BILL ANALYSIS Ó SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 432 SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: dickinson VERSION: 6/21/2012 Analysis by: Art Bauer FISCAL: no Hearing date: July 3, 2012 SUBJECT: Transportation funding DESCRIPTION: This bill authorizes the Sacramento Area Council of Governments (SACOG) to create a combined farebox recovery ratio for the Sacramento County transit operators-Sacramento Regional Transit, Folsom transit, Elk Grove transit, and Sacramento County transit services-to be eligible to receive subsidies from the Transportation Development Act (TDA). ANALYSIS: The Legislature enacted the Transportation Development Act (TDA), Senate Bill 325, Chapter 1400, Statutes of 1971, in order to ensure "the efficient and orderly movement of people and goods in the urban areas of the state." The TDA authorized the boards of supervisors in each county to impose a percent local sales tax for transportation purposes. All counties imposed the tax in 1972, because if they had not, the state, under California's uniform tax law, would not have collected the 1 percent local sales tax that supports the general funds of cities and counties. To be eligible to receive TDA funds, a transit operator must meet a specified ratio of fare revenues to operating cost. The ratio varies. For operators that were providing transit at the time this provision become law in 1979, their ratio is what they achieved that year. For operators who began providing service after 1979, their ratio is the average of the first three years of operation, provided it is not below 20 percent. New operators in nonurbanized areas have five-years to determine their farebox recovery ratio. In addition, if an operator receives funds from a local transportation sales tax or some other local revenue sources, it can meet its farebox recovery AB 432 (DICKINSON) Page 2 ratio by combining fare revenues with that local support. This bill authorizes SACOG to determine the farebox recovery ratio for all operators in Sacramento County, provided the ratio for Sacramento Regional Transit (RT) is not less than 23 percent and SACOG finds that the services are coordinate. COMMENTS: 1.Purpose . The purpose of this bill is to ensure that the three transit operators- Elk Grove, Folsom, and the County of Sacramento- in the SACOG area will remain eligible to receive TDA funding by creating a regional ratio of fare revenues to operating cost that will include RT. Essentially, RT's revenue base will ensure that the three smaller operators will remain eligible for TDA funding. 2.Farebox ratio status of Sacramento County operators . According to the Controller's report on TDA expenditures for 2010, the ratio of fare revenues to operating cost for the Sacramento County transit operators is as follows: RT 24 percent, Folsom 21.9 percent, Elk Grove 16.6 percent, and County of Sacramento 8.9 percent. Other than RT, the remaining operators are finding it difficult to meet the farebox recovery minimum requirements. In fact, SACOG, under the terms of TDA, had to penalize Elk Grove by withholding $300,000 from the city's apportionment of funds for failing to meet the requirement. By linking the three smaller operators to RT, SACOG will have to manage their farebox recovery ratio in a way that ensures the suburban operators continue to maintain a fare level that does not require RT to increase fares or alter its service levels to accommodate the smaller operators. Combining farebox recovery ratios are authorized for the BART service area and for the service area of the Metropolitan Transit System in San Diego. Assembly Votes: Previous votes are not relevant. POSITIONS: (Communicated to the committee before noon on Wednesday, June 27, 2012) AB 432 (DICKINSON) Page 3 SUPPORT: City of Folsom County of Sacramento OPPOSED: None received.