BILL ANALYSIS Ó SB 425 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 425 (Hernandez) - As Amended June 14, 2016 ----------------------------------------------------------------- |Policy |Transportation |Vote:|15 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 Page 2 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 Page 3 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