BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 425  


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          Date of Hearing:  August 3, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


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


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill provides the City of El Monte 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 maintenance of streets and roads from the Transportation  
          Investment Fund (TIF).


          FISCAL EFFECT:








                                                                     SB 425  


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          Absent this bill, the city would have to provide a $2 million  
          reimbursement to the state, which would be reallocated among  
          cities and counties for streets and roads. This bill requires  
          the city to instead spend this amount from its general fund, by  
          June 30, 2021, to maintain its own streets and roads.


          COMMENTS:


          1)Background. Prior law directed the transfer of revenue from  
            sales tax collected on motor vehicle fuel from the General  
            Fund to the TIF, and apportioned these revenues, in part, to  
            cities and counties for rehabilitation and maintenance of  
            local streets and roads. Receipt of these fund was conditioned  
            on each local entity meeting a specified MOE requirement.  
            Trailer bills to the 2010 Budget Act partially replaced the  
            sale tax on motor fuels with an excise tax and, thereafter,  
            rendered the TIF and related provisions obsolete.


            Between 2006 and 2011, the City of El Monte received funding  
            from the TIF, and based on the MOE requirement, was obligated  
            to spend approximately $2 million on its streets and roads  
            from its general fund. A 2014 State Controller's Office (SCO)  
            audit found, however, that the city failed to comply with this  
            MOE requirement.


          2)Purpose. According to the author, the city's failure to comply  
            with the MOE requirement was due to budgetary struggles  
            throughout the recession. SB 425 allows the city to meet its  
            MOE requirement by applying the amount owed ($2,015,165) to  
            its streets and roads over the next four-and-one-half years,  
            rather than having to repay that amount to the SCO.










                                                                     SB 425  


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          3)Prior Legislation. The following entities have been granted  
            similar statutory relief:


             a)   Fresno County, though SB 524 (Cogdill) of 2010 and a  
               further time extension through AB 273` (Perea) of 2014.
             b)   City of Santa Rosa, through AB 115 (Committee on Budget)  
               of 2011.





          Analysis Prepared by:Chuck Nicol / APPR. / (916)  
          319-2081