n autonomous state operation
does not seem to be a very good fit with the critical set
of tasks now required to move forward with a high-speed
rail project." The LAO suggests ceding day-to-day and
strategic long-term project management decisions to
Caltrans or a new state department would provide more
accountability to the Administration and the Legislature.
3)Related Legislation . AB 145 (Galgiani), pending in Senate
Appropriation, also moves the authority under the BT&H Agency.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081