BILL ANALYSIS                                                                                                                                                                                                    



                                                                       AB 6


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          Date of Hearing:  April 6, 2015


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          AB 6  
          (Wilk) - As Introduced December 1, 2014


          SUBJECT:  Bonds:  transportation:  school facilities


          SUMMARY:  Prohibits the sale of any additional bonds for  
          high-speed rail and redirects the remaining bonding authority to  
          fund the construction of school facilities.  Specifically, this  
          bill:  


          1)Prohibits the sale of any additional bonds for high-speed rail  
            purposes pursuant to the Safe, Reliable High-Speed Passenger  
            Train Bond Act for the 21st Century.


          2)Exempts from the above prohibition an existing appropriation  
            for high-speed rail in the Budget Act of 2012 for early  
            improvement projects in the Phase 1 blended system.


          3)Requires the unspent proceeds from any outstanding bonds  
            issued and sold for any other high-speed rail purpose to be  
            redirected, upon appropriation, for use in retiring the debt  
            incurred from the issuance and sale of those outstanding  
            bonds.










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          4)Authorizes the remaining unissued bonds from the high-speed  
            rail bond act to be issued and sold, with the proceeds to be  
            made available, upon appropriation, to fund construction of  
            school facilities for K-12 and higher education.


          5)Leaves in place the authorization under the high-speed rail  
            bond act for the issuance and sale of $950 million in bonds  
            for rail purposes other than high-speed rail. 


          6)Requires voter approval at the next statewide election for  
            these provisions to become effective. 


          EXISTING LAW:  


          1)Establishes the California High-Speed Rail Authority  
            (Authority) and vests with it the responsibility to develop  
            and implement a high-speed rail system in California.  

          2)Authorizes the sale of $9 billion in general obligation bonds  
            to partially fund the development and construction of the  
            high-speed rail system.  

          3)Authorizes the expenditure of an additional $950 million in  
            general obligation bonds for capital projects on other  
            passenger rail lines to provide connectivity to the high-speed  
            rail system, as well as for capacity enhancements and safety  
            improvements to those lines.  

          FISCAL EFFECT:  According to the Authority, $705 million in  
          Proposition 1A bonds have been issued to date.  Of that total,  
          $400 million (of $9 billion) have been issued for the high-speed  
          rail project and $305 million (of $950 million) have been issued  
          for connectivity projects.  










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          COMMENTS:  In 2008, voters approved Proposition 1A, the Safe,  
          Reliable High-Speed Passenger Train Bond Act, a $9.95 billion  
          general obligation bond to fund the proposed California  
          high-speed rail project and related improvements.  As envisioned  
          at the time of the ballot measure, the project was to consist of  
          an 800-mile dedicated high-speed passenger rail system capable  
          of speeds up to 220 miles per hour, initially serving San  
          Francisco through the Central Valley into Los Angeles and Orange  
          County (Phase 1) with service eventually extended to Sacramento,  
          the Inland Empire, and San Diego.  


          When voters approved the bonds in 2008, the Authority estimated  
          the cost for the entire project to be $45 billion, to be paid by  
          a mix of state bonds, federal grants, and private investments.  
          Since then, estimated costs for the project have risen markedly.  
           The Authority's most recent business plan estimates costs for  
          just Phase 1 to be $68 billion using a "blended approach" -  
          relying in part on existing tracks - rather than a fully  
          built-out system of dedicated rail lines. Furthermore, federal  
          contributions to date have been limited to $3.3 billion and  
          there have been no private investments.  


          In 2012, the Legislature passed and the Governor signed SB 1029  
          (Committee on Budget and Fiscal Review), Chapter 152, Statutes  
          of 2012, to appropriate $8 billion ($4.7 billion in Proposition  
          1A bond funds and $3.3 billion in federal funds) to the  
          Authority to initiate construction of the high-speed rail  
          project.  This amount included $1.1 billion of Proposition 1A  
          bond funding for bookend projects on the San Francisco Peninsula  
          and in the Los Angeles Basin.  Additionally, last year's Budget  
          allocated $250 million in cap-and-trade revenues to high-speed  
          rail for the 2014-15 fiscal year and dedicated 25% of all  
          cap-and-trade revenues to the project on an ongoing basis. 












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          AB 6 proposes to ask voters to redirect roughly $8 billion in  
          bond capacity away from high-speed rail and towards the  
          construction of school facilities for K-12 and higher education.  
           The author introduced AB 6 because "public support has waned  
          for the project, and many feel tricked by the original  
          projections regarding the build timeline, costs, transit  
          accessibility, and speed estimates.  AB 6 would give the voters  
          the opportunity to halt the sale of bonds sold for high-speed  
          rail purposes?."





          Committee concerns:  While there is no doubt that the state has  
          a need for additional funds to improve existing and build new  
          school facilities, it is not clear why those funds need to come  
          at the expense of the high-speed rail project.  California needs  
          both high-quality educational facilities and a high-quality,  
          modern transportation system.  While the funding hurdles facing  
          high-speed rail are daunting, the project is proceeding and its  
          unsteady beginning is not without precedent among mega-projects.  
           The project may not be progressing as smoothly as hoped, but it  
          is progressing and is better off today than it was three years  
          ago when the Legislature committed to the project.  Stopping the  
          project now by redirecting the bonds will cause hundreds of  
          millions of dollars of work and study to be wasted.  Instead,  
          the Legislature should redouble its resolve to the project and  
          thereby improve the likelihood of its success in luring federal  
          and private investors.  





          Double referral:  This bill will be referred to the Assembly  
          Education Committee should it pass out of this committee.









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          Related legislation:  AB 397 (Mathis) prohibits the sale of any  
          additional bonds for high-speed rail and redirects the remaining  
          bonding authority to fund the construction of water-related  
          infrastructure.  AB 397 is set for hearing in this committee on  
          April 20, 2015.


          AB 1087 (Grove) provides that the cap-and-trade funds that have  
          been continuously appropriated to high-speed rail are for  
          specified components of the initial operating segment and Phase  
          1 blended system, as described in the Authority's 2012 business  
          plan.  AB 1087 is set for hearing in this committee on April 20,  
          2015.


          AB 1138 (Patterson) prohibits the Authority, or the State Public  
          Works Board acting on behalf of the Authority, from commencing  
          an eminent domain proceeding to acquire property for the  
          high-speed rail system unless it identifies the sources of all  
          funds to be invested in the corridor the property is needed for  
          and certifies that it has completed all project-level  
          environmental clearances necessary to proceed to construction.   
          AB 1138 is set for hearing in this committee on April 20, 2015.


          Previous legislation: This bill is the latest in a string of  
          bills aimed at reducing the amount of authorized indebtedness  
          for high-speed rail.  Other similar bills have included:


          1)AB 2650 (Conway) of 2014, which failed passage in this  
            committee;











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          2)AB 1501 (Patterson) of 2014, which failed passage in this  
            committee;



          3)SB 901 (Vidak) of 2014, which failed passage in the Senate  
            Transportation and Housing Committee;



          4)AB 842 (Donnelly) of 2013, which failed passage in this  
            committee;



          5)AB 1455 (Harkey) of 2012, which failed passage in this  
            committee;



          6)SB 22 (LaMalfa) of 2012, which failed passage in the Senate  
            Transportation and Housing Committee;



          7)AB 76 (Harkey) of 2011, which failed passage in this  
            committee; and



          8)AB 2121 (Harkey) of 2010, which died in the Senate Rules  
            Committee.  
          


          REGISTERED SUPPORT / OPPOSITION:











                                                                       AB 6


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          Support


          Howard Jarvis Taxpayers Association




          Opposition


          California Labor Federation


          State Building and Construction Trades Council




          Analysis Prepared by:Anya Lawler / TRANS. / (916) 319-2093