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.
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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