BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 289
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: Galgiani
VERSION: 6/22/10
Analysis by: Art Bauer FISCAL: yes
Hearing date: June 29, 2010 URGENCY: YES
SUBJECT:
High-speed rail
DESCRIPTION:
This bill authorizes exempt positions and establishes priorities
for spending state and federal funds relating to high-speed
rail.
ANALYSIS:
SB 1420 (Kopp), Chapter 796, Statutes of 1996, creates the
High-Speed Rail Authority (HSRA). In 2008, California voters
approved the Safe, Reliable High-Speed Passenger Train Bond Act,
Proposition 1A, which was put on the ballot by AB 3034
(Galgiani), Chapter 276, Statutes of 2008. The bond measure
makes available $9 billion for the development of a high-speed
rail system and $950 million for improvements to existing
passenger rail systems that will offer feeder services to the
high-speed rail service. Proposition 1A identified Phase I of
the high-speed rail (HSR) project as Anaheim-Los
Angeles-Bakersfield-Fresno-San Jose-San Francisco Transbay
Terminal. Although planning can proceed on the San Diego and
Sacramento lines, construction may occur only after Phase I is
under construction and funding is available for these two
additional segments.
In January of 2010, the Federal Railroad Administration (FRA)
awarded the HSRA a $2.25 billion American Recovery and
Reinvestment Act (ARRA) grant, the largest HSR grant award in
the country. Included in the grant is $400 million for the San
Francisco Transbay Terminal joint powers agency, which submitted
a separate ARRA application, but FRA consolidated its grant with
the state's. The actual amount of ARRA funds available to the
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HSR project is $1.85 billion. The ARRA grant is for assisting in
funding the preliminary engineering and environmental work on
Phase I and to assist with the construction of the following
Phase I segments: Los Angeles-Anaheim, Fresno-Bakersfield,
Fresno-Merced, and San Jose-San Francisco. As a condition of the
grant, the HSRA must obtain environmental clearances for the
corridors by September 30, 2011, and construction must be
completed by September 30, 2017. In addition to the Proposition
1A authorization and the ARRA funds, the HSRA also has $336
million of other public funds. The total amount of funding
currently available to the HSRA is $11.2 billion. The HSRA's
current estimate for constructing Phase I is $42.6 billion.
Management of the HSRA
Existing law establishes the HSRA with a nine member governing
board, including five members appointed by the governor, two
members appointed by the Senate Rules Committee, and two members
appointed by the Speaker of the Assembly. The board is
authorized to appoint an executive director, who is exempt from
the state civil service, at a salary established by the board
and approved by the Department of Personnel Administration. With
the approval of the board, the executive director may appoint
staff to assist him.
This bill :
Authorizes the governor, upon the recommendation of the
executive director of the HSRA, to appoint up to six exempt
employees who shall serve at the pleasure of the executive
director, and who shall serve in the following positions:
o Chief program officer.
o Regional directors (up to three).
o Chief financial officer.
o Director of risk management and project
controls.
Authorizes the compensation of all exempt employees to
be set by the governing board based on a salary survey
conducted by independent outside advisors of state,
regional and local transportation agencies with
responsibilities comparable to the HSRA, and other relevant
labor pools.
AB 289 (GALGIANI) Page 3
Requires the Department of Personnel Administration
(DPA) to review the methodology used in the survey and to
approve the salaries set by the governing board. DPA may
accept a previously completed salary survey if it so
desires
State Funds
Existing law establishes an annual budgetary process managed by
the Budget and Fiscal Committee in the Senate and the Budget
Committee in the Assembly to determine the level of
appropriations for all state programs for the fiscal year.
This bill states that it is the intent of the Legislature to
appropriate $230.5 million in Proposition 1A bond funds to the
HSRA.
Federal Funds
Existing law authorizes the HSRA to accept federal grants;
however, the grant revenues cannot be expended nor can state
funds be expended in anticipation of being reimbursed from a
federal grant, until there is an appropriation of funds by the
Legislature. In addition, existing law requires the HSRA to
adopt a funding plan that identifies all existing funds for
expenditure in a corridor as an element of the pre-appropriation
process and the plan must be reviewed by a peer review group.
This bill :
Requires ARRA funds appropriated by the Legislature to
be used for planning, preliminary engineering,
project-level environmental work, mitigation, final design,
and construction for San Francisco-San Jose, Merced-Fresno,
Fresno-Bakersfield and Los Angeles-Anaheim corridors.
Requires the HSRA to prepare an expenditure plan, in
consultation with the Federal Railroad Administration, for
the ARRA funds and submit the plan to the Director of
Finance and to the transportation and fiscal committees of
both houses of the Legislature.
Places in state statute the federal requirements
governing the use of ARRA funds, including the completion
AB 289 (GALGIANI) Page 4
of environmental reviews by September 2011, the obligation
of funds by September 2012, and the completion of
construction by September 2017.
Funds received by the HSRA from the Passenger Rail
Investment and Improvement Act of 2008 (PRIIA) shall be
used for planning and engineering of future high-speed rail
service in the Merced to Sacramento Corridor, Los Angeles
to San Diego Corridor, and the Altamont Corridor. PRIIA is
the act governing the use of federal rail improvement
funds.
COMMENTS:
1) Background . The Senate Transportation and Housing
Committee has held eight oversight hearings on the HSRA.
The most recent oversight hearing included a presentation
by the State Auditor of her findings of an audit that the
chair and vice-chair of this committee requested. Among the
findings of the State Bureau of Audits (SBA) were
managerial deficiencies, including $6 million of payments
made to contractors without any documentation, and the
HSRA's failure to the keep track of the use of bond
revenues for administration and preconstruction planning.
2) Issues related to management appointments . The
provisions related to the appointment of six exempt
positions and the setting of salaries is unnecessary
because trailer bill language for the 2010-2011 Budget Act
includes those same provisions.
3) Budgetary polic y. The bill states as a matter of
legislative intent that the Legislature will budget in the
2010-2011 fiscal year $230.5 million of Proposition 1A
funds to match the federal funds awarded to the HSRA. It is
difficult to understand the purpose of this language
because the amount of bond funds are appropriated by the
Legislature and reflect several factors, including the
ability of the funds to be spent during the fiscal year. To
date, HSRA does not even have a fund transfer agreement
AB 289 (GALGIANI) Page 5
with the federal government for ARRA funds that the state
would match. This provision of the bill is unnecessary.
4) Federal funds . This bill puts into state law existing
federal law or regulations that govern agreements between
the HSRA and the federal government. Should the federal
government change the regulations or the underlying
statute, state law would have to be amended to conform to
the new federal provisions to avoid conflicts in law. These
provisions are unnecessary.
Assembly Votes are not relevant to this bill.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 23, 2010)
SUPPORT: None received.
OPPOSED: None received.