BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1078
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: Feuer
VERSION: 8/5/10
Analysis by: Art Bauer FISCAL: No
Hearing date: August 18, 2010 URGENCY
SUBJECT:
Los Angeles Transportation Metropolitan Transportation
Authority: transactions and use tax
DESCRIPTION:
This bill changes the notification to Los Angeles County members
of the Legislature required for amendments to the Measure R
transportation sales tax expenditure plan.
ANALYSIS:
AB 2321 (Feuer), Chapter 302, Statutes of 2008, authorizes the
Los Angeles County Metropolitan Transportation Authority (MTA)
to place a percent transportation sales tax proposal before
Los Angeles County voters. MTA exercised this authorization in
November 2008, when voters there approved Measure R, a percent
sales tax for transportation improvements. Measure R gained the
support of 68 percent of the voters. It is estimated that this
sales tax will generate $39.4 billion before it expires in 2040.
Prior to submitting Measure R to the voters, existing law
required MTA to adopt an expenditure plan, which was part of the
ballot measure, for the use of sales tax revenues. The program
is summarized in the following table.
--------------------------------------------------
| Voter Approved Measure R Expenditure Plan |
| Allocations |
| |
--------------------------------------------------
|--------------------------+-----------+-----------|
| Programs | Est. 30 |Percentage |
| | Year | Share |
AB 1078 (FEUER) Page 2
| | Amount of | |
| | Sale Tax | |
| | Revenue | |
| |(billions) | |
|--------------------------+-----------+-----------|
| Transit Capital | $13.790 | 35% |
|--------------------------+-----------+-----------|
| | | |
|--------------------------+-----------+-----------|
| Miscellaneous | 1.970 | 5% |
|Transit | | |
|--------------------------+-----------+-----------|
| | | |
|--------------------------+-----------+-----------|
| Highway Capital | 7.880 | 20% |
|--------------------------+-----------+-----------|
| | | |
|--------------------------+-----------+-----------|
| Rail Operations | 1.970 | 5% |
|--------------------------+-----------+-----------|
| | | |
|--------------------------+-----------+-----------|
| Bus Operation | 7.880 | 20% |
|--------------------------+-----------+-----------|
| | | |
|--------------------------+-----------+-----------|
| Local Return | 5.910 | 15% |
|(Streets & Roads)Roads) | | |
|--------------------------+-----------+-----------|
| Total | | 100% |
| |$39.4 | |
|--------------------------+-----------+-----------|
|Source: MTA | | |
--------------------------------------------------
In addition to the program of projects, the expenditure plan has
several transit and highway projects that have been assigned
"expected completion" dates. Existing law requires all projects
in the expenditure plan must be in MTA's Long Range
Transportation Plan.
Existing law requires MTA to notify the Los Angeles County
legislative delegation of changes to the adopted expenditure
plan no later than 365-days prior to MTA adopting the
expenditure plan amendments. The notification applies to
amendments to the expenditure plan that:
AB 1078 (FEUER) Page 3
1. Affect the amount of net revenue that
is proposed to be spent on projects.
2. Affect the schedule for the
availability of funds for projects.
3. Affect the schedule for estimated
completion date for a project.
The notification must also include an explanation of the
proposed amendments and an estimate of the impact the proposed
amendment would have on the project scope, schedule, cost, or
availability of funding.
In addition to procedural requirements regarding the expenditure
plan, existing law authorizes MTA to issue debt guaranteed by
the net proceeds of the Measure R sales tax.
This bill :
1) Requires MTA to notify the Los Angeles County
legislative delegation if an amendment to the expenditure
plan would delay the availability of the funding for a
project.
2) Requires MTA to notify the Los Angeles County
legislative delegation if an amendment to the expenditure
would delay the estimated completion date for a project.
3) Declares this act is an urgency statute in order to
provide increased flexibility to MTA for implementation of
its sales tax program.
COMMENTS:
1) Purpose . The purpose of this bill is to waive the
365-day notice for amendments to Measure R's expenditure
plan when they accelerate the availability of funds and
advance the completion of transit and highway projects. The
365-day notice would still apply if an amendment to the
expenditure plan would result in a delay to either the
availability of funds or to the completion schedule. The
bill's provisions would apply to twelve transit projects
and to up to fifteen highway projects that have been
identified as being candidates for schedule acceleration.
AB 1078 (FEUER) Page 4
The fundamental argument underlying this built is that
accelerating a project's funding and schedule is valuable
as the benefits from enhanced mobility occur sooner. The
more serious matter of delayed projects still requires
legislative notification.
2) 30/10 Initiative . Since the enactment of AB 2321 and the
passage of Measure R, MTA has embarked upon an effort to
accelerate federal funding for MTA's rail development
program. This program, initiated by Mayor Antonio
Villaraigosa, and adopted unanimously by the MTA board, is
popularly referred to as the 30/10 Initiative. The 30/10
Initiative applies only to transit projects. The
Initiative's objective is to create a financial strategy
allowing for the construction of twelve rail transit
projects in ten years as opposed to the usual thirty years
when relying upon federal capital grants. MTA estimates in
its Long Range Transportation Plan that the cost of the
twelve projects over thirty-years would be $17.5 billion.
This is unaffordable under the Measure R Program. Using
the 30/10 Initiative framework, the cost of the twelve
projects is reduced to $13.7 billion, a 21 percent saving.
The essence of this program is to use the 30-year revenue
stream generated by the Measure R for transit projects as
collateral for long-term financing. The elements of the
30/10 Initiative include a combination of grants and debt
as can be seen below:
$2.9 billion in federal new rail
starts funding.
$5.7 billion federal loan.
$160 million in loans and guarantees
from the federal Transportation Infrastructure
Finance and Innovation Act (TIFIA)
MTA is in negotiations with congressional and
administration officials in Washington to secure
implementing federal legislation.
1) Required notification has been given . Because it is
unclear exactly when the negotiations in Washington will be
completed, MTA notified the Los Angeles County legislative
delegation by letter on July 26, 2010 that it "intended to
AB 1078 (FEUER) Page 5
expedite implementation of Measure R projects by
implementing the 30/10 Initiative and accelerating the
highway projects." By removing the need to notify the
Legislature when accelerating project schedules or funding,
this bill allows MTA to respond to potential federal
funding actions more quickly. For example, if MTA and the
federal government were to reach agreement on the 30/10
Initiative in August 2011, and the terms resulted in a
different schedule from that which is currently
anticipated, a new notification and twelve month time clock
would begin. This situation would potentially delay
implementation and is the circumstance that this bill
endeavors to avoid.
Assembly votes are not relevant.
POSITIONS: (Communicated to the Committee before noon on
Tuesday,
August 17, 2010)
SUPPORT: Los Angeles County Metropolitan Transportation
Authority (sponsor)
OPPOSED: None received.