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Agenda Item # 9

BOARD MEMORANDUM

RECOMMENDATION:

Adopt a support position for the following pieces of legislation:

• AB 813 (Salinas) Farebox recovery ratios.
• SCA 7 (Murray) Loans of transportation funds.

BACKGROUND/DISCUSSION:

AB 813 (Salinas), which is being sponsored by the California Transit Association, excludes those operating costs that are not reasonably within the control of a public transit operator from the calculation of costs in farebox recovery ratios for purposes of qualifying for Transportation Development Act (TDA) funding.   This includes those operating costs related to providing paratransit services required by the federal Americans with Disabilities Act (ADA), the additional costs of liability insurance premiums and settlement claims above those paid by a public transit operator for the previous year, and the additional costs of power and fuel above those paid by an operator for the previous year.

In addition, AB 813 excludes operating costs to provide ADA-required paratransit services and increases in power costs that are beyond the change in the Consumer Price Index from the calculation of costs in farebox recovery ratios for purposes of determining a public transit operators eligibility for State Transit Assistance Program (STA) funding.

Under current law, public transit operators must recover a certain percentage of their operating costs from the farebox in order to receive TDA and STA funds for operating purposes.  However, certain costs are beyond the reasonable control of a public transit operator.  For example, the commercial insurance market recently has undergone a tightening of available capital.  This situation has caused insurance premiums for all risks to increase dramatically, including for public transit liability insurance.  Similarly, the states recent energy crisis has caused a steep increase in the price of certain fuels for many public transit operators in California.  Furthermore, providing paratransit services as mandated by ADA has imposed huge service cost increases on public transit operators.

These types of sudden, unplanned and unavoidable cost increases have threatened the continued receipt of TDA and STA funding for many public transit operators in California.  AB 813 is intended to address this problem, and staff recommends that the Board of Directors support this bill.

SCA 7 (Murray) amends the California Constitution to require that loans from the State Highway Account and the Public Transportation Account to the General Fund or to any other state fund be repaid with interest at the rate of the Pooled Money Investment Account.

The state has a history of loaning or diverting revenues from transportation accounts to the General Fund in lean budget years.  In 1998, the voters of California approved Proposition 2, an amendment to the state constitution that was intended to curb this practice.  Proposition 2 requires full repayment of all loans from the State Highway Account to the General Fund in the same fiscal year in which the funds were borrowed, or 30 days following the enactment of the state budget.  The Public Transportation Account enjoys similar protections through Proposition 116, which was enacted by the voters in 1988.

However, both of these propositions apply only to transportation dollars loaned to the General Fund.  They do not apply to revenues loaned between transportation accounts, and they do not address the question of interest payments.  SCA 7 offers further protections for transportation funds by requiring full repayment, as well as the payment of interest, for loans not only to the General Fund, but also to any other state fund or account.

Both the State Highway Account and the Public Transportation Account have been used to provide substantial loans during the past two fiscal years to help address General Fund deficits.  Because SCA 7 would correct a deficiency in current protections for loans from transportation funds and accounts, staff recommends that the Board of Directors support this constitutional amendment.

ALTERNATIVES:

In the case of AB 813 and SCA 7, the Board of Directors supported similar measures last year, which were not approved by the Legislature.  The recommended positions are consistent with past Board actions.

FISCAL IMPACT:

There is no immediate fiscal impact associated with these recommendations.

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