Transportation and Infrastructure Funding Legislation

Assembly Member Mike Feuer (D- Los Angeles)

 

 

Assembly Member Mike Feuer (D – Los Angeles) introduced a package of bills in 2008 to address state, regional and local transportation and infrastructure funding needs. The Assembly Member’s primary thesis is that the State, due to year-over-year budget shortfalls, will not be increasing revenue for transportation purposes any time soon. Thus, these measures focus on providing tools to regional and local entities and voters to raise revenues for local projects, as they see fit.

 

 

AB 1815 (Feuer)  California Transportation Infrastructure Funding Task Force.

 

Existing law provides various sources of revenue to fund state highway and local road maintenance, operation, and improvement, including a state-imposed per-gallon fuel tax of 18 cents.

 

This bill creates, until January 1, 2010, the California Transportation Infrastructure Funding Task Force, with 14 members appointed by the Legislature, Governor, California Transportation

Commission, city and county organizations, and other specified entities. The bill would require the task force to hold at least three public hearings around the state and to report to the Legislature and Governor by January 1, 2010, on alternatives to the current system of taxing road users through per-gallon fuel taxes. The bill would make legislative findings and declarations in that regard.

 

Background: AB 1815 creates the Road User Task Force in order to analyze the decline in gas tax revenues, due to the increased use of alternative fuels and enhanced motor vehicle fuel efficiency.  Its purpose would also be to provide solutions to stabilize future transportation funding, which may include alternative revenue sources.  The current transportation financing system needs to be studied.  The state’s gas tax has not kept up with inflation. Consequently, the state’s “buying power” for transportation projects has been eroding.

 

 

AB 1836 (Feuer)  Infrastructure Financing Districts: voter approval: repeal.

 

Status: Set for Hearing in Assembly Local Government Committee on April 16th.

 

Existing law: allows a legislative body, as defined, to create an infrastructure financing district (IFD), adopt an infrastructure financing plan, and issue bonds, for which only the district is liable, to finance specified public facilities, upon voter approval.

 

This bill would eliminate the requirement of two-thirds voter approval and allow the legislative body to create the district, adopt the plan, and issue the bonds by resolutions.

Background: According to the author, this bill brings IFDs more in line with redevelopment districts by removing the voter approval currently needed for cities and counties to create IFDs. IFDs are similar to redevelopment districts in that they allow reallocation of existing tax revenues to improve a designated area. Local agencies that will contribute their property tax increment revenue to the IFD must still approve the plan.

 

 

AB 2321 (Feuer) Transportation funding: County of Los Angeles

 

Status: Located in the Assembly Transportation Committee. Not yet set for hearing.

 

Existing law authorizes the Los Angeles County Metropolitan Transportation Authority (MTA) to impose, in addition to any other tax that it is authorized to impose, a transactions and use tax at the rate of 0.5% for 6½ years or less, for the funding of specified transportation-related purposes designated as capital projects or capital programs. Existing law conditions the imposition of a tax under this authority upon voter approval as otherwise required by law. It also prohibits the MTA from incurring bonded indebtedness payable from the tax proceeds to fund those projects or programs or from substituting revenue from the tax proceeds for current funding commitments to the projects or programs. Existing law requires the MTA to prepare an expenditure plan prior to submitting the tax ordinance to voters, describing the projects and programs and their cost and funding sources. Existing law also creates the Capital Project Development Fund, into which the tax revenue is to be deposited, and makes those moneys available for expenditure by the MTA to fund the designated projects and programs.

 

This bill, sponsored by the MTA, modifies these provisions to require the MTA tax ordinance to specify that the tax is to be imposed for a period not to exceed 30 years, and to require the MTA to include specified projects and programs in its Long Range Transportation Plan. This bill would also authorize the MTA to incur bonded indebtedness, as specified, and would make other related changes.

 

One of the City of Santa Monica’s highest priority transportation projects – extension of Exposition Boulevard Light Rail Transit from Culver City to Santa Monica – was specifically listed and funded in the original legislation that authorized the MTA to raise the additional half-cent tax (i.e. SB 314 [Murray] of 2003; see below). This bill leaves that language in the law, but deletes the SB 314 requirement that the Project be completed by 2011. Additionally, this bill deletes the SB 314 language that required the Exposition Boulevard Light Rail Transit Project to “be the first priority for federal funding received for the capital projects in this subparagraph.” In other words, of the 11 original transit or highway projects named for half-cent sales tax funding in SB 314, Expo had been designated as receiving “first call” on federal funds MTA might receive; AB 2321 deletes that designation.

 

Here is the operative language from AB 2321 (Feuer) affecting the Exposition Boulevard LRT Project:

 

“Exposition Boulevard Light Rail Transit Project from downtown Los Angeles to Santa Monica. The sum of nine hundred twenty-five million dollars ($925,000,000). This project shall be completed by 2011, and shall be the first priority for federal funding received for the capital projects in this subparagraph.”

 

Background: Beginning in the 1970's, numerous measures were approved by the Legislature granting specific authority to certain counties, such as Los Angeles, Santa Clara, and Sacramento, to impose regional sales taxes to fund transportation projects and services.

 

In Los Angeles County, consumers of tangible items currently pay sales tax at the rate of 8.25%.  This tax rate is comprised of a 6% state sales tax, a 1.25% local sales tax, and a 1% local transactions and use tax.  In 2003, Senator Kevin Murray authored a bill, SB 314 (Chapter 785, Statutes of 2003) for MTA which allowed MTA to seek county voter approval to increase the transactions and use tax by 0.5% for a combined rate of 8.75%.  The tax of 0.5% would be limited to a 6 year period and would be dedicated to specified transportation projects and uses specified in the bill Passage of the additional tax required a majority vote from the MTA governing board and approval from two-thirds of voters in the county.  While Los Angeles County was already at its 1% transactions and use tax maximum under state law, SB 314 excluded the proposed 0.5% increase from that cap. Most of the projects that were proposed for construction in the bill were also listed in MTA's Draft Short Range Transportation Plan.

 

AB 2321 extends the sunset of the tax to 30 years and allows for extra revenue generated from the sales tax to continue to be used for projects in MTA’s Long Range Transportation Plan.  It is estimated to generate $30 billion over the course of 30 years. 

 

 

AB 2388 (Feuer) Vehicle License Fee Law: passenger vehicles.

 

Status:   Assembly Rules Committee

 

Existing law: The Vehicle License Fee Law establishes, in lieu of any ad valorem property tax upon vehicles, an annual license fee for any vehicle subject to registration in this state in the amount of 0.065% of the market value of that vehicle, as provided.

 

This bill would declare the intent of the Legislature to enact legislation to revise the Vehicle License Fee Law to include fees on passenger vehicles for weight and carbon dioxide emissions.

 

Background: The author’s intent is to require the Department of Motor Vehicles (DMV) to collect a statewide surcharge on the registration fees for every passenger vehicle based on carbon dioxide emissions and the weight of the vehicle. The revenue generated would go to projects to mitigate the effects of carbon emissions, wear and tear on roads and to ease traffic congestion.

 

For the moment, this is only a “spot bill” – it contains no substantive language. The City Council should consider whether it wants to support the concept of creating a new vehicle fee based on weight and / or carbon emissions, to fund needed projects. Upon adoption of such a position, the Council could direct that staff and your advocates to work with the author on the details of the bill, to ensure that City priorities are met.

 

 

AB 2495 (Feuer) Local governments: infrastructure financing.

 

Status:   Assembly Rules Committee

 

Existing law authorizes local governmental agencies to utilize private sector investment capital to develop, construct, and maintain fee-producing infrastructure projects and fee-producing infrastructure facilities, as defined.

 

This bill would state the intent of the Legislature to enact legislation to allow the state to create public-public partnerships with local governmental agencies.

 

Background: The author’s intent is to allow local agencies to create fee-producing infrastructure projects and facilities.

 

For the moment, this is only a “spot bill” – it contains no substantive language. The City Council should consider whether it wants to support the concept of allowing the state to create public-private partnerships with local governments, to fund needed projects. Upon adoption of such a position, the Council could direct that staff and your advocates to work with the author on the details of the bill, to ensure that City priorities are met.

 

 

AB 2558 (Feuer)  LACMTA: climate change mitigation and adaptation fee.

 

Status: Located in the Assembly Transportation Committee. Not yet set for hearing.

 

Existing law creates the Los Angeles County Metropolitan Transportation Authority (MTA), with specified powers and duties relative to transportation planning, programming, and operations in the County of Los Angeles.

 

This bill would authorize MTA to impose a climate change mitigation and adaptation fee in the County of Los Angeles, subject to approval of an ordinance by a majority of the board of the authority and majority voter approval of a ballot measure containing the fee and an expenditure plan. The bill would specify two alternative options for imposing the fee, which would be either a motor vehicle fuel tax or a vehicle fee, subject to specified maximum amounts. Revenues from the fee would be used for public transit and congestion management projects and programs.

 

Background: MTA would decide whether the fee would be assessed at the pump or through the Vehicle License Fee. Although the bill does not specify a dollar amount other than to say that the fee shall not exceed 3 percent of the retail sales price of motor vehicle fuel, the author’s office estimates that $400 to $600 million would be generated to pay air pollution and congestion management programs.

 

 

ACA 10 (Feuer)  Bonded indebtedness: local government: transportation infrastructure

 

Status:  Assembly Rules Committee

 

Existing law: The California Constitution prohibits any ad valorem tax on real property from exceeding 1% of the full cash value of the property, subject to certain exceptions. In addition, the California Constitution, except as otherwise provided with respect to school entities, a local government may not impose, extend, or increase any special tax unless that tax is submitted to the electorate and approved by a 2/3 vote of the voters voting on the measure. Finally, the California Constitution prohibits a city or county from incurring any indebtedness exceeding in one year the income and revenue provided in that year, without the assent of 2/3 of the voters and subject to other conditions.

 

This bill would lower to 55% the voter approval threshold for a city, county, or city and county to impose, extend, or increase any special tax for the purpose of paying the principal, interest, and redemption charges on bonded indebtedness incurred to fund specified transportation infrastructure. This measure would also lower to 55% the voter approval threshold for a city, county, or city and county to incur bonded indebtedness, exceeding in one year the income and revenue provided in that year, that is in the form of general obligation bonds to fund specified transportation infrastructure.

 

Background: Funding for transportation improvements is not keeping pace with the increasing demands from the growing number of people, vehicles and goods that rely on California's transportation systems. Highways are deteriorating and congestion is causing increased travel time. The state should increase transportation funding, expand the use of financing techniques, and increase flexibility to respond to the growing need to move people and goods safely and efficiently.

 

Local jurisdictions have been issuing bonds backed by sales taxes, and other types of local assessments for transportation since 1970, when the Legislature authorized several counties served by the BART District to impose a regional sales tax.  Since 1987, state law has authorized the imposition of special sales taxes for transportation purposes, subject to voter approval. 

 

The state’s Legislative Analyst’s Office estimates that nearly half (47%) of all transportation revenues generated in the state come from local sources.  Currently, a two-thirds (67.7%) vote is required for approval or renewal of any local optional sales tax for transportation purposes.  ACA 10 would amend the state constitution to allow these transportation related bonds to be approved by a 55% vote of the people. 

 

There is precedent for ACA 10.  In November of 2000, California voters approved Proposition 39; a measure lowered the vote threshold from 67.7% to 55% for education-related bonds.  Since that measure was approved, dozens of school districts around the state have been able to authorize or renew local school bonds.  Cities and Counties in California deserve the same opportunity to take control over their own destiny when it comes to transportation funding.

 

In most cases, local jurisdictions that seek voter approval to issue bonds backed by dedicated sources of revenue must submit a plan detailing expenditure plan that specifies how the funds would be used.  As of 2006, 17 counties have optional local sales taxes for transportation. (Starting in early 2007, two additional counties—Madera and Tulare—will levy a local sales tax for transportation.)

 

Although these local option sales taxes were authorized with majority votes, all of the sales tax programs that require renewal must be reauthorized within a 15 to 20 year period.  There are 17 counties in the state that have voter-approved countywide sales tax measures.  Most of the locally approved sales tax measures were passed on a limited-term basis.  Many are scheduled to expire between now and 2011. 

 

A decision rendered by the State Supreme Court in 1995 (Santa Clara County Local Transportation Authority v. Guardino), however, may make many of the reauthorizations very difficult or virtually impossible to achieve.  Current law requires that these measures receive two-thirds voter approval for reauthorization.  The loss of local sales taxes as a viable revenue source for transportation purposes will only increase the funding burden on the state. 

 

The current state fiscal crisis illustrates that the state needs to give local government the tools to enact their own sources of funding.