BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          SB 425            Hearing Date:    8/24/2016
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          |Author:   |Hernandez                                             |
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          |Version:  |6/14/2016                                             |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Manny Leon                                            |
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          SUBJECT:  City of El Monte:  maintenance of effort:  streets and  
          roads allocations

            DIGEST:  This bill extends the date for the City of El Monte to  
          meet its maintenance of effort (MOE) requirement for funds  
          received from the Transportation Investment Fund (TIF).

          ANALYSIS:
          
          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 an MOE 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.







          SB 425 (Hernandez)                                 Page 2 of ?
          
          

          4)Per ABX8 6 (Committee on Budget, Chapter 11, Statutes of 2010)  
            and SB 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, as a result, rendered  
            the TIF and related provisions obsolete.


          This bill:

          1)Extends the date for City of El Monte to meet its MOE  
            requirement for funds received from the TIF to June 30, 2021.

          2)Makes legislative findings and declarations regarding the need  
            for a statutory extension for the City of El Monte.

          COMMENTS:

          1)Purpose.  The author notes, "Between 2006 and 2011, El Monte  
            received funding from the State's Traffic Congestion Relief  
            Fund, and as per state law, was required to contribute an MOE  
            amount of approximately $2 million as a local match.  
            Unfortunately, El Monte, as was the case with every other city  
            in California, underwent a recession during this time. It was  
            unable to contribute its MOE as a result. Since this was  
            revealed in an audit in 2014, El Monte has attempted to reach  
            an agreement with the State to repay its MOE, but was told  
            that repayment after the fact required a statutory change."

          2)SCO Audit report.  As noted by the author, in October 2014,  
            the SCO released an audit on the City's use of state  
            transportation revenues. The SCO's audit found that in the  
            period from July 1, 2006, to June 30, 2011, the City did not  
            meet its MOE requirements in return for monies from the  
            Traffic Congestion Relief Fund (TCRF) for two of those years,  
            totaling $2.05 million.  As a result of this finding, the City  
            would be required to return the $2.05 million back to the SCO.  
             In response to the audit's findings, the City requested that  
            alternative arrangements be established to meet the TCRF's MOE  
            obligation; however, the SCO informed the City that existing  
            law does not provide the flexibility for alternative  
            arrangements and would require a legislative remedy in order  
            for the City to be provided some relief.    

          3)What is MOE?  An MOE is a requirement in certain legislative,  








          SB 425 (Hernandez)                                 Page 3 of ?
          
          
            regulatory or administrative policies that a recipient of  
            specific funds (e.g., state or federal transportation funds)  
            must maintain a specified level of financial effort in that  
            particular program area (e.g., funding for road  
            rehabilitation) in order for these specified funds to be  
            provided to the recipient.  MOE requirements are usually given  
            in terms of a previous base-year monetary amount and are  
            typically established to ensure a recipient of the funds is  
            committed to maintaining the same level of services it has  
            been providing prior to receiving the additional revenue. 

          4)Prior MOE relief to locals.  Over the past six years, the  
            Legislature has provided MOE extensions to several local  
            entities.  The County of Fresno also failed to meet its TIF  
            MOE obligations and was subsequently statutorily authorized to  
            fulfill that obligation by providing specialty medical  
            services in conjunction with federally funded clinics to  
            indigent individuals.  Additionally, the City of Santa Rosa  
            sought statutory relief, similar to this bill, to grant it  
            more time to apply funds equal to its MOE requirements on  
            local streets and roads.

          Related/Prior 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. 



          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  No


          Assembly votes:








          SB 425 (Hernandez)                                 Page 4 of ?
          
          

            Floor:         70-0
            Appr:          20-0
            Trans          15-0
          


            POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,
                          August 23, 2016.)
          
            SUPPORT:  

          City of El Monte (sponsor) 

          OPPOSITION:

          None recieved 
          
          

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