BILL ANALYSIS Ó SB 1037 Page 1 SENATE THIRD READING SB 1037 (Ed Hernandez) As Amended June 9, 2014 Majority vote SENATE VOTE :31-2 LOCAL GOVERNMENT 9-0 TRANSPORTATION 14-0 ----------------------------------------------------------------- |Ayes:|Achadjian, Levine, Alejo, |Ayes:|Lowenthal, Linder, | | |Bradford, Gordon, | |Achadjian, Bloom, Bonta, | | |Melendez, Mullin, Rendon, | |Buchanan, Daly, Frazier, | | |Waldron | |Gatto, Holden, Nazarian, | | | | |Patterson, Quirk-Silva, | | | | |Waldron | ----------------------------------------------------------------- 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. SB 1037 Page 2 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. 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 Web site 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. SB 1037 Page 3 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 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 SB 1037 Page 4 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: (a) cost estimates for each project and program, using a transparent process; (b) accelerated costs of each of the plan's projects and programs, if applicable; (c) a schedule for when MTA anticipates funds will be available for each project and program; and, (d) 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. 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 Web site 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 SB 1037 Page 5 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 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. Analysis Prepared by : Misa Yokoi Shelton / L. GOV. / (916) 319-3958 FN: 0004082