BILL ANALYSIS                                                                                                                                                                                                    






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: SB 1037
          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:  hernandez
                                                         VERSION: 3/24/14
          Analysis by:  Eric Thronson                    FISCAL:  no
          Hearing date:  April 29, 2014



          SUBJECT:

          Measure R project cost estimates

          DESCRIPTION:

          This bill requires the Los Angeles County Metropolitan  
          Transportation Authority (LACMTA) to update its expenditure plan  
          and Long-Range Transportation Plan (LRTP) before presenting  
          another measure before the voters.

          ANALYSIS:

          In order to efficiently plan the state's near-term  
          transportation expenditures, existing law requires regional  
          transportation planning agencies to adopt, every odd-numbered  
          year, a five-year regional transportation improvement plan  
          containing all projects funded with state and federal dollars.   
          These fiscally constrained plans are derived from regional  
          transportation planning efforts identifying long-term  
          transportation needs based on forecasted population growth and  
          addressing mobility needs.  The long-term regional  
          transportation plans are not fiscally constrained, which means  
          they include many more projects than there is likely to be  
          resources available to build.  

          In the region overseen by the Southern California Association of  
          Governments (SCAG), which includes the counties of Imperial, Los  
          Angeles, Orange, Riverside, San Bernardino, and Ventura, each  
          county develops and adopts its own transportation plan and then  
          submits that plan to SCAG for consolidation.  The LACMTA adopted  
          its LRTP in 2009, which includes projects for which it has  
          identified funding as well as unfunded projects for future  
          consideration.  In developing its 2009 LRTP, LACMTA designated  
          and partnered with nine subregions within Los Angeles County  
          that identified their own transportation needs and priorities to  
          be included in the LRTP.





          SB 1037 (HERNANDEZ)                                    Page 2

                                                                       


          Existing law permits a county board of supervisors to create a  
          countywide transportation authority to plan and fund  
          transportation projects within the county.  These transportation  
          authorities may impose a local sales tax for transportation  
          purposes, if the tax ordinance is within statutory limits and  
          abides by restrictions on local taxes contained in the  
          California Constitution.  Counties that have chosen to tax  
          themselves for transportation purposes call themselves  
          "self-help" counties because they have approved measures to help  
          themselves address their own transportation problems.

          In 2008, the Legislature passed and the governor signed AB 2321  
          (Feuer), Chapter 302, which authorized LACMTA to place before  
          the voters an ordinance to increase the local transportation  
          sales tax for 30 years by 0.5% in Los Angeles County.  The  
          statute required LACMTA to adopt an expenditure plan prior to  
          submitting the ordinance to the voters, and identified 18  
          projects to be included in that expenditure plan and in the  
          LRTP.  AB 2321 required LACMTA to include in the expenditure  
          plan the anticipated completion date for each project.  In  
          November 2008, LACMTA placed the sales tax ordinance, referred  
          to as Measure R, on the ballot and 67% of the voters approved  
          the measure.

          At the time voters approved Measure R, LACMTA estimated that the  
          30-year program would raise about $40 billion.  Because of the  
          recession and general economic malaise that followed that vote,  
          LACMTA adjusted its revenue estimates downward and now only  
          expects the sales tax measure to generate about $36 billion.  To  
          address this funding shortfall, LACMTA began a search for  
          additional revenue or funding mechanisms to meet its  
          transportation needs.  In 2012, the Legislature passed and the  
          governor signed AB 1446 (Feuer), Chapter 806, which authorized  
          LACMTA to place before the voters an ordinance to either  
          eliminate or extend Measure R's 30-year sunset date.  The  
          measure, put before the voters in November 2012, failed to  
          achieve the two-thirds majority necessary for passage.

           This bill  requires LACMTA, prior to submitting another Measure R  
          extension to the voters, to do the following:

          1.Amend its expenditure plan and, for the 18 projects included  
            in the original Measure R legislation, update the following  
            information:

                 The identification or the specific program or source of  




          SB 1037 (HERNANDEZ)                                    Page 3

                                                                       


               non-Measure R funds.
                 The identification of the accelerated cost, if  
               applicable, for each project and program.
                 The expected completion dates for each project and  
               program.

          1.Include in a revised and updated LRTP both the Measure R  
            expenditure plan and all capital projects adopted and  
            submitted to LACMTA by each of the nine Los Angeles County  
            subregions.
          
          COMMENTS:

           1.Purpose  .  According to the author, LACMTA's process for  
            determining cost estimates for projects in its expenditure  
            plans is internal, and the agency may or may not solicit  
            estimates from outside sources.  Some have criticized this  
            process and suggest it results in out-of-date figures and cost  
            projections.  Because of the uncertainty in how LACMTA  
            determines its estimates, there is general unease between  
            various subregions in Los Angeles County, and some worry that  
            one project is being treated more favorably than another  
            behind the scenes.  This bill attempts to bypass efforts by  
            individual project sponsors to increase their own share of  
            funding by instituting a transparent method for determining  
            cost estimates in which subregions submit their own updated  
            estimates to LACMTA.

           2.So what does this bill do  ?  Given the problem identified by  
            the author - the potentially questionable cost estimates in  
            the expenditure plan - it is unclear how this bill provides  
            resolution.  It appears this bill either (1) puts into statute  
            actions LACMTA already takes, such as including the expected  
            completion dates for each project in the expenditure plan, or  
            (2) requires information from LACMTA that may be difficult or  
            impossible to obtain, such as the specific source of  
            non-Measure R funds necessary for completion of each of the  
            projects.  While the bill requires LACMTA to update  
            accelerated costs, if any, it does not require updated cost  
            estimates for all projects.  If the author wishes to resolve  
            the stated problem, then the bill should be amended to require  
            LACMTA to update the cost estimates of every project in the  
            expenditure plan through a transparent process.  The bill may  
            also be amended to remove elements of the bill that do not  
            address the problem.  In light of this, the committee may wish  
            to amend the bill to reflect a solution to the stated problem  




          SB 1037 (HERNANDEZ)                                    Page 4

                                                                       


            of unclear cost estimates for all projects in the expenditure  
            plan.

           3.Updating the LRTP  .  As stated earlier, LACMTA includes both  
            projects with identified funding and unfunded projects in its  
            LRTP.  This bill requires LACMTA to include in a revised and  
            updated LRTP all capital projects adopted and submitted to  
            LACMTA by each of the nine subregions.  It is unclear,  
            however, whether including these projects presupposes that  
            each would therefore become a funded project.  The committee  
            may wish to amend the bill to clarify that including a project  
            in the LRTP does not presuppose that the project will be  
            funded at any particular point in the future.

           4.Previous legislation  .  SB 314 (Murray), Chapter 785, Statutes  
            of 2003, established a list of projects that LACMTA was to  
            construct with proceeds from a voter-approved 6.5 year,  
            -percent sales tax.  AB 2321 (Feuer), Chapter 302, Statutes  
            of 2008, superseded SB 314.

           5.Double-referral  .  The Rules Committee referred this bill to  
            this committee and to the Governance and Finance Committee.  
          
          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,                                             April 23,  
          2014.)

               SUPPORT:  None received.

               OPPOSED:  None received.