BILL ANALYSIS                                                                                                                                                                                                    


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                                    THIRD READING

          Bill No:  SB 1037
          Author:   Hernandez (D)
          Amended:  5/1/14
          Vote:     21

          AYES:  DeSaulnier, Gaines, Beall, Cannella, Galgiani, Hueso,  
            Lara, Liu, Pavley, Roth, Wyland

           SENATE GOVERNANCE & FINANCE COMMITTEE  :  6-1, 5/7/14
          AYES:  Wolk, Knight, Beall, DeSaulnier, Hernandez, Liu
          NOES:  Walters

           SUBJECT  :    Measure R project cost estimates

           SOURCE  :     Author

           DIGEST  :    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  


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          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.

          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  



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          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  

                 The most recent cost estimates for each project and  
               program identified in the plan.

                 The identification of the accelerated cost, if  
               applicable, for each project and program.

                 The schedule for which MTA anticipates funds will be  
               available for each project and program.

                 The expected completion dates for each project and  

          1.Requires MTA develop a transparent process to determine the  
            most recent cost estimates for each project and program in the  
            amended plan.

          2.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.  Specifies inclusion of a project or program in  
            the LRTP is not a guarantee that the project or program shall  
            receive future funding.

          According to the author, LACMTA's process for determining cost  
          estimates for projects in its expenditure plans is internal, and  



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          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  

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

          JA:nl  5/8/14   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  NONE RECEIVED

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