BILL ANALYSIS Ó AB 620 Page 1 Date of Hearing: April 27, 2015 ASSEMBLY COMMITTEE ON TRANSPORTATION Jim Frazier, Chair AB 620 (Roger Hernández) - As Introduced February 24, 2015 SUBJECT: High-occupancy toll lanes: exemptions from tolls SUMMARY: Expands the low-income assistance program associated with the Los Angeles County Metropolitan Transportation Authority's (Metro's) value-pricing and transit development program (Express Lanes Program). Specifically, this bill: 1)Expands the requirement that Metro work with low-income commuters in communities affected by the Express Lanes Program in the Interstate 10 (I-10) and Interstate 110 (I-110) corridors to require that mitigation measures (such as reduced toll charges and toll charges for transit users) be extended also to moderate-income commuters and transit users; refers to provisions within the state's housing and home finance laws to define "moderate- and low-income." 2)Requires Metro to exempt commuters from Express Lanes toll charges if they meet the eligibility requirements for any one of the following public assistance programs: a) California Work Opportunity and Responsibility to Kids Act (CalWORKS Program); AB 620 Page 2 b) State Supplementary Program for Aged, Blind and Disabled; c) County Aid Relief to Indigents; d) CalFresh (a.k.a. Food Stamp Program); e) Food Assistance Program for Legal Immigrants; or f) Cash Assistance Program for Aged, Blind, and Disabled Legal Immigrants. EXISTING LAW: 1)Authorizes Metro to conduct, administer, and operate the Express Lanes Program on I-10 and I-110 in Los Angeles County. 2)Requires Metro, when implementing the program, to work with affected communities in the two highway corridors and provide mitigation measures for low-income commuters, including reduced toll charges and toll credits for transit users. 3)Requires that participants in the low-income assistance program meet eligibility requirements for any one of several specific public assistance programs. 4)Requires Metro and the California Department of Transportation AB 620 Page 3 (Caltrans) to report to the Legislature by January 15, 2015, on the results of the demonstration program. FISCAL EFFECT: None COMMENTS: SB 1422 (Ridley-Thomas), Chapter 547, Statutes of 2008, authorized Metro, until January 15, 2013, to develop and operate a value-pricing and transit development demonstration program involving HOT lanes, referred to as Express Lanes. The program was primarily funded with a $210 million congestion reduction demonstration grant from the U.S. Department of Transportation. Tolling began on November 10, 2012, on the I-110 and February 23, 2013, on the I-10. AB 1224 (Eng), Chapter 441, Statutes of 2010, extended the sunset and reporting dates for the Express Lanes program from January 2013 to January 2015, and SB 1298 (Hernández), Chapter 531, Statutes of 2013, recast the program and extended it indefinitely. According to Metro, its low-income assistance program is the first in the nation to address equity concerns on toll lane projects. Metro supported provisions in enabling legislation that require it to work with communities affected by the Express Lanes Program. The low-income assistance program was developed by an independent consultant through extensive outreach with affected communities and designed to reflect community concerns. Metro reports that the program was subsequently reviewed and endorsed by a peer review team of individuals representing the Environmental Defense Fund, the University of California, Los Angeles, and the University of Southern California. AB 620 Page 4 Eligibility criteria for the low-income assistance program require that the applicant be a Los Angeles County resident with an annual household income at or below two times the federal poverty level (i.e., $39,060 in 2013). Qualifying residents receive a $25 credit when they set up an account, which can be applied to either the transponder deposit or pre-paid toll deposit. The monthly account maintenance fee is waived. As of December 31, 2014, 5,740 households were enrolled in the low-income assistance program. Under AB 620, commuters whose annual income is roughly $75,000 or less would be eligible for reduced toll charges and toll credits for transit. Numerous economic studies show that the biggest burden on family incomes is the cost of housing and transportation. For example, a report by Smart Growth America found that transportation is the second largest expense for American households, costing more than food, clothing, and health care. Furthermore, it has been documented that the working poor spend a fraction of what other workers spend on commuting expenses, but those costs amounted to a significantly higher proportion of their income. Consequently, concerns about the impact that Metro's Express Lanes Program could have on low-income families are well founded. Although studies indicate that low-income commuters heartily support the Express Lanes Program, data show that they do not use the toll lanes in large numbers. In fact, Metro reports that participants in its low-income assistance program made up only 1.2% of the tolled lane usage. Arguably, these numbers support the author's belief that Metro's low-income assistance AB 620 Page 5 program is underperforming. Of the nearly 200,000 Express Lanes account holders, just over 4,000 are enrolled in the low-income assistance program. In 2008, when congestion pricing was in its infancy in the United States, the Federal Highway Administration (FHWA) published a primer entitled, "Income-Based Equity Impact of Congestion Pricing." According to the report, a well-designed value-pricing program like Express Lanes can be less burdensome to low-income citizens than current systems of highway financing that are based on regressive taxes, such as car registration fees, sales taxes, and the gas tax. The report found that, while fewer low-income drivers use express lanes than those in other income categories, they are as likely to approve of the lanes as drivers with higher incomes. This is not surprising given that studies have shown that lower income individuals face the greatest financial harm when they are denied adequate travel choices. Lack of choice to pay a toll in exchange for reliable travel times can result in lost wages or late fees for daycare, for example. AB 620 requires Metro to expand its low-income program for commuters to include moderate-income commuters and transit users as well. Furthermore, AB 620 would require Metro to offer toll-free passage to commuters that are eligible for any of the above-listed public assistance programs. Writing in opposition to the bill, Metro argues that the overall goal of the Express Lanes is to improve mobility for commuters in the two corridors. Metro is concerned that AB 620 could allow a significantly larger number of vehicles into the Express Lanes and could obviate the usefulness of tolling as a congestion management tool. Furthermore, Metro argues that AB AB 620 Page 6 620 could have far-reaching, unintended consequences by reducing the toll revenues used to operate enhanced transit services in the corridor. Finally, Metro is concerned that AB 620 would significantly impair its ability to secure the financing necessary to extend or implement additional Express Lanes, among other transportation improvements. Committee concerns: More can and should be done to reduce the disproportionate impact that transportation costs have on low-income families, but AB 620 goes too far. Allowing significantly more commuters into the lanes for toll-free or reduce-rate passage diminishes the ability of the Express Lanes Program to manage congestion and reduces revenue from toll-paying commuters. This is a "no-win" scenario. The lanes will be congested and transit service in the corridors will be harmed. Previous legislation: SB 1298 (Hernández), Chapter 531, Statutes of 2013, recast the program and extended it indefinitely. AB 1224 (Eng),Chapter 441, Statutes of 2010, extended the sunset and reporting dates for the Express Lanes program from January 2013 to January 2015. SB 1422 (Ridley-Thomas), Chapter 547, Statutes of 2008, authorized, until January 15, 2013, Metro to operate the Express Lanes Program. AB 620 Page 7 REGISTERED SUPPORT / OPPOSITION: Support None on file Opposition Los Angeles County Metropolitan Transportation Authority Analysis Prepared by:Janet Dawson / TRANS. / (916) 319-2093