BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
DEVELOPMENT
Senator Jim Beall, Chair
2015 - 2016 First Extraordinary
Bill No: SBX1 3 Hearing Date: 8/19/2015
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|Author: |Vidak |
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|Version: |8/17/2015 Vote: |
| | 2/3 Required |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Erin Riches |
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SUBJECT: Transportation bonds: high-speed rail
DIGEST: This bill redirects high-speed rail bond proceeds to
state freeways and highways, and local streets and roads, upon
voter approval.
ANALYSIS:
The California High-Speed Rail Authority (HSRA) was established
by legislation in 1996 (SB 1420, Kopp, Chapter 796) to direct
the development and implementation of intercity high-speed rail
service that is fully coordinated with other public
transportation services. In 2008, California voters approved
Proposition 1A, the Safe, Reliable High-Speed Passenger Train
Bond Act for the 21st Century (Prop. 1A), which authorized $9
billion in general obligation bonds for the high-speed rail
project. Prop. 1A included a number of requirements the state
must meet to access the bond funding for capital construction,
including the identification of matching funds, the completion
of a funding plan, and approval of required environmental
clearance documents.
In 2009, the federal government augmented Prop. 1A bond funding
with roughly $3.3 billion in funding from the American Recovery
and Reinvestment Act and other federal funding programs. HSRA
committed to match these federal funds with approximately $2.3
billion in state funding.
SBX1 3 (Vidak) Page 2 of ?
Of the $8.8 billion appropriated thus far for high-speed rail,
HSRA spent $950 million through 2013-14 and an estimated $917
million in 2014-15. For 2015-16, HSRA plans to spend $3.0
billion: $1.4 billion in Prop. 1A bond funds, $1.2 billion in
federal funds, and $500 million in cap-and-trade revenues.
This bill:
1)Redirects unspent proceeds from high-speed rail bonds issued
and sold prior to the effective date of this legislation to
retire the debt incurred from issuance and sale of these
bonds.
2)Directs the proceeds of remaining unissued bonds to repair and
new construction projects on state highways and freeways (50%)
and local streets and roads (50%). Provides that for the
latter, each county shall receive a base amount of the local
street and road funding, with any additional funding to be
allocated based on a county's population.
3)Requires the Secretary of State to place a measure authorizing
these provisions on the June 2016 primary election ballot.
COMMENTS:
1)Purpose. The author states that this bill can help address
the transportation infrastructure funding shortfall by
redirecting nearly $8 billion in high-speed rail bonds to
expansion and restoration of highways and rehabilitation of
local roads. The author states that Prop. 1A passed by only a
very slim majority, and with 52% of Californians now firmly
opposed to the high-speed rail project, according to a
September 2013 USC/LA Times poll, there is a critical need for
legislation to address these concerns. The author further
states that the high-speed rail project is a failure, citing
lack of private sector funding, blockage of federal funding,
expensive litigation over poor route selections, mismanagement
by HSRA, local opposition, and millions of wasted dollars on
expensive construction equipment that has sat unused at the
side of Highway 99 for months on end. The author states that
this bill would provide resources to shovel-ready projects
SBX1 3 (Vidak) Page 3 of ?
that will put people to work tomorrow instead of decades in
the future, if at all.
2)Status of the high-speed rail project. At a 2014 hearing of
the Senate Transportation and Housing Committee, Louis
Thompson, Chair of the High-Speed Rail Peer Review Group,
noted that what was sold to voters in 2008 was an aspirational
vision of high-speed rail service in California. In the years
since, the state has had to work within financial and
political realities to define a project the state can actually
deliver.
As HSRA staff has worked to define the project, they have come
up against a number of real-world challenges. First and
foremost, it is clear the project is going to cost
significantly more than early estimates, and HSRA has been
unable to identify all the funding necessary to complete the
initial operating segment, or the first 130-mile segment from
Fresno to the San Fernando Valley. In addition, further
design of the project suggests speeds and travel times
initially included in the 2008 ballot measure may be
difficult, if not impossible, to achieve. Further, rising
costs and political hurdles have led HSRA to adapt the
proposed project in ways that blend service in major urban
areas instead of building a completely separate and
independent infrastructure for the system. Some argue that,
given these and other changes to the proposed project compared
to what voters approved in 2008, it seems reasonable to
resubmit the state bond funds to the electorate for approval.
3)Fulfilling the promise. Proponents of high-speed rail suggest
that the project still technically meets the promises made to
voters in 2008. In addition, some advocates argue that the
project is transformative and should be pursued regardless of
a potentially divergent electorate. These advocates suggest
that, while voters today may not approve the project as
currently envisioned, when the system is finally running and
all of the benefits are realized, Californians will be
thankful the state continued to pursue it in the face of its
many detractors. They point to the significant opposition to
construction of the Bay Area Rapid Transit (BART) system in
the 1960s, which today is an integral part of the Bay Area
transportation network. Other supporters of high-speed rail
argue that, despite the fact that today's plan may not fully
live up to the vision presented to voters in 2008, the large
SBX1 3 (Vidak) Page 4 of ?
influx of construction dollars and potential jobs created in
the Central Valley are too important to risk losing should the
voters defeat the project at the ballot. With the Central
Valley region suffering one of the worst unemployment rates in
the country, the funds from this project could bring
much-needed relief to that region's economy.
4)Federal matching requirements. Complicating the
implementation of this bill is the fact that the federal
government requires the state to match any federal funding
expended on the project. It is unclear whether the state, if
it suddenly ceased to pursue the high-speed rail project,
would be in a position to pay back the federal government for
some of the funds thus far expended. If that became the case,
it is not clear how the state would achieve repayment without
access to the Prop. 1A bond funds.
PREVIOUS LEGISLATION:
Many prior legislative attempts to reduce the amount of
authorized indebtedness for the high-speed rail project have
failed in each house:
SB 901 (Vidak, 2014) - would have required the Secretary of
State to place on the November 2014 general election ballot a
referendum to prohibit the sale of additional high-speed rail
bonds. It would also have authorized the net proceeds from
outstanding bonds to be redirected, upon appropriation, to
retirement of high-speed rail bond debt and would have
prohibited expenditure of bond funds, or issuance of additional
bonds, for high-speed rail until November 2014. SB 901 failed
passage in the Senate Transportation and Housing Committee.
AB 1501 (Patterson, 2014) - would have prohibited HSRA from
spending federal funds for which a state match is required
unless state funding for the match is immediately available. AB
1501 failed passage in the Assembly Transportation Committee.
AB 2650 (Conway, 2014) - would have directed the Secretary of
State to place on the November 2014 general election ballot a
measure to prohibit further issuance and sale of any authorized
bonds for high-speed rail, except for specified projects for
which appropriations have already been made. It would also have
redirected the proceeds of any outstanding bonds issued and sold
to debt retirement, and reauthorized the issuance and sale of
SBX1 3 (Vidak) Page 5 of ?
any unissued bonds for other transportation uses, upon
legislative appropriation. AB 2650 failed passage in the
Assembly Transportation Committee.
AB 842 (Donnelly, 2013) - would have prohibited the expenditure
of state and federal funds for high-speed rail except as
necessary to meet contractual commitments entered into before
January 1, 2014. AB 842 failed passage in the Assembly
Transportation Committee.
AB 1455 (Harkey, 2012) - would have reduced the amount of
authorized indebtedness for HSRA to the amount contracted as of
January 1, 2013 and excluded from these provisions indebtedness
authorized for other rail purposes. AB 1455 failed passage in
the Assembly Transportation Committee.
SB 22 (La Malfa, 2011) - would have reduced the amount of
indebtedness authorized by Prop. 1A to the amount contracted as
of January 1, 2012. SB 22 failed passage in the Senate
Transportation and Housing Committee.
AB 76 (Harkey, 2011) - would have reduced the amount of
authorized indebtedness for HSRA to the amount contracted as of
January 1, 2012. AB 76 failed passage in the Assembly
Transportation Committee.
AB 2121 (Harkey, 2010) - would have reduced the amount of
general obligation debt authorized pursuant to Prop. 1A to the
amount contracted by HSRA. It was amended in the Assembly
Transportation Committee to instead require HSRA to annually
submit a six-year funding program and a project progress report
to the appropriate policy and budget committees of the
Legislature. AB 2121 was passed by the Assembly, but died in
the Senate Rules Committee.
Related Legislation:
SBX1 2 (Huff) - would require Greenhouse Gas Reduction Fund
(GGRF) monies generated from transportation fuels to be spent on
transportation infrastructure, excluding high-speed rail. SBX1
1 is also being heard in the Senate Transportation and
Infrastructure Development Committee today.
SBX1 6 (Runner) - would eliminate the existing continuous
appropriation of GGRF monies for high-speed rail (25% of total
SBX1 3 (Vidak) Page 6 of ?
GGRF funds) and would prohibit any GGRF monies from being spent
on the high-speed rail project. It would continuously
appropriate the remaining 65% of GGRF funds to the California
Transportation Commission (CTC) to allocate to what the CTC
deems as high-priority transportation projects. Of these funds,
40% would go to state highway projects, 40% to local street and
road projects, and 20% to public transit projects. It would
also require the 2013 Budget Act loan of $400 million from the
GGRF to the General Fund to be immediately repaid to the GGRF.
SBX1 6 is pending in the Senate Transportation and
Infrastructure Development Committee.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
Thursday,
August 13, 2015.)
SUPPORT:
Howard Jarvis Taxpayers Association
OPPOSITION:
Sierra Club California
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