BILL ANALYSIS Ó
SB 425
Page 1
SENATE THIRD READING
SB
425 (Hernandez)
As Amended June 14, 2016
Majority vote
SENATE VOTE: 39-0
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|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
Page 2
| | |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
Page 4
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