BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
965 (DeSaulnier)
Hearing Date: 04/26/2010 Amended: 04/07/2010
Consultant: Mark McKenzie Policy Vote: T&H 8-0
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BILL SUMMARY: SB 965 would authorize the High-Speed Rail
Authority (HSRA) to expend federal funds made available by the
federal American Recovery and Reinvestment Act (ARRA) for
high-speed rail purposes, upon appropriation of those funds by
the Legislature. The bill would also require the HSRA to submit
an expenditure plan to the Legislature within 60 days of this
bill's enactment or upon finalization of a cooperative agreement
with the federal government, whichever occurs later, and to
annually report to the Legislature on the progress of the
expenditure of ARRA funds for high-speed rail purposes. The
bill would also facilitate the transfer of $400 million in ARRA
funds designated for expenditure on the Transbay Terminal in the
event that those funds are not transferred directly to the
Transbay Terminal Joint Powers Agency.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
HSRA expenditure plan likely in the range of $100-$150 Bond*/
Federal**
HSRA annual report minor ongoing costs to report project
level Bond*/
progress data
Federal**
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* High Speed Passenger Train Bond Fund
** ARRA funds
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STAFF COMMENTS:
Existing law, the Safe, Reliable High-Speed Passenger Train Bond
Act for the 21st Century of 2008 (Proposition 1A) identifies the
Phase I corridor for high-speed rail as an alignment from the
San Francisco Transbay Terminal to the Los Angeles Union Station
and Anaheim via the San Joaquin Valley. In January 2010, the
High-Speed Rail Authority (HSRA) received an American Recovery
and Reinvestment Act (ARRA) grant of $2.25 billion to aid in the
development of the Phase I project. Of that amount, $400
million is for constructing the basement of the new Transbay
Terminal in San Francisco to accommodate high-speed trains.
According to the Federal Railroad Administration (FRA)
announcement of its ARRA award, the remaining $1.85 billion is
for purchasing right-of-way, constructing track, signaling
systems, and stations, and completing environmental reviews and
engineering documents for the Los Angeles/Anaheim segment, the
San Francisco/San Jose segment, the Fresno/Bakersfield segment,
and the Merced/Fresno segment.
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SB 965 (DeSaulnier)
The federal guidelines for the expenditure of the funds have not
been issued to date. The FRA will be working with Caltrans and
the HSRA to set up a "cooperative agreement" that will guide the
state on requirements for expenditure of federal ARRA funds. It
is likely that the HSRA will be required to spend other
available revenues, such as high-speed rail bond funds, for
project expenditures in advance, and seek reimbursement for half
of project costs from the federal ARRA funds.
Staff notes that the oversight and project-level reporting
requirements of the bill are likely to be consistent with
accountability provisions in the forthcoming federal guidelines.
While these have yet to be issued, preliminary discussions with
the FRA as well as past experience indicate that this level of
project management and accountability will probably be a
requirement for expenditure of the federal ARRA funds. In
addition, since all of the projects supported by ARRA funds will
also include expenditure of state bond funds, HSRA will already
be collecting and reporting similar data pursuant to oversight
and accountability requirements in existing state law.
Therefore, costs related to bill's requirement that annual
progress reports be submitted by HSRA to the Legislature are
projected to be minor.
SB 965 would require HSRA to expeditiously adopt an expenditure
plan for the expenditure of the ARRA funds. The plan must
include project-level data on each project proposed for funding,
including project description, project location, a baseline
budget that includes both support and capital costs, the amount
of federal, state, and private funding to be committed to each
project, a baseline project schedule, and the projected number
of jobs each project would create or maintain in the state.
While HSRA would likely be required under the forthcoming
regulations to comply with these provisions, the urgent
timelines to submit the initial expenditure plan to the
Legislative Analyst's Office and the Legislature would require
HSRA to dedicate staff to the expenditure plan who would
otherwise be performing other functions. Staff estimates these
costs to be in the range of $100,000 to $150,000 in high-speed
rail bond funds, depending on when a cooperative agreement is
finalized.
The Transbay Terminal Joint Powers Agency, the governing agency
for the Transbay Terminal project at the northern terminus of
the high-speed rail system, submitted an application directly to
the federal government for ARRA funding and was awarded $400
million, which FRA included in its $2.25 billion award to the
HSRA. The U.S. Department of Transportation is attempting to
find a means of transferring the grant directly to the Transbay
Terminal project, bypassing the HSRA and the state. SB 965
would exempt any funds made available for the Transbay Terminal
from the requirements of the bill if the funds are provided
directly to HSRA for that project.