BILL ANALYSIS �
AB 1308
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1308 (Miller) - As Introduced: February 18, 2011
Policy Committee:
TransportationVote:12-0 (Consent)
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill continuously appropriates, and allows for encumbrance
of, funds in the Highway Users Tax Account (HUTA) in any fiscal
year when the budget is not enacted by July 1, until the time
when the budget is enacted.
FISCAL EFFECT
1)Potential GF revenue loss from forgone Pooled Money Investment
Account interest earnings to the extent HUTA funds are
allocated prior to late enactment of a state budget. Based on
annual revenues of around $3 billion, the revenue loss
assuming a one-month budget delay would be in the hundreds of
thousands dollars.
2)Potential significant savings to the extent the continued
allocation of HUTA funds, despite a late budget allows the
state to avoid the costs of stopping and restarting some
transportation projects. Examples of these costs are erecting
temporary barriers, additional contractor charges for
demobilization and remobilization, and potential liquidated
damages and contractor claims for project delays.
COMMENTS
1)Background . The primary source of state funds for
transportation is the state excise tax on gasoline and diesel
fuel, which generates roughly $3 billion annually. Revenue
from the excise tax is deposited into HUTA then dispersed by
formula monthly to cities and counties and to Caltrans. Money
dispersed to Caltrans is deposited into the State Highway
AB 1308
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Account (SHA).
2)Purpose . This bill is intended to allow for the continued use
HUTA funds, even when the state budget is not passed by the
statutory deadline. During periods in which there is no state
budget, excise tax revenue is collected and deposited into
HUTA but is not dispersed to cities and counties or to the
State Highway Account (SHA) for Caltrans's use. In years past,
the SHA had sufficient cash such that the lack of HUTA
transfers did not pose much of a problem for the state.
Transportation projects could continue unfettered throughout a
budget-less summer using SHA reserves in the SHA.
For a number of reasons, however, the SHA no longer carries
such a large cash balance, thus a budget impasse places
projects are in jeopardy of being shut down for lack of cash,
even though cash is accruing to the HUTA. During budget delays
earlier in the last decade, project stoppages were avoided
despite the lack of SHA cash because local governments, and
even contractors, provided loans to keep projects going until
a state budget was signed. In the current fiscal climate and
economic challenges facing the construction industry, lines of
credit are scarce. In the event of another budget impasse, it
is more likely that some transportation projects would be
suspended due to a lack of access to HUTA funds.
3)No Cash-Flow Implications . Prior to approval by the voters of
Proposition 22 in November 2010, the administration would
typically borrow HUTA funds over the course of each fiscal
year in order to meet short-term cash-flow needs. Because the
provisions of Proposition 22 specifically prohibit any
borrowing of HUTA funds, continuously appropriating HUTA
monies will not have any impact on the state's ability to
manage its cash-flow.
4)Prior Legislation . In recent years, numerous bills have sought
to authorize or require continuous appropriations for specific
programs or departments during periods of budget impasse. All
of the following measures were held on this committee's
Suspense File:
a) AB 256 (Huff) of 2007, AB 697 Oropeza of 2005, and AB
1443 (Murray) of 2003, to continuously appropriate all fuel
tax revenue for transportation purposes.
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b) AB 322 (Anderson) of 2007 and AB 1928 (Berg) in 2006, to
continuously appropriate Federal funds to the Departments
of Aging and Rehabilitation to support specific activities.
c) AB 1125 (Hern�ndez) of 2009, AB 1523 (Soto) of 2007, AB
742 (Jones) of 2005, and AB 1535 (Bermudez) of 2003, to
continuously appropriate funds to pay all state employee
salaries and benefits.
d) AB 1604 (Saldana) of 2005 to continuously appropriate GF
to support the California Community College system.
e) AB 273 (Bogh) of 2003 to continuously appropriate GF to
pay state peace officers' salaries.
AB 1699 (Hern�ndez) of 2010, which continuously appropriate
funds to pay all state employee salaries and benefits, passed
this committee, but was subsequently amended to become an
urgency measure and failed in the Senate.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081