BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2094


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          Date of Hearing:  April 11, 2016


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          AB 2094  
          (Obernolte) - As Amended March 18, 2016


          SUBJECT:  Transportation:  Greenhouse Gas Reduction Fund:  state  
          and local transportation funds


          SUMMARY:  Transfers $1 billion annually from the Greenhouse Gas  
          Reduction Fund (GGRF) to the Retail Sales Tax Fund to allocate  
          to regional and local transportation agencies as part of the  
          existing Transportation Development Act (TDA) process, and then  
          allocates an equivalent $1 billion from the Retail Sales Tax  
          Fund to the state and local governments for road improvements.    
            Specifically, this bill:  


          1)Declares that this bill complies with Article XIX of the  
            California Constitution which prohibits loans from local  
            transportation funds and prohibits the expenditure of money in  
            a local transportation fund for purposes for which it was not  
            authorized.  


          2)Declares that this bill does not change the current collection  
            level and allocation of the sales and use tax to local  
            transportation funds. 


          3)Requires $1 billion from the GGRF be transferred to the Retail  








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            Sales Tax Fund if:


             a)   $1 billion is available from the GGRF after the required  
               60% continuous appropriations for affordable housing and  
               sustainable communities, transit, and high-speed rail; and,  
                


             b)   The amount of taxes collected for local transportation  
               funds equals or exceeds $1 billion.


          4)Requires $1 billion be allocated from the Retail Sales Tax  
            Fund be continuously appropriated with:


             a)   50% to the California Department of Transportation  
               (Caltrans) for maintenance projects or the State Highway  
               Operations and Protection Program (SHOPP); and, 


             b)   50% to cities and counties based on existing  
               distribution formulas for local streets and road  
               maintenance.


          5)Declares that GGRF funds transferred to the Retail Sales Tax  
            Fund shall be considered part of the revenues allocated to  
            local transportation funds.   


          EXISTING LAW: 





          1)Protects local transportation funds from being transferred,  








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            diverted, appropriated, borrowed or loaned for other purposes.

          2)Provides state funding through the Local Transportation Fund  
            (LTF) of the TDA, which is derived from a 1/4-cent of the  
            general sales tax collected statewide.  These funds are  
            distributed to each county according to the amount of tax  
            collected in that county.  LTF funds a wide variety of  
            transportation programs, including planning and program  
            activities, pedestrian and bicycle facilities, community  
            transit services, public transportation, and bus and rail  
            projects.  In limited cases, counties may also use LTF moneys  
            for local streets and roads construction and maintenance.

          3)Requires the California Air Resources Board (ARB), pursuant to  
            AB 32 (Núñez), Chapter 488, Statutes of 2006, to develop a  
            plan of how to reduce statewide greenhouse gas emissions to  
            1990 levels by 2020.  Under AB 32, ARB is authorized to  
            include the use of market-based mechanisms to comply with  
            these regulations (cap and trade).

          4)Establishes the GGRF in the State Treasury and requires all  
            money collected pursuant to cap and trade, with limited  
            exceptions, be deposited into the fund and makes the GGRF  
            funds available for appropriation by the Legislature.

          5)Established the Affordable Housing and Sustainable  
            Communities, the Low Carbon Transportation, and the Low Carbon  
            Transit Operations programs and continuously appropriates 60%  
            of GGRF fund proceeds, beginning in the 2015-16 fiscal year,  
            for transit, affordable housing and sustainable communities  
            programs, and high-speed rail.

          6)Requires, pursuant to SB 535 (de León), Chapter 830, Statutes  
            of 2012, that a minimum of 25% of the moneys available in GGRF  
            be used to benefits disadvantaged communities.



          FISCAL EFFECT:  Unknown








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          COMMENTS:  This bill would essentially "swap" $1 billion derived  
          from the state's cap and trade program with $1 billion of funds  
          collected for the LTF.  This bill would then require that the  
          cap and trade funds be expended for the existing purposes of the  
          LTF, including local planning and transit programs, and the $1  
          billion of LTF funded that have been "swapped" be allocated to  
          Caltrans and local governments for road maintenance.  


          The author states that "California roads are in a serious state  
          of disrepair and the funding situation is just as bleak."  He  
          states that according to a February 2016 report by the  
          Legislative Analyst (LAO), the state has significant ongoing  
          maintenance needs including an annual funding shortfall of $2  
          billion in maintenance and the State Highway Operation and  
          Protection Program (SHOPP). 





          The Legislature and the Administration continue to discuss state  
          and local transportation needs for deferred maintenance and  
          funding solutions for the problem.  Governor Brown identified  
          the $59 billion backlog of maintenance on the state highway  
          system as a priority in his State of the State address in both  
          2014 and 2015.  Additionally, in June 2015, the Governor called  
          a Special Legislative Session on transportation directing the  
          Legislature to act on a permanent, sustainable funding source  
          for state and local transportation infrastructure.     





          Local governments are also facing a nearly $80 billion shortfall  
          in funding for local streets and roads.  Additionally, the loss  








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          of funding for the State Transportation Improvement Program  
          (STIP), which received a $754 million cut this year by the  
          California Transportation Commission due to reductions in the  
          gasoline excise tax, has caused projects to be delayed or  
          cancelled.  





          The author states that infrastructure is a core function of  
          government and California's economy and residents deserve  
          better. Adding that it is crucial that the Legislature identify  
          ways to improve funding for deteriorating state highways and  
          local roads. He contends that this bill would help address these  
          funding needs by redirecting the 0.25% sales tax that is  
          currently going to fund local transit projects back to state and  
          local roads.



          Currently, a 1/4-cent sales tax collected statewide is deposited  
          in LTF in the Retail Sales Tax Account and funding is  
          distributed to each county according to the amount of tax  
          collected in that county.  The funding is used for  
          transportation activities authorized by the TDA which was  
          enacted in the early 1970's. Regional transportation planning  
          agencies, transit agencies and cities and counties utilize LTF  
          funds a wide variety of transportation programs, including  
          planning and programming, pedestrian and bicycle facilities,  
          community transit services, public transportation, and bus and  
          rail projects.  Additionally, some counties, usually in rural  
          areas, may also use LTF moneys for local streets and roads  
          construction and maintenance.



          Committee Concerns:  Although the need is great and funding  
          discussions have yet to yield a solution, AB 2049 is likely not  








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          constitutional and also raises numerous concerns for the use of  
          funds and for the agencies that would be affected.   
          Specifically, Article XIX of the California Constitution  
          protects local transportation fund revenues from being  
          transferred, diverted, loaned or borrowed for any purposes other  
          than those authorized in the TDA.  Additionally, Article XIII  
          prohibits any change in distributing the Bradley-Burns Uniform  
          Local Sales and Use Tax Law, which authorizes collection of the  
          1/4 cent statewide sales tax.  Also, current law does not allow  
          funds from the GGRF to be used for any programs that do not have  
          a clear nexus to greenhouse gas emissions reductions as required  
          by AB 32.      





          Although the author contends that the "swap" would not violate  
          law and would also provide a nexus to AB 32 due to LTF funds  
          being used on transit, which is questionable and does not  
          accurately reflect how LTF funds are currently used.  LTF funds  
          are currently used for planning and programming activities by  
          regional transportation agencies and in some areas, after a  
          finding of no unmet transits needs, counties can use their LTF  
          funds for local streets and roads.  In commenting on this bill,  
          the Rural Counties Task Force (RCTF), who represent 28 rural  
          county transportation planning agencies and local transportation  
          commissions, noted that they are concerned that any swap of  
          greenhouse gas funds for LTF will open the door to possible  
          restrictions on the current eligible uses of LTF funds that are  
          critical to regional transportation planning agencies functions  
          and transit operators statewide.  RCTF added a concern that  
          current LTF funds that are used for local street and road  
          maintenance which may not be an eligible use for greenhouse gas  
          funds.  












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          Additionally, if funds from the GGRF were "swapped," the  
          receiving regional and local agencies would be responsible for  
          all spending and reporting requirements that accompany this  
          funding source including documenting greenhouse gas reductions  
          and directing 25% of funds to benefit disadvantaged communities.  






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





          REGISTERED SUPPORT / OPPOSITION:




          Support


          Howard Jarvis Taxpayer Association




          Opposition


          California Chamber of Commerce











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          Analysis Prepared by:Melissa White / TRANS. / (916) 319-2093