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June 22, 2005

TO: Joe Wallace, President, and

Members of the AC Transit Board of Directors

Jim Gleich, DGM

FR: Lynn M. Suter & Associates

RE: Legislative Update

Ritual Delay: Until last year, the California Constitution simply required passage of a budget by midnight on June 15. This year Constitutional amendment (Prop 58) requires passage of a balanced budget by that date. In keeping with a long tradition of ignoring the Constitution, the Governor did not receive a budget by midnight - - balanced or otherwise. The Dems get credit for the attempt, and the failed votes could be the first steps in the War of the Worlds precipitated by the Gov’s announcement of the special election on November 8. We hope not, but remain prepared for a summer of chants, whistles and loud shirts.

 

Budget Update:  The Senate and Assembly budget staff have been holding meetings both in the Capitol and off-campus since the drill on June 15. Over the weekend Department of Finance folks and Governor’s office staff also attended some meetings. There is very little difference in the dollar amounts of the two budget plans except that the Dems rejected the Governor’s assumption that he can save $400 million next year by negotiating salary and benefit reductions with state employees and they rejected early pay-off of 1/2 the VLF gap loan to local governments. They also rejected the $469 million STRS shift from the state to local school budgets. Other than these, the biggest policy issues have been resolved for the most part: K-12 Education, Higher Ed, Health Care, and Transportation.

The difference between the two is how the money is spent. The Dems’ plan rejects the 6.5 percent welfare benefit cut, provides for the federal pass through of the SSI/SSP COLA and maintains payments to counties for IHSS workers. The Gov's folks want to trade the early payment of $600 million for the VLF cap for restoring the gov's cuts to the above programs, so here we are in the swamp. There's no way the Dems can accept the state workers reduction assumption, so our guess is that they'll continue to argue about poor and old folks until the gov can find a way to declare victory. There's no real impetus for the gov to give in - - he's given up the demonizing teachers & nurses strategy and now is "standing up" to the faceless body of "the Legislature." The earliest we can expect a budget will be the end of this week, but we're not counting on it.

LAO Analysis Available: The Legislative Analyst’s Office issued a summary analysis of the contents of the proposed budget, outlining its major features by policy area. You can access this summary at: lao.

 

BUDGET HIGHLIGHTS

OVERVIEW

• On-time and balanced

• No new taxes

• No borrowing above the Governor’s May Revision

• Reserve is $894 million; $394 million more than the Governor’s

• Rejects $408 million in unachievable savings from employee compensation reductions

• No assumptions of unachievable federal funds

• Assumes $500 million in on-going revenues per the LAO

• Assumes tobacco securitization refinancing for a savings of $500 million

• Assumes the Pension Obligation Bond at $535 million, same as the Governor’s May Revision

• Begins to repay mandated costs to local government by providing some funds for both 2004-05 and 2005-06 claims

TRANSPORTATION

Prop 42:  Prop 42 is funded at $1.313 billion. The funds would be allocated pursuant to the statutory formula that splits the revenue as follows:

• $678 million is allocated to Traffic Congestion Relief Program project,

• $254 million to STIP projects,

• $254 million is split between cities and counties for local street and road maintenance (Alameda County will receive approximately $4.2 million and each city will receive approximately $4.38 per capita), and

• $127 million to the Public Transportation Account (PTA) where half is deposited into the State Transit Assistance account. 

 

Caltrans Savings: Operational savings within Caltrans will allow an additional $51.6 million to be dedicated to capital projects. Over the course of the 2006 STIP cycle, these savings will provide $250 million in added programming capacity.

 

Tribal Gaming Bonds: The value of the tribal gaming bond is reduced by $200 million to $1 billion. Unfortunately, a new lawsuit filed by the Commerce Casino, a card club in Southern California, will likely postpone the receipt of these funds for another year. The money is slated to repay various transportation accounts.

PTA Spillover: The Budget retains in the general fund $380 million in spill over funds. Spill over funds occur when gasoline sales tax revenue exceeds the revenue generated from a quarter percent of all taxable sales. This revenue is normally placed in the Public Transportation Account (PTA) where it is used by public transit operators to offset spikes in fuel costs. Attempts were made to divert part of this money to State Transit Assistance, but with Prop 42 pushing STA revenue over $200 million it was impossible gain traction.

 

State Transit Assistance (STA): STA is funded at $202.3 million for 2005-06. This includes the base formula allocation of $137.3 million and $65 million provided by funding Proposition 42. The MTC region will receive approximately $73 million in STA funds in 2005-06 of which AC Transit is in line for about $7 million. 

LEGISLATION

|Bill |Topic |Status |Client-Position |

|AB 691 (Hancock) |Transit village plans. |06/16/2005-Read second time. To|AC Transit-Watch |

|A-05/31/2005 | |third reading. (06/16/2005-S | |

| | |THIRD READING) | |

|  |NOTE: This measure was approved by the Senate Local Government Committee, and it is currently on|

| |the Senate Third Reading File. |

| | |

| |AB 691 would authorize a city or county to declare that a previously adopted specific plan or |

| |redevelopment plan is also a transit village plan if the city or county adopts findings prior to|

| |December 31, 2006 stating it conforms to the definition of a transit village. The bill was |

| |amended to require the city or county to publish a notice of the time, date, and place of the |

| |public meeting if an existing plan will become a transit village plan. |

| |

|AB 1020 (Hancock) |Planning: smart growth models. |Two-Year Bill |AC Transit-Support |

|I-02/22/2005 | | | |

|  |NOTE: AB 1020 is a two-year bill and will remain idle until the beginning of next year. |

| | |

| |Currently this bill would require metropolitan planning organizations and state-designated |

| |regional transportation planning agencies to develop and implement improved regional travel |

| |models incorporating smart growth concepts. The bill would also require all transportation |

| |models used by state or regional agencies to be usable on personal computers and to be made |

| |available to the public. |

|  |

|AB 1112 (Cohn) |Loitering: transit facilities. |Two-Year Bill |AC Transit-Watch |

|A-04/04/2005 | | | |

|  |NOTE: AB 1112 was held in the Assembly Committee on Public Safety due to the questionable |

| |constitutionality of provisions that would allow police to detain an individual for up to one |

| |hour. This bill clarifies that every person who loiters on or in any transit facility or other |

| |transit property is punishable as a misdemeanor. |

|  |

|AB 1169 (Torrico) |Transit district operators: |06/21/2005-In committee: Set |AC Transit-Support |

|A-05/27/2005 |assault and battery: penalties.|first hearing. Failed passage. | |

| | |Reconsideration granted. | |

| | |(06/09/2005-S PUB. S.) | |

|  |NOTE: AB 1169 failed passage in the Senate Committee on Public Safety. However, reconsideration|

| |was granted and another vote is likely. |

| | |

| |This bill increases the penalty for assaulting an operator of a transit district's vehicle while|

| |the operator is performing his or her duties. AB 1169 increases the punishment to a fine not to|

| |exceed $5,000 or imprisonment in a county jail not to exceed one year, or by both the fine and |

| |imprisonment. |

|  |

|AB 1234 (Salinas) |Local agencies: compensation |06/21/2005-Read second time, |AC Transit-Watch |

|A-06/21/2005 |and ethics. |amended, and re-referred to | |

| | |Com. on APPR. (06/21/2005-S | |

| | |APPR.) | |

|  |NOTE: AB 1234 would require a local agency to adopt a written policy outlining the duties for |

| |which legislative body members may receive compensation, other than meetings of the legislative |

| |body or an advisory body or attendance at a conference. The bill would also require the |

| |governing body to adopt a written policy on what occurrences qualify a member to receive |

| |reimbursement of expenses, and the board members and staff must periodically complete an ethics |

| |course. |

|  |

|AB 1462 (Torrico) |State Highway Route 84. |06/08/2005-From committee: Do |AC Transit-Watch |

|A-04/14/2005 | |pass, and re-refer to Com. on | |

| | |APPR. with recommendation: To | |

| | |Consent Calendar. Re-referred. | |

| | |(Ayes 14. Noes 0.). | |

| | |(06/08/2005-S APPR.) | |

|  |NOTE: AB 1462 was unanimously approved by the Senate Committee on Transportation and will be |

| |heard next week by the Senate Appropriations Committee. |

| | |

| |AB 1462 would allow the Cities of Fremont and Union City and the transportation planning agency |

| |to prepare and submit to the CTC for approval a local alternative transportation program for |

| |Route 84. This would allow the proceeds from the sale of excess right-of-way from the Route 84 |

| |project to be programmed to other transportation projects in Alameda County |

|  |

|AB 1618 (Klehs) |Sales and use taxes: |05/25/2005-In committee: Set, |AC Transit-Sponsor |

|A-04/21/2005 |exemptions: alternative fuel |first hearing. Held under | |

| |passenger transit buses. |submission. (05/17/2005-A 2 | |

| | |YEAR) | |

|  |NOTE: AB 1618 was held on the Assembly Committee on Appropriations’ Suspense File. However, we |

| |continue to work with the author on placing the provisions of this bill in another vehicle. |

| | |

| |AB 1618 would have amended to existing law to clarify that not only the purchase of a prototype |

| |vehicle is exempt from the sales & use tax, but also the component parts purchased and installed|

| |on the prototype vehicle would also be exempt. |

| | |

| |Although the BOE agreed that the purchase by AC Transit of the prototype hydrogen fuel cell |

| |buses is exempt from the sales & use tax, the individual components that make-up the vehicle are|

| |not exempt. This defeats the benefit of the exemption. AB 1618 attempts to correct this |

| |conflict. |

|  |

|AB 1623 (Klehs) |County transportation agencies:|06/13/2005-From committee |AC Transit-Support |

|A-06/13/2005 |congestion management and |chair, with author's | |

| |environmental mitigation fee. |amendments: Amend, and re-refer| |

| | |to committee. Read second time,| |

| | |amended, and re-referred to | |

| | |Com. on T. & H. (06/13/2005-S | |

| | |T. & H.) | |

|  |NOTE: AB 1623 was approved by the Senate Committee on Transportation & Housing earlier this |

| |week. |

| | |

| |AB 1623 would authorize the Alameda County Congestion Management Agency and the transportation |

| |agencies in Contra Costa, Marin, Napa and Sacramento to impose an annual fee of up to $5 on |

| |motor vehicles registered within each county. The revenue would be used for traffic congestion |

| |projects, such as the Smart Corridors Program, and the mitigation of environmental impacts of |

| |motor vehicles within that county |

|  |

|AB 1714 (Plescia) |Toll Bridge Seismic Retrofit |Two-Year Bill |AC Transit-Oppose |

|A-05/03/2005 |Program. | | |

|  |NOTE: AB 1714 has been significantly amended to simply state that it is the intent of the |

| |Legislature to develop a funding solution for the Toll Bridge Seismic Retrofit Program. |

| |However, this bill was held on the Suspense File and is dead for this year. |

| | |

| |As introduced this bill would implement the Governor’s proposal for funding the Bay Bridge, |

| |which would replace the SAS design with the viaduct design and require the Bay Area to fund the |

| |shortfall. |

|  |

|SB 172 (Torlakson) |Bay area state-owned toll |06/13/2005-To Com. on TRANS. |AC Transit-Support |

|A-05/27/2005 |bridges: financing. |(06/13/2005-A TRANS.) | |

|  |NOTE: SB 172 was approved by the Senate on a vote of 23-15. The bill awaiting a hearing by the |

| |Assembly Committee on Transportation. |

| | |

| |SB 172 would reform the management of the toll bridge seismic retrofit program and would provide|

| |funding for identified cost overruns. In summary, this bill specifies that the Toll Bridge |

| |Seismic Retrofit Program deficit will be roughly split 50-50 between state sources and toll |

| |revenues, transfers administration of all tolls to BATA, allows BATA to increase tolls by $1 if |

| |specified |

| |conditions are met, and creates a new oversight committee |

|  |

|SB 250 (Campbell) |Department of Food and |06/21/2005-From committee with |AC Transit-Support |

|A-06/21/2005 |Agriculture: hydrogen fuel |author's amendments. Read | |

| |standards. |second time. Amended. | |

| | |Re-referred to committee. | |

| | |(06/20/2005-A TRANS.) | |

|  |NOTE: SB 250 will be heard next week by the Assembly Committee on Transportation. |

| | |

| |This bill would require the California Department of Food and Agriculture, in consultation with |

| |the Air Resources Board, to initially establish specifications for hydrogen fuels and fuel |

| |cells, until the American Society for Testing and Materials (ASTM) adopts standards. |

|  |

|SB 275 (Torlakson) |Transportation needs |06/09/2005-To Com. on TRANS. |AC Transit-Watch |

|A-06/09/2005 |assessment. |(06/09/2005-A TRANS.) | |

|  |NOTE: AB 275 was approved by the Senate. This bill would require the CTC, working with the |

| |Caltrans and regional transportation entities, to complete a 10-year transportation needs |

| |assessment to the Legislature by October 1, 2006. |

| | |

| |The needs assessment would examine the unfunded rehabilitation and operations needs for the |

| |state highway system, local streets and roads, the intercity rail program, and urban, commuter, |

| |and regional transit systems, including ferry systems, over the next 10 years |

| |

|SB 393 (Ortiz) |Special districts. |Two-Year Bill |AC Transit-Oppose |

|A-05/10/2005 | | | |

|  |NOTE: SB 393 was held on the Senate Committee on Appropriations’ Suspense File, and is dead for |

| |this session. |

| | |

| |SB 393 would require annual audits to be performed in accordance with government auditing |

| |standards and would impose various other requirements on these audits. This bill contains |

| |numerous other related provisions relating to ethics orientation, board members compensation and|

| |reimbursement, and it establishes whistle blower protections. |

|  |

|SB 521 (Torlakson) |Local planning: transit village|06/13/2005-To Coms. on H. & |AC Transit-Watch |

|A-05/27/2005 |plans. |C.D. and L. GOV. (06/13/2005-A | |

| | |H. & C.D.) | |

|  |NOTE: SB 521 was approved by the Senate, and has been referred to two policy committees in the |

| |Assembly. This bill will likely become a two-year bill. |

| | |

| |SB 521 would allow a city or county to create a transit village redevelopment area surrounding a|

| |rail transit station. The number of transit village redevelopment areas would be limited to 25 |

| |statewide. The bill also adds to the definition of blight to include the lack of high density |

| |development within the transit village area. |

|  |

|SB 1020 (Migden) |County sales and use taxes: |Two-Year Bill |AC Transit-Support |

|I-02/22/2005 |rate increase | | |

|  |NOTE: SB 1020 was placed on the Senate Revenue & Taxation Committee’s suspense file, and will be|

| |revisited at a later date. |

| | |

| |This bill would authorize a county or city and county to impose an additional 1/4 of 1% sales |

| |and use tax rate under the Bradley-Burns Law. This bill would require a county or city and |

| |county to deposit all revenues into a local transportation fund, and expend the funds in a |

| |manner consistent with the Transportation Development Act. |

|  |

|SB 1024 (Perata) |Public works and improvements: |05/27/2005-From committee: Do |AC Transit-Support |

|A-05/12/2005 |bond measure. |pass. (Ayes 8. Noes 5. Page | |

| | |1306.) Read second time. To | |

| | |third reading. (05/27/2005-S | |

| | |THIRD READING) | |

|  |NOTE: SB 1024 is currently on the Senate Floor. Because this bill contains an “urgency” clause |

| |it is exempt from the June 3, House of Origin deadline. |

| | |

| |SB 1024 would enact the “Safe Facilities, Improved Mobility and Clean Air Act of 2005. This Act|

| |would place a $7.7 billion bond measure on the ballot to fund the Bay Bridge shortfall, repay |

| |existing Prop 42 loans, and other infrastructure projects. |

| | |

| |No agreements have been reached, nor have deals been cut with this proposal. Negotiations |

| |continue on financing the bridge, as well as the contents of an infrastructure bond. With |

| |Speaker Nunez proposing an unspecified $10 billion bond proposal, it is likely that SB 1024 will|

| |expand beyond $7.7 billion. Other possible changes include establishing a north-south split for|

| |some of the funding programs. |

-----------------------

1127-11th Street, Suite 512 ( Sacramento, CA 95814 ( Telephone 916/442-0412 ( Facsimile 916/444-0383

Internet: email: lmsa@

|Government Relations |

|Lynn M. Suter |

|  |

|and Associates |

|  |

GM Memo No. 05-158

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