BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 425


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          Date of Hearing:  June 20, 2016


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          SB  
          425 (Hernandez) - As Amended June 14, 2016


          SENATE VOTE:  39-0


          SUBJECT:  City of El Monte:  maintenance of effort:  streets and  
          roads allocations


          SUMMARY:  Grants the City of El Monte and extended period of  
          time, until June 30, 2021, to meet the maintenance of effort  
          (MOE) requirement applicable to cities and counties as a  
          condition of receiving an allocation for streets and roads from  
          the Transportation Investment Fund (TIF).  


          EXISTING LAW: 


          1)Previously directed the transfer of revenue from sales tax  
            collected on motor vehicle fuel from the General Fund to the  
            TIF; directed the revenue to be apportioned, in part, to  
            cities and counties for rehabilitation and maintenance of  
            local streets and roads.  

          2)Established a maintenance of effort requirement for cities and  
            counties as a condition of receiving TIF funds; specifically,  
            in exchange for receiving TIF allocations, cities and counties  








                                                                     SB 425


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            were required to expend from their general fund for street,  
            road, and highway purposes an amount not less than the annual  
            average of their expenditures from their general fund during  
            the 1996-97, 1997-98, and 1998-99 fiscal years, as reported to  
            the State Controller's Office (SCO).  

          3)Provided that cities and counties had two fiscal years within  
            which to meet their MOE requirement; cities and counties that  
            failed to do so would have to return the TIF funds to the SCO  
            for redistribution to other cities and counties.

          [Note:  Assembly Billx8 6 (Committee on Budget), Chapter 11,  
          Statutes of 2010 and Senate Bill 70 (Committee on Budget and  
          Fiscal Review), Chapter 9, Statutes of 2010, partially replaced  
          the sales tax on motor vehicle fuels with an excise tax and,  
          thereafter, rendered the TIF and related provisions obsolete.]

          FISCAL EFFECT:  Unknown


          COMMENTS:  Between 2006 and 2011, the City of El Monte received  
          funding from the TIF.  As a condition of the receiving these  
          funds, the city was obligated, under the MOE requirements,  to  
          spend approximately $2 million on local streets and roads from  
          its general fund.  A 2014 SCO audit found, however, that the  
          city failed to comply with the MOE requirements.





          According to the author, the City of El Monte failed to comply  
          with the MOE requirement because it, like many other cities,  
          struggled economically through the recession.  The author  
          introduced SB 425 to allow the city to meet its MOE requirement  
          by applying the amount owed, $2,051,165, to its local streets  
          and roads over the next five years, rather than having to repay  
          that amount to the SCO.









                                                                     SB 425


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          The City of El Monte is not the first entity to struggle to  
          comply with the MOE requirement of the TIF program.  The County  
          of Fresno also failed to meet its TIF MOE obligations and was  
          subsequently statutorily authorized to fulfil that obligation by  
          providing specialty medical services in conjunction with  
          federally funded clinics to indigent individuals.  Additionally,  
          the City of Santa Rosa sought statutorily relief, similar to  
          this bill, to grant it more time to apply funds equal to its MOE  
          requirements on local streets and roads.





          SB 425 is a reasonable resolution to the SCO's audit finding and  
          will ensure that the city's MOE requirement is applied to local  
          streets and roads as originally intended, albeit over a longer  
          period of time.  




          Previous legislation:  SB 524 (Cogdill), Chapter 716, Statutes  
          of 2010, granted Fresno County additional time to meet its TIF  
          MOE commitment.  


          AB 115 (Committee on Budget), Chapter 38, Statutes of 2011,  
          provided the City of Santa Rosa a four-year extension to meet  
          its TIF MOE obligations.  




          AB 2731 (Perea), Chapter 743, Statutes of 2014, allowed Fresno  
          County an additional five years to meet its TIF MOE commitment,  
          under certain conditions. 









                                                                     SB 425


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          REGISTERED SUPPORT / OPPOSITION:

          Support:

          None on file

          Opposition:

          None on file


          Analysis Prepared by:Janet Dawson / TRANS. / (916)  
          319-2093