BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 2703
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: J. perez
VERSION: 5/17/10
Analysis by: Jennifer Gress FISCAL: yes
Hearing date: June 29, 2010 URGENCY: YES
SUBJECT:
Second round of federal economic stimulus funds for
transportation
DESCRIPTION:
This bill establishes a process whereby the California
Department of Transportation (Caltrans) may make loans using
federal funds received from a second round of economic stimulus
to advance a Proposition 1B project. Upon repayment of the
loan, the funds shall be made available, upon appropriation by
the Legislature, for the State Highway Operations and Protection
Program (SHOPP).
ANALYSIS:
Proposition 1B
Proposition 1B, known as the Highway Safety, Traffic Reduction,
Air Quality and Port Security Bond Act of 2006, is a general
obligation bond measure approved by voters in November 2006.
The measure established 14 funding programs that serve a variety
of transportation purposes.
Round 1 of federal economic stimulus
On February 17, 2009, President Obama signed the American
Recovery and Reinvestment Act (ARRA), a $787 billion economic
stimulus package developed with the goals of creating new and
saving existing jobs and investing in long-term economic growth.
The federal government made available $48 billion nationally
for a variety of discretionary grant and formula-based
transportation programs. Of the formula-based funds, California
is expected to receive $2.57 billion for highways and $1.1
billion for transit.
AB 2703 (J. PEREZ) Page 2
On March 27, 2009, the Legislature passed and the Governor
signed AB 20xxx (Bass), Chapter 21, to govern the distribution
of ARRA's formula-based highway funds. That bill provided that
all projects using ARRA funds must meet the deadlines and
requirements established by ARRA, but it changed how highway
infrastructure funds are distributed to Caltrans and to regional
transportation agencies and provided specific guidance on the
use of Caltrans' portion of ARRA funds. AB 20xxx also permitted
Caltrans to use the federal funds to make loans to maintain work
on Proposition 1B projects that were at risk of being delayed by
the state's inability to issue bonds. Funds used to repay these
loans were then made available for the SHOPP program.
The intent of AB 20xxx was to facilitate the implementation of
federal stimulus funds under the timelines established by ARRA
and to achieve a number of policy objectives, including
addressing a growing backlog of maintenance and rehabilitation
needs, supporting Proposition 1B projects that may be delayed
due to the state's fiscal crisis, and creating employment
opportunities for young adults.
Round 2 of federal economic stimulus
In December 2009, the United States House of Representatives
passed H.R. 2847, known as the "Jobs for Main Street Act," to
provide additional stimulus funding for transportation. The
Jobs for Main Street Act contains formula-based programs that
are similar to those that were in ARRA, but it establishes a
much shorter timeline for spending its funds. Under the Jobs
for Main Street Act, transportation agencies must award
contracts within 90 days of the state receiving funds.
This bill establishes a process whereby Caltrans may make loans
using federal funds received from a second round of economic
stimulus for transportation to advance Proposition 1B projects,
provided each project meets the following requirements:
The project has been programmed to be funded under a
Proposition 1B program prior to May 1, 2010.
The project is ready such that the project sponsor may
award a construction contract within 90 days of federal
funds being made available.
This bill also provides that, upon repayment of the loan, the
funds shall be made available, upon appropriation by the
Legislature, for the SHOPP.
AB 2703 (J. PEREZ) Page 3
COMMENTS:
1.Purpose . According to the author, this bill is needed to
ensure that any federal economic stimulus funds that are made
available are awarded in an expeditious manner to
"shovel-ready" projects, in the event Congress makes
additional transportation funding available. Under ARRA, many
shovel-ready projects were completed and thus there are now
fewer projects that would be ready for construction
immediately if a second stimulus bill were enacted. This
situation may make it difficult for Caltrans and other
transportation agencies to use funds from a second round of
stimulus funding within the anticipated timelines. Many
Proposition 1B projects, however, meet the requirements for
use of federal funds and will be able to meet the short
timelines for awarding funds. Allowing federal funds to be
loaned to Proposition 1B projects, therefore, enables funds to
be awarded quickly while also making funding available for the
SHOPP.
2.SHOPP . The purpose of the SHOPP is to maintain and preserve
the investment in the state highway system and its supporting
infrastructure. Each year the maintenance and rehabilitation
needs of the system outstrip available resources. Providing
that federal stimulus funds used to advance Proposition 1B
projects be repaid to the SHOPP has several advantages.
First, a one-time infusion of funds will help to address the
growing backlog of projects in the program and spending more
on maintenance to preserve the system in the near-term reduces
costs that must be incurred for major rehabilitation projects
in the future. Second, SHOPP projects are located throughout
the state, helping to ensure geographic equity in the
expenditure of federal funds. Finally, there is evidence to
suggest that maintenance and rehabilitation projects create
more jobs than large capacity-expansion projects.
3.Status of federal stimulus . It is unclear at this time
whether Congress will enact a second stimulus bill. After the
House of Representatives passed the Jobs for Main Street Act
in December, the U.S. Senate amended the bill to remove the
provisions related to stimulus, renamed the bill the "Hiring
Incentives to Restore Employment (HIRE) Act," and limited the
bill to extending the federal transportation bill, known as
the Safe, Accountable, Flexible, Transportation Equity Act - A
Legacy for Users (SAFETEA-LU). The HIRE Act was signed by the
AB 2703 (J. PEREZ) Page 4
President on March 12, 2010. The Senate had proposed to deal
with a second stimulus with a smaller amount of funding, but
has yet to do so.
In response to the Jobs for Main Street Act, Caltrans worked
with the regional transportation agencies and the Federal
Highway Administration (FHWA) in January and February to
identify projects that could meet the short deadlines proposed
by the original Jobs for Main Street Act and to ensure that
projects that could meet those timelines were included in the
Federal Statewide Transportation Improvement Program (FSTIP).
(Projects must be included in the FSTIP to be eligible for
federal funding.) Given the uncertain fate of federal
stimulus at this time, much of the early activity by
transportation agencies at every level of government has
slowed or halted altogether.
4.Technical amendment . The author or committee may wish to make
the following technical amendment: Page 2, line 28, strike
"Operation" and insert "Operations."
5.Urgency . This bill is an urgency measure intended to expedite
the awarding of federal stimulus funds in order to retain jobs
in California. If this bill is passed by the Legislature and
signed by the Governor, it will go into immediate effect.
RELATED LEGISLATION
SB 1371 (Lowenthal) seeks to implement a second federal economic
stimulus bill. In so doing, that bill requires Caltrans to work
with local transportation agencies to develop a list of projects
that have the potential to be awarded within a 90-day period
established by the Jobs for Main Street Act and to submit
monthly reports to the Legislature regarding the status of
implementing the stimulus bill, should one be passed by Congress
and signed by the President. Pending in the Assembly
Appropriations Committee.
Assembly Votes:
Floor: 72-0
Appr: 16-0
Trans: 13-0
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 23, 2010)
AB 2703 (J. PEREZ) Page 5
SUPPORT: California State Association of Counties
State Building and Construction Trades Council of
California
OPPOSED: None received.