BILL ANALYSIS                                                                                                                                                                                                    Ó






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO:  ab 2731
          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:   perea
                                                         VERSION:  8/28/14
          Analysis by:  Eric Thronson                    FISCAL:   no
          Hearing date:  August 29, 2014                 URGENCY:  YES



          SUBJECT:

          Fresno County maintenance of effort requirement

          DESCRIPTION:

          This bill clarifies the action that Fresno County must take in  
          order to defer the county's 2010 transportation maintenance of  
          effort payment until 2020.  

          ANALYSIS:

          Should the state collect a sales tax on gasoline, existing law  
          divides the distribution of the revenues from this tax between  
          various entities and purposes.  For example, existing law  
          requires the State Controller to apportion by formula 40 percent  
          of these revenues to the state's cities and counties for  
          transportation purposes.  In order to be eligible to receive  
          these state revenues, however, cities and counties must maintain  
          their existing commitment of local funds for street, road, and  
          highway purposes.  This requirement is often referred to as a  
          maintenance of effort (MOE) requirement.

          Due to the economic downturn at the time, Fresno County was  
          unable to meet its MOE requirement in fiscal year 2009-2010.  To  
          remedy this situation, Senate Bill 524 (Cogdill), Chapter 716,  
          Statutes of 2010, deferred until 2015 Fresno County's $5.5  
          million MOE payment for 2010 to its Local Road Fund.  This  
          statute enabled Fresno County to receive its portion of revenues  
          from the sales tax on gasoline without spending its required  
          local funding.

          In 2010, the Legislature passed and the governor signed Assembly  
          Bill 6 (Committee on Budget), Chapter 11, Statutes of 2010 in  
          the 8th extraordinary session, which became known as the "Gas  
          Tax Swap."  The gas tax swap eliminated, effective July 1, 2010,  
          the sales tax on gasoline and replaced it with an increase in  
          the gasoline excise tax designed to generate an equivalent  




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          amount of revenue.  Among other things, the gas tax swap  
          specifically stated that these new excise tax revenues are not  
          subject to the requirements placed on revenues generated from  
          the sales tax on gasoline.  

          In June of this year, the Legislature passed and the governor  
          signed Senate Bill 853 (Committee on Budget and Fiscal Review),  
          Chapter 27, Statutes of 2014.  In part, this budget trailer bill  
          delayed until January 30, 2020, Fresno County's required MOE  
          payment as long as the county continues to provide medical  
          services to indigent individuals and undocumented individuals  
          consistent with the eligibility and benefit provisions in effect  
          in the 2013-14 fiscal year.  


           This bill  amends SB 853 to clarify the action Fresno County must  
          take in order to defer the 2010 MOE payment until 2020.   
          Specifically, this bill requires Fresno County to expend no less  
          than $5.5 million to provide specialty medical services in  
          conjunction with federally qualified health clinics, or other  
          federally funded clinics, to indigent individuals, including but  
          not limited to, those individuals who are ineligible for  
          full-scope Medi-Cal.  If Fresno County spends the $5.5 million  
          on healthcare services, it would then have until 2020 to repay  
          the $5.5 million to its Local Road Fund.

          In addition, this bill is an urgency measure which means it  
          takes effect immediately once the governor signs it into law.
          
          COMMENTS:

           1.Purpose  .  According to proponents of the measure, this bill is  
            necessary because some Fresno County supervisors are  
            interpreting SB 853 to mean that the county must provide  
            identical levels of care to that provided in 2013-14.  The  
            state recently changed the formula for reimbursing counties  
            for medical services provided to indigent patients.  This  
            funding change has resulted in significant budget pressure in  
            Fresno County, and some county supervisors have suggested that  
            they are unwilling to spend at the same level as 2013-14 for  
            indigent healthcare.  

            In a letter to the Assembly Daily Journal clarifying the  
            intent of SB 853, Assemblymember Perea states that Fresno  
            County is not expected to bear medical costs in excess of the  
            $5.5 million made available by delaying the MOE payment.  Mr.  




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            Perea's letter also states that the language in SB 853 is not  
            intended to jeopardize the county's fiscal health.  Once the  
            $5.5 million is spent on indigent health care, Fresno County  
            should be considered in compliance with state law.

            This bill explicitly defines the intent described in  
            Assemblymember Perea's letter and makes clear Fresno County's  
            obligation necessary to receive an additional five-year  
            deferment of its 2009-10 MOE payment.
          
           2.What does this bill accomplish  ?  As stated earlier, this bill  
            allows Fresno County to defer a $5.5 payment to its Local Road  
            Fund if the county spends at least that amount on indigent  
            health care.  Either way, Fresno County will spend $5.5  
            million.  It appears that the original intent of SB 853 was to  
            grant Fresno County some relief from a mandatory payment only  
            if the county chooses to spend that money instead on health  
            care costs.  This bill, however, creates little incentive for  
            Fresno County to spend the money on healthcare, as doing so in  
            the coming year only means it will have to pay the same amount  
            again within the next five years to its Local Road Fund.  If  
            the county instead chooses to repay the Local Road Fund this  
            year, it will be out from under that future obligation.  It  
            seems unclear whether this bill, or the original language in  
            SB 853, can accomplish its intended aim.
          
           3.29.10 hearing  .  This bill passed out of the Senate Insurance  
            Committee on June 26, 2014.  The author amended this bill on  
            the Senate Floor on August 18 and then on August 28, 2014,  
            replacing the existing language related to insurance reporting  
            requirements with the bill's current contents.  Because this  
            is a new bill, the Senate Rules Committee referred this bill  
            back to this committee for a hearing under Senate Rule 29.10.   
            At today's hearing, the committee may, with a majority vote,  
            (1) hold the bill; or (2) return the bill as approved by the  
            committee to the Senate Floor.
          
          Assembly Votes are not relevant.

          POSITIONS:  (Communicated to the committee before noon on  
          Thursday,                                         August 28,  
          2014.)

               SUPPORT:  None received.

               OPPOSED:  None received.




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