STAFF REPORT. MEETING DATE: August 19, 2010 AGENDA ITEM: 6B

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1 STAFF REPORT SUBJECT: State Legislative Program MEETING DATE: August 19, 2010 AGENDA ITEM: 6B RECOMMENDATION: Approve State Legislative Platform for FY 10/11. STAFF CONTACT: Gregg Hart DISCUSSION: This year, the Board retained Shaw / Yoder / Antwih, Inc, a legislative advocacy firm, to assist in advocating on behalf of SBCAG s interests at the State of California level. The proposed State Legislative Platform will assist our state lobbyist in identifying policy issues and communicating SBCAG s goals to the State Legislature and other agencies that have impacts on SBCAG. The SBCAG Board reviewed the draft State Legislative Platform in June and board members directed that the legislative platform also address RHNA (Regional Housing Needs Allocation) reform. County Supervisors raised the factors of large areas of federal lands and agricultural lands that are excluded from any urban development. The legislative platform was revised under Issue #5 State Mandates to address these board concerns. Staff also took this item to SBCAG s advisory committees (Technical Transportation Advisory Committee (TTAC), Technical Planning Advisory Committee (TPAC), and Santa Barbara County Transit Advisory Committee (SBCTAC) for their input as well. There were no additional comments from the advisory committees on the draft legislative program. The proposed state 2010 legislative program for SBCAG is attached for your approval along with a state legislative update for July from Gus Khouri, SBCAG s state lobbyist. Attachments Attachment A: Proposed SBCAG 2010 State Legislative Platform Attachment B. State Legislative Update for July, 2010 from Gus Khouri, Shaw, Yoder, Antwih

2 Proposed SBCAG 2010 State Legislative Platform Issue Goal Strategy 1. State funding for SBCAG s priority projects 2. Protect Existing Sources of Transportation Funding Aggressively pursue funds through the State Budget, California Transportation Commission allocation process or any other state sources. Raise awareness of the Highway 101 Corridor and its importance as a transportation facility of state and national significance. Prohibit General Fund diversions of existing transportation revenues including public transit, Proposition 42, State Transit Assistance and local gasoline tax revenue Work with the California Department of Transportation, SBCAG member agencies, our state legislative delegation and local community leaders and organizations to aggressively advocate at the state level for funding to complete projects promised to Santa Barbara County voters in the Measure A Investment Plan. Educate our delegation and funding partners about the Highway 101 Widening project, the funding plan, schedule and attributes that make it a highway of statewide/national significance. Work with other regional agencies on the central coast and Caltrans to raise awareness of the importance of 101 and its need for improvements as one of two north-south interregional corridors in the state Work with our other regional partners to seek appointment of a central coast representative to serve on the California Transportation Commission While fundamental change is preferable, given the status quo, it is necessary to support efforts to provide constitutional protection against state diversion of funds from the Public Transportation Account, State Transit Assistance, HUTA, Proposition 42 and local gasoline tax subventions for local streets and roads.

3 Issue Goal Strategy 3. Augment Transportation Funding Sources Seek an increase in transportation revenues to address unmet funding needs for maintenance, repair, operation and improvement of the transportation system Over the past 16 years, the purchasing power of the state gasoline excise tax has been reduced by more than 50% because of inflation. State transportation infrastructure investment has dipped precipitously over this time to the point where state gas tax revenue is dedicated entirely to maintenance of the state highway system with no funding available for improvements. Support legislation to raise new user-fee based revenue sources to bring the state s transportation system into a state of good repair. This could include adoption of an increase in the gasoline user fee to fund state highway and local street and road repairs. The gasoline user fee should also be indexed to inflation to prevent the erosion of its purchasing power. 4. SB 375 Implementation Provide new funding to assist in the planning work required by SB 375. Ensure that SBCAG s issues are addressed in setting of SB 375 targets. Work with the California Association of Councils of Government to develop new revenue sources at the state, regional and local level to support the additional planning required by SB 375. This could be accomplished through legislation that would require local majority voter approval of new vehicle license fees to support SB 375 implementation. Work with other MPO s, Air Resources Board, Department of Housing and Community Development, and, the Strategic Growth Council to ensure the special circumstances and limitations of small and medium size regional agencies are integrated into the ARB s SB 375 Greenhouse Gas emission targets.

4 Issue Goal Strategy 5. State Mandates Require reimbursement to regional agencies for the costs of complying with state mandates Stop legislation to require reimbursement for Caltrans work on project initiation documents Reform State RHNA law to address special limitations and circumstances in Santa Barbara County on new development State law requires reimbursement for costs imposed on local governments by state mandates. However, regional governments are exempted for reimbursement because they are not considered local governments. Support legislation to address this inequity in state law and require reimbursement for state mandate costs to regional governments. Work with CALCOG and the Self-Help Counties Coalition to oppose new requirement contained in the Governor s FY 2010/11 Budget that local and regional agencies reimburse Caltrans for preparation of project initiation documents. Work with CSAC, the League of Cities and other partners to support legislation that would reform RHNA mandate to specifically address our county s very large percentage of land that is unavailable for development because it is either federal property or in Williamson Act preserve status.

5 Issue Goal Strategy 6. Passenger Rail Provide passenger rail commute service connecting Ventura and Santa Barbara counties. Maintain and increase funding for inter-city passenger rail in the LOSSAN North Corridor Seek appointment of California representative to the Amtrak Board Work cooperatively with Caltrans Division of Rail, Amtrak, LOSSAN and Union Pacific Railroad to change the timing of Amtrak Pacific Surfliner trains to accommodate Ventura County to south Santa Barbara County commuter schedules. Work with Caltrans District 5 to develop LOSSAN North Corridor Improvements NEPA document to increase viability of grant applications for rail improvements. Support legislative efforts to stabilize and even increase funding for state passenger rail capital improvements and operating costs. Work with our legislative delegation, LOSSAN, and other state partners to raise awareness of the importance of having a California representative on the Amtrak Board and seek out qualified applicants to pursue a presidential appointment. 7. Federal SAFETEA-LU Renewal Support California State Consensus Principals for SAFETEA-LU renewal The SBCAG Board previously endorsed the California State Consensus Principals for SAFTEA-LU renewal. Continue to work with our legislative delegations to ensure our local and state interests are addressed in the new federal transportation authorization legislation.

6 DATE: August 5, 2010 TO: FROM: RE: Board Members, Santa Barbara County Association of Governments Gus Khouri, Legislative Advocate, Shaw / Yoder / Antwih, Inc. STATE LEGISLATIVE UPDATE- JULY On May 14 th, the Governor released his May Revision to the Governor s State Budget. The Governor estimates that the state s budget gap is $19.1 billion (only $800 million less than what the Governor stated in January), which includes a current year (FY 09-10) shortfall of $7.7 billion, a budget year (FY 10-11) shortfall of $10.2 billion and a modest reserve of $1.2 billion. Citing lower than anticipated revenues, the Governor proposes to eliminate the California Work Opportunity and Responsibility to Kids Program, (CalWORKs) program, and to reduce funding for local mental health services by approximately 60 percent to help balance the budget. In addition, the Governor proposes to borrow $650 million from the excise tax on gasoline (additional revenue generated from gas tax swap that was to be divided between STIP, SHOPP, and cities/counties), and account for $3.4 billion in federal funding. Spending reductions account for $12.4 billion of his proposed solutions. The Senate Democrats entertained delaying corporate tax breaks, increasing the vehicle license fee rate (1.15% to 1.65%), increasing the alcohol tax (1 to 2 cents per bottle), and retaining a.25% personal income tax surcharge and reduction in dependent tax credits to balance the budget. The Assembly Democrats countered with a proposal to securitize against the California Beverage Recycling Fund and impose an oil severance tax. Status of the State Budget The Budget Conference Committee has been meeting in an attempt to reconcile the various proposals between Senate and Assembly proposals. Many of the tough decisions will be left up to the Big 5 (Governor, Speaker of the Assembly, President pro Tempore of the Senate, Senate Republican Leader, Assembly Republican Leader) to ultimately decide. Given that transportation was addressed in the March Special Session, there is little to be concerned about at this point. The constitutional deadline for the legislature to submit a budget to the Governor was June 15 th. While legislators have stated that they will work through the Summer Recess (July 2 nd through August 2 nd ), it appears unlikely that a budget agreement will be reached prior to the end of August. The most recent developments suggest however that there may be agreement in principle on $11 billion out of the $19 billion problem. While details are scant, the solutions seems to revolve around delaying $2.1 billion in corporate tax breaks, $3.7 billion in cuts to schools and the reserve, and $1.4 billion in adjusted projections by the Legislative Analyst s Office. Democrats are also pushing for another tax swap which would broaden the tax base by slightly flattening the personal income tax. Tax rates would increase by one percentage point except at

7 the top bracket, where it would remain the same (9.55%). In return, the state sales tax would be cut by 1.5 cents on the dollar (6 cents to 4.5 cents). The plan is estimated to generate anywhere from $2 to $3 billion. In addition, there is a proposed increase in the vehicle license fee rate from 1.15% to 1.65% to assist with the realignment of inmate transfers between locals and the state. An oil severance tax of 7.75% is also being discussed. The Governor and both Republican Caucuses have stated that the Democrats proposals beyond the $11 billion in agreed solutions are dead on arrival. Republicans are resisting tax increases and are calling for additional cuts. Impact on Transportation In March, the legislature adopted the gas tax swap which eliminated the sales tax on gasoline (Proposition 42) and replace it with a 17.3 cent increase in excise tax revenue. This new increment provided an additional $650 million to what the sales tax generated as was to be split 44/44/12 between the State Transportation Improvement Program (STIP), and cities and counties, and State Highway Operation and Protection Program (SHOPP), respectively. The Governor proposes to borrow this amount and repay it in This funding is available on a one-time only basis, as specified in ABx8 9, Chapter 12, Statutes of 2010, of the recently enacted excise gas tax swap legislation. Impact on Transit In March, the legislature captured a total of $1.586 billion in traditional sources of funding through the gas tax swap from public transportation for FY Public transportation received a $400 million appropriation to the State Transit Assistance program from the balance created from the Shaw v. Chiang lawsuit. The intercity rail program received a $129 million appropriation from that balance as well for FY and is expected to receive a like amount for FY Beginning in FY 11-12, local transit operators are expected to receive $348 million as a result of the 75% allocation to the State Transit Assistance program from the sales tax on diesel. The remaining 25% is dedicated primarily to the intercity rail program as well as the other traditional expenditures of the Public Transportation Account (CPUC, CTC, ITS). Non-article XIX funds which are derived from the sale of documents and miscellaneous services to the public were also dedicated to the intercity rail program to ensure full funding in future years. The May Revise proposes to transfer the $72.2 million of Non-Article XIX funds that have materialized for FY from the Motor Vehicle Account to the General Fund. This should not have an impact on the intercity rail program in the budget year. Additional proposals include: Extending the repayment date for $230 million in loans from the State Highway Account and other transportation funds from June 2011 to June The projects planned for 2010 do not require this cash. Loaning up to $250 million from the Motor Vehicle Account to the General Fund. This funding depends in large part on the adoption of reductions in state staffing costs as proposed in the Governor s Budget. High-Speed Rail Proposition 1A is the Safe, Reliable High-speed Passenger Train Bonds Act of Proposition 1A is a $9.95 billion bond measure that includes $950 million for capital projects on other passenger rail lines to provide connectivity to the high-speed train system and for capacity enhancements and safety improvements to those lines. The adopted program of projects includes the intercity rail services run by Caltrans in cooperation with Amtrak, as well as regional-run rail services around the state.

8 The California Transportation Commission (CTC) recently approved and then immediately rescinded allocations from the $950 million pot. Many systems intend to use their apportionment to comply with federal regulations to implement positive train control or institute service efficiencies by electrifying their system, among others things. The allocations were rescinded because CTC staff has determined that the CTC cannot make an allocation of Proposition 1A funding unless the legislature appropriates money from this funding this category of Proposition 1A. In fact, CTC decided that they do not have sufficient authority to allocate Proposition 1A funding. The initial recommendation from CTC staff was to pursue emergency legislation to appropriate Prop 1A funding in August. As a result, AB 2703 was introduced by Speaker John Pérez in order to allow eligible transit systems to utilize the letter of no prejudice (LONP) process for the $950 million pot of money that is dedicated for capital projects on existing passenger rail lines to provide connectivity to the high-speed train system. The LONP process will enable agencies to use their own funds and contract out for Proposition 1A eligible projects and to be reimbursed for those funds once bond money becomes available.