BILL ANALYSIS                                                                                                                                                                                                    ”



                                                                  SB 1037
                                                                  Page  1

          Date of Hearing:  June 18, 2014

                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
                           K.H. "Katcho" Achadjian, Chair
                   SB 1037 (HernŠndez) - As Amended:  June 9, 2014

           SENATE VOTE  :  31-2
           
          SUBJECT  :  Los Angeles County Metropolitan Transportation  
          Authority: transactions and use tax.

           SUMMARY  :  Requires the Los Angeles County Metropolitan  
          Transportation Authority (MTA) to update its expenditure plan  
          and Long-Range Transportation Plan (LRTP) before placing another  
          transactions and use tax measure before the voters.    
          Specifically,  this bill  :   

          1)Requires MTA, before placing a transactions and use tax on the  
            ballot, to update and amend the expenditure plan with the  
            following information:

             a)   Most recent cost estimates for each project and program  
               identified in the amended expenditure plan;

             b)   Identification of the accelerated cost, if applicable,  
               for each project and program in the amended expenditure  
               plan;

             c)   Schedule that MTA anticipates funds will be available  
               for each project and program; and,

             d)   Expected completion dates for each project and program.   


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

          3)Requires the amended expenditure plan to be included in the  
            revised and updated LRTP before placing a transactions and use  
            tax on the ballot.

          4)Requires the updated LRTP to include capital projects and  
            capital programs adopted by each subregion that are submitted  
            to MTA for inclusion in the updated LRTP.  








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          5)Provides that inclusion of a capital project or program in the  
            LRTP is not a commitment or guarantee that the project or  
            program shall receive any future funding.  

          6)Requires MTA, at least 30 days before submitting the ordinance  
            to the voters, to post the amended expenditure plan and LRTP  
            on their website in a prominent manner.  

           EXISTING LAW  :

          1)Authorizes MTA to impose a transactions and use tax at a rate  
            of 0.5% that is applicable in the incorporated and  
            unincorporated areas of the county.  


          2)Provides, for purposes of the imposition of the transactions  
            and use tax, the following requirements:

             a)   The tax shall be proposed in a transactions and use tax  
               ordinance that conforms with specified laws and that is  
               approved by a majority of the entire membership of the MTA;  
               and,

             b)   The tax may be imposed only if the proposing ordinance  
               is approved by two-thirds of the voters in a specified  
               manner.

          3)Requires MTA, prior to submitting the ordinance to the voters,  
            to adopt and amend the expenditure plan with updates of the  
            estimated total cost for each project or program, the schedule  
            during which MTA anticipates funds will be available for each  
            project or program, and the expected completion dates for each  
            project or program.  

          4)Allows MTA to incur bonded indebtedness payable from the  
            proceeds of the tax extension pursuant to MTA's bond issuance  
            provisions in existing law, and any successor act, and  
            specifies that proceeds from the bonds must be used to  
            accelerate the completion of the capital projects and capital  
            programs listed in existing law for MTA, and for operations as  
            specified.  

          5)Requires, upon completion of the projects that any funds  
            remaining from the bonds and any funds remaining from the  








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            proceeds of the tax, after payment of the bonded indebtedness,  
            must be deposited in MTA's sales tax revenue fund to be used  
            for the purposes of projects and programs contained in the  
            expenditure plan, LRTP, or its successor plans, and for  
            operation costs as specified.  

           FISCAL EFFECT  :  None

           COMMENTS  :   

           1)Background  .  SB 314 (Murray), Chapter 785, Statutes of 2003,  
            originally enacted provisions that authorized MTA to impose a  
            0.5% transactions and use tax, not subject to the 2% cap for  
            no more than six and one-half years, for specific  
            transportation projects and programs.  The authority to put a  
            tax measure before the voters was never used.  AB 2321  
            (Feuer), Chapter 302, Statutes of 2008, modified those  
            provisions to allow MTA to impose a transactions and use tax  
            for 30 years.  AB 2321 additionally required MTA to adopt an  
            expenditure plan prior to submitting a transactions and use  
            tax to the voters and to include specified projects and  
            programs in its LRTP.  In November of 2008, more than 67% of  
            Los Angeles County voters approved this tax in a ballot  
            measure known as Measure R.  

            Most recently, AB 1446 (Feuer), Chapter 806, Statutes of 2012,  
            authorized MTA, subject to voter approval, to extend the  
            existing transactions and use tax for an unlimited amount of  
            time, allowing MTA to determine if a sunset date is necessary.  
             AB 1446 also required MTA to update its expenditure plan  
            prior to submitting the tax measure to the voters. 

           2)Purpose of this bill  .  This bill builds on existing  
            requirements that MTA must comply with before going to the  
            voters with an additional transactions and use tax measure.   
            This bill requires MTA, before placing a transactions and use  
            tax on the ballot, to update and amend the expenditure plan  
            with the following: (1) cost estimates for each project and  
            program, using a transparent process; (2) accelerated costs of  
            each of the plan's projects and programs, if applicable; (3) a  
            schedule for when MTA anticipates funds will be available for  
            each project and program; and, (4) expected completion dates  
            for each project and program.  Additionally, this bill  
            requires the revised and updated LRTP to include the  
            expenditure plan before placing the measure on the ballot.   








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            The LRTP also must list capital projects and programs adopted  
            by each subregion that are submitted to MTA for inclusion.   
            The bill notes that including cost estimates does not mean the  
            project is guaranteed funding. Under this bill, MTA would have  
            to post the amended expenditure plan and LRTP on its website  
            at least 
          30 days prior to submitting the tax measure.  This bill is  
            author-sponsored.  

           3)Author's statement  .  According to the author, "Los Angeles  
            County voters are subjected to some of the worst traffic in  
            the nation, and they are willing to pass taxes upon themselves  
            to help address the problem.  [This bill] will give voters  
            comprehensive information on where their money will go; how  
            much and to what project; any outstanding funding needs; and  
            most importantly, will solicit current figures on exact  
            project outlays.  This information will be required to go to  
            the voters before any vote to increase or extend another  
            transportation tax.

            "[MTA's] current internal system of coming up with project  
            costs has at times been criticized, and [this bill] attempts  
            to address the situation, while precluding balkanization of  
            transportation projects, by requiring regional collaboration.   


            "Independent of [this bill], [MTA] has already begun the  
            process of reaching out to the various COGs [council of  
            governments] to get their updated transportation priority  
            list, granting each COG $500,000 to assist in their updating  
            and planning effort.  Due in large part to this effort, the  
            author feels it is the right time to update the expenditure  
            plan in a comprehensive and thoughtful manner, ahead of the  
            likely vote by the [MTA] Board to put a new Measure R vote on  
            the 2016 ballot.  If [this bill] is signed into law, it will  
            provide voters with a clear picture of how much projects cost  
            in current year costs, where exactly their funds will be  
            going, and how much is needed (if any) to complete a project.

            "Additionally, [MTA] would be required to include the updated  
            numbers in its expenditure plan prior to placing any new  
            Measure R update on the ballot.  [MTA] would also need to  
            break down its numbers more thoroughly than in the past, by  
            specifying the source of any non-Measure R funds; the cost of  
            accelerating a project; and, the schedule which [MTA] expects  








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            funds to be available for each project and program.  [This  
            bill] also requires [MTA] to update its LRTP with the revised  
            expenditure plan."  

           4)Arguments in support  .  None on file.  

           5)Arguments in opposition  .  None on file.   

           6)Double-referral  .  This bill is double-referred to the  
            Transportation Committee.

           




          REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          None on file
           
            Opposition 
           
          None on file

           
          Analysis Prepared by  :    Misa Yokoi Shelton / L. GOV. / (916)  
          319-3958