BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 425


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          SENATE THIRD READING


          SB  
          425 (Hernandez)


          As Amended  June 14, 2016


          Majority vote


          SENATE VOTE:  39-0


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Transportation  |15-0 |Frazier, Linder,      |                    |
          |                |     |Baker, Bloom, Brown,  |                    |
          |                |     |Chu, Daly, Dodd,      |                    |
          |                |     |Eduardo Garcia,       |                    |
          |                |     |Gomez, Kim, Mathis,   |                    |
          |                |     |Melendez, Nazarian,   |                    |
          |                |     |O'Donnell             |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |20-0 |Gonzalez, Bigelow,    |                    |
          |                |     |Bloom, Bonilla,       |                    |
          |                |     |Bonta, Calderon,      |                    |
          |                |     |Chang, Daly, Eggman,  |                    |
          |                |     |Gallagher, Eduardo    |                    |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Jones, Obernolte,     |                    |
          |                |     |Quirk, Santiago,      |                    |








                                                                     SB 425


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          |                |     |Wagner, Weber, Wood,  |                    |
          |                |     |McCarty               |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
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          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  
            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:  AB 6 X8 (Budget Committee), Chapter 11, Statutes of  








                                                                     SB 425


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          2009-10 Eighth Extraordinary Session, and Senate Bill 70 (Budget  
          and Fiscal Review Committee), 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:  According to the Assembly Appropriations  
          Committee, 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, by June 30,  
          2021, to maintain its own streets and roads.


          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 this bill 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.


          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  








                                                                     SB 425


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          this bill, to grant it more time to apply funds equal to its MOE  
          requirements on local streets and roads.


          This bill 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.  




          Analysis Prepared by:                                             
                          Janet Dawson / TRANS. / (916) 319-2093  FN:  
          0004025