BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1446
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: Feuer
VERSION:
6/19/2012
Analysis by: Art Bauer FISCAL: yes
Hearing date: June 26, 2012
SUBJECT:
Sales and use tax: Los Angeles County
DESCRIPTION:
This bill authorizes the Los Angeles County Metropolitan
Transportation Authority (MTA) to place before the voters an
ordinance to extend Los Angeles' Measure R sales tax
indefinitely.
ANALYSIS:
AB 2321 (Feuer), Chapter 302, Statutes of 2008, authorized MTA
to place before the voters an ordinance to increase the local
transportation sales tax for 30 years by percent. The statute
also requires MTA to allocate 20 percent of the sales tax
revenue for bus operations and 5 percent for rail operations,
authorizes MTA to incur bonded indebtedness, and requires MTA to
adopt an expenditure plan prior to submitting the ordinance to
the voters. Existing law identifies 18 projects that MTA must
include in the expenditure plan and in its Long Range
Transportation Plan. Although state law identifies the minimum
level of funding for each project, MTA is allowed to increase
funds to a project if any funds are available after debt service
payments. The expenditure plan must also anticipate the
completion date for each project. MTA placed a sales tax
ordinance, referred to as Measure R, on the November 2008
ballot. Sixty-seven percent of the voters approved the sales
tax increase.
This bill :
1.Authorizes MTA to place before the voters a permanent half
percent sales tax and requires that two-thirds of the voters
vote in favor for it to be adopted.
AB 1446 (FEUER) Page 2
2.Requires MTA to update its expenditure plan prior to
submitting the ordinance to the voters. The update shall
include an estimated cost for each project and program,
identification of the schedule that MTA believes the funds
will be available for projects, and the expected completion
date for each project.
3.Authorizes MTA to incur bonded indebtedness payable from the
revenue from the new sales tax.
4.Requires that the proceeds from the Measure R bonds and the
proceeds from the new tax to be used to accelerate the
completion of projects authorized in AB 2321 and in MTA's
adopted expenditure plan for Measure R.
5.Continues the set aside of 20 percent of sales tax revenue for
bus operations in Los Angeles County and 5 percent for rail
transit operations.
6.Requires MTA, upon the completion of the specified projects
and the payment of outstanding debt service, to spend
unencumbered sales tax revenue on other projects in its Long
Range Transportation Plan.
COMMENTS:
1.Purpose . Sixty-seven percent of Los Angeles County voters
authorized the imposition of a 30 year, -percent local
transportation sales tax in 2008. The decline in the state
and national economy, the diminishment of state and federal
funding, the increasing need to rely upon various debt
financing strategies, and unanticipated cost increases have
delayed project implementation. According to the author, this
bill provides the voters an opportunity to endorse the Measure
R program by asking them to approve converting the existing
tax to a permanent tax.
2.Background . When Measure R was adopted, MTA estimated that
the 30-year program was about $40 billion. Because of the
recession and general economic malaise, MTA is now estimating
that Measure R will generate about $36 billion by 2038. When
Los Angeles Mayor Antonio Villaraigosa proposed to accelerate
the construction of all 12 rail transit projects so that they
would be completed in 10 years and not the usual 30 years, MTA
began a search for additional revenue or funding mechanisms.
AB 1446 (FEUER) Page 3
This bill endeavors to solve the problem of insufficient
revenue by removing the sunset on Measure R. Should the
voters approve a new sales tax without a sunset, MTA may be
able to issue additional debt and take advantage of the
federal credit assistance program included in The
Transportation Infrastructure Finance and Innovation Act
(TIFIA).
3.Foothill Extension Construction Authority (Authority)
amendment. The Authority contends that MTA's current adopted
expenditure plan incorrectly characterizes Metro Gold Line
Foothill Extension. AB 2321 describes the extension from east
Pasadena to Claremont. The the expenditure plan provides $735
million from east Pasadena to Azusa. The Authority believes
the termination of the project is defined as Claremont and
that should be reflected in the expenditure plan. The
Authority proposes to amend this bill to allow any sponsor of
a project to submit its expenditure plan for its project to
MTA. The expenditure plans will include the projects' cost
and construction schedule. The amendment requires MTA to
include the expenditure plans submitted by project sponsors in
its countywide expenditure plan without modification.
MTA's expenditure plan endeavors to harmonize competing
demands among projects and the revenue generated by the sales
tax. It appears the amendment would allow the Authority and
other project sponsors to develop their project expenditure
plans. The amendment requires MTA to incorporate these plans
into the countywide expenditure plan. It is unclear exactly
how the projects would be harmonized with the limited sales
tax revenues. It essentially removes MTA from being the
referee among competing projects and appears to balkanize the
project development process in Los Angeles County.
4.Amendments . Although the bill specifies that the funding set
aside in Measure R for transit operations will continue should
the voters approve an additional sales tax, it is unclear
whether the set-aside for the maintenance, construction, and
rehabilitation of local streets and roads would continue after
the program of projects is completed. Recognizing this, the
committee may wish to amend the bill to ensure that Section
310350.5 (b) (B ) (iv) remains operative after the Measure R
program of projects is completed, to clarify that the street
and road set aside remains.
5.Previous legislation . SB 314 (Murray), Chapter 785, Statutes
AB 1446 (FEUER) Page 4
of 2003, established a list of projects that MTA was to
construct with proceeds from a voter approved six and one-half
years half percent sales tax. AB 2321 (Feuer), Chapter 302,
Statutes of 2008, superseded
SB 314.
6.Double-referral . The Rules Committee referred this bill to
both the Transportation and Housing Committee and to the
Governance and Finance Committee. Therefore, if this bill
passes this committee, it will be referred to the Governance
and Finance Committee.
Assembly Votes:
Floor: 54-17
Appr: 13-4
Trans: 11-1
Loc Gov: 7-1
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 20, 2012)
SUPPORT: American Council of Engineering Companies
American Jewish Committee
California Chamber of Commerce
California Labor Federation
Los Angeles Area Chamber of Commerce
Los Angeles Business Council
Los Angeles County Federation of Labor
Move LA
Southern California Contractors Association
State Building and Construction Trades Council of
California
South Bay Cities Council of Governments
OPPOSED: California Taxpayers Association
City of Cerritos
Howard Jarvis Taxpayers Association
Metro Gold Line Foothill Extension Construction
Authority
AB 1446 (FEUER) Page 5