BILL ANALYSIS
SB 457
Date of Hearing: August 23, 1995
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Charles Poochigian, Chair
SB 457 (Kelley) - As Amended: August 21, 1995
Policy Committee: Transportation Vote: 15-0
State Mandated Local Program: No Reimbursable: No
SUBJECT
Intercity rail services: funding
This bill:
1) Authorizes the California Transportation Commission (CTC) to
grant a waiver from the fare box recovery ratios for intercity and
commuter rail service for up to three years upon annual
reconsideration and approval of the waiver by the CTC after a
public hearing.
2) By interagency agreement executed on or before April 1, 1996,
requires the Department of Transportation (Caltrans) to transfer
to the Southern California Regional Rail Authority (Authority) the
responsibility to administer intercity rail service between the
cities of San Diego and San Luis Obispo and in other previously
authorized intercity rail corridors in Southern California, as
specified. The current intercity rail service in this corridor is
known as "The San Diegans".
3) Authorizes the Authority to contract for operation of the
service with Amtrak, or with any other party that may be
authorized under federal law. Authorizes the Authority to
administer such a contract or to select, on a competitive basis, a
qualified operator to administer the contract.
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4) Requires the Authority to be expanded, on or before January 1,
1996, to include, on its policy board, representation from all
counties involved in intercity rail services in Southern
California.
5) Requires that state funding allocations be made based on an
annual business plan prepared by the Authority and approved by its
policy board.
6) Requires that the business plan include the results of the
previous year's marketing, financial, patronage, operating and
capital programs, recommended goals for the coming year, and
specific actions to meet those goals.
7) Requires that the business plan clearly delineate intercity
rail passenger
services from the commuter rail services administered by the
Authority.
8) Requires the business plan to be submitted to Caltrans and the
CTC for suggestions, and then to be submitted by the Authority to
the Legislature and Governor, annually, by November 1. This plan
would form the basis of the annual budget request for the service.
9) Requires the initial business plan to be submitted on April 1,
1996.
10) Requires Caltrans to transfer, through the interagency
agreement, the funds necessary to operate the intercity rail
services within the jurisdiction of the Authority.
11) Specifies that the fund transfer from Caltrans to the
Authority shall include funds for the operating subsidy, marketing
costs and a share of administrative costs resulting from the
substitution of responsibilities from Caltrans to the Authority.
12) Requires that 20% of the funds transferred to the Authority be
made available for discretionary new intercity rail services in
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the corridor, but provides that this requirement may be modified
to ensure that existing levels of service in the corridor are not
reduced.
FISCAL EFFECT
1) Makes up to $15 million in Transportation Planning and
Development (TP&D) Account funds available for transfer to the
Authority to operate the San Diegan intercity rail service. These
funds would cover the following costs for administering the rail
service:
a) $11 million for operating subsidies based upon the 1995-96
intercity rail budget for the San Diegans at the level of
service approved in the Governor's Budget;
b) $1.8 million for the marketing costs of the Authority based
upon Caltrans current San Diegan marketing budget;
c) $1 to $2 million to cover the administrative workload
shifted from Caltrans to the Authority.
2) Should result in a reduction in Caltrans' intercity rail budget
of approximately $14 to $15 million and the reduction of an
unknown number of administrative positions in the Caltrans
Division of Rail. Caltrans 1996-97 rail budget would need to be
reduced by this amount to account for the transfer of
responsibility from the state to the Authority for the operation,
administration and marketing of the San Diegan rail service by the
Authority.
3) To the extent that Caltrans' Rail Division and intercity rail
budget are not reduced consistent with the transfer of TP&D funds
to the Authority, there would be a corresponding decrease in
funding available for the Transit Capital Improvement (TCI) and
the State Transit Assistance (STA) programs. Both the STA and TCI
programs are local assistance transit programs funded from the
TP&D
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account. The funding formula for these programs provides that, of
the available revenues in the TP&D account, funds remaining in the
account after Caltrans' rail administrative, marketing and
operating costs are deducted shall be available for TCI and STA.
So, to the extent that overall intercity rail operating costs go
up, TCI and STA funding is reduced on a 50% / 50% proportional
basis.
4) Minor absorbable costs to the CTC to review and comment on the
Authority's annual business plan. These costs would be funded from
the TP&D account.
COMMENTS
1) Existing law requires an intercity rail service which receives
specified state funds to maintain a fare box recovery ratio of at
least 55% of operating costs to continue to be eligible for those
funds. Commuter rail service which receives specified state funds
must maintain a 40% fare box ratio. Existing law authorizes
Caltrans to contract with Amtrak to provide commuter and intercity
passenger rail services.
2) The Authority is a joint exercise of powers agency which
operates passenger rail service in San Bernardino, Riverside, Los
Angeles, Orange and Ventura counties. The Authority currently
operates a successful 350 mile commuter rail service in Southern
California known as the METROLINK, and the Authority negotiates
its own service contracts with AMTRAK.
3) The San Diegans intercity rail service in the corridor between
San Diego and San Luis Obispo has proven to be very popular,
generating fare box revenues far in excess of the required ratio.
The San Diegan fare box ratios have run about 90% over the last 5
years. Because the San Diegans have been so successful, only a
small portion of the state's $42 million annual intercity rail
operating budget is allocated to the San Diegan trains. For
example, the 1995-96 Governor's Budget provides a total $42
million in state funds to subsidize intercity rail service. Of
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this amount, only $11 million is allocated to the San Diegans. The
Balance of $31 million is allocated to the San Joaquins and the
Capitols services which have consistently had poor ridership. In
the 1994-95 fiscal year, projected fare box returns for the San
Joaquins is 54% and the Capitols is only 38%. As a result of the
poor fare box recovery, over 75% of the state resources available
for intercity rail service get allocated to the San Joaquins
service in the Central Valley, and the Capitols service between
Sacramento and the San Francisco Bay area.
4) The overall state rail subsidy is likely to increase in the
1995-96 fiscal year as AMTRAK is looking to cut costs and has even
considered terminating its agreement with the state to operate
these trains. Caltrans has been unable to negotiate contracts with
AMTRAK which control state costs. For example, over the last 3
years, Caltrans has requested over $12 million in budget increases
for new train service which the Legislature approved. However,
instead of allocating these resources for new service, these funds
were used for higher operating costs charged by AMTRAK. It is
unlikely that fare box returns will increase more than marginally
in 1995-96 to offset this trend. The result is that California
will probably have to increase the amount it pays AMTRAK to
operate intercity rail service in the future.
5) Caltrans' Division of Rail administers the San Diegans
intercity rail service through its contract with Amtrak. Caltrans
has a total of 158 personnel years allocated to the rail program
at a total rail staff cost of over
$12 million annually. Caltrans has "charged" the San Diegan for
administrative and marketing costs which totaled over $2.8 million
in FY 93-94. Caltrans also developed a marketing plan for the
service which has been sharply criticized by local agencies and
rail advocates as being overly expensive and ineffective.
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