BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 432
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          Date of Hearing:   August 20, 2012

                               Bonnie Lowenthal, Chair
                   AB 432 (Dickenson) - As Amended:  June 21, 2012
          SUBJECT  :  Local public transportation funding

           SUMMARY  :  Authorizes the Sacramento Area Council of Governments 
          (SACOG) to create a combined farebox recovery ratio for the 
          Sacramento County transit operators (Sacramento Regional Transit 
          District, Elk Grove transit, Folsom transit, South County 
          Transit (Galt), and Sacramento County transit services) for 
          purposes of determining eligibility for receiving public 
          transportation operating subsidies.  Requires the Sacramento 
          Regional Transit District to cover no less than 23% of operating 
          costs from fares even if the transit operators serving 
          Sacramento County are evaluated as a group.  
           EXISTING LAW :  

          1)Known as the Transportation Development Act of 1971 (TDA), 
            provides funding for transit and non-transit related purposes 
            that comply with regional transportation plans.  Serves to 
            improve existing public transportation services and encourage 
            regional transportation coordination.  

          2)Authorizes transportation planning agencies to administer 
            transit funding made available under the TDA.  Imposes certain 
            financial requirements on transit operators making claims for 
            transit funds, including requirements that fares collected by 
            the operator cover a specified percentage of operating costs.  
            Establishes different farebox requirements depending upon 

          3)Authorizes the San Francisco Bay Area Metropolitan 
            Transportation Commission (for transit operations serving the 
            San Francisco Bay Area Rapid Transit District area) and the 
            San Diego Metropolitan Transit System to make a determination 
            as to whether transit operators for specified service areas 
            have met the requirements for claims for transit funds by 
            evaluating the operators as a group rather than individually.  

           FISCAL EFFECT  :  Unknown


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           COMMENTS  :  The TDA provides funding for public transportation 
          services.  Funds are allocated to each county based on 
          population, taxable sales and transit performance.  TDA is 
          funded through local sales tax revenues that are collected by 
          the state and returned to the local governments and transit 
          operators through the regional transportation planning agencies 
          (RTPA). Generating $1.3 billion dollars in the 2010/11 fiscal 
          year, TDA is a major funding source for public transportation in 

          To be eligible to receive TDA funds, a transit operator must 
          meet a specified ratio of fare revenues to operating cost, 
          referred to as the farebox recovery ratio.  The ratio varies 
          according to different circumstances.  For operators that were 
          providing transit services in urbanized areas 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, with a minimum ratio of 20%.  
          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 
          ratio by combining fare revenues with that local support.  

          According to the author, the TDA law establishes a formula for 
          transit operators to measure how much of their funding comes 
          from ticket and passes.  This "farebox requirement" is often 
          difficult for smaller and rural transit operators to meet.  This 
          state-imposed requirement limits the ability of local government 
          to meet the transit needs of the diverse communities in 
          Sacramento County.  The author contends that Sacramento County 
          is the only county in SACOG's regional transportation planning 
          jurisdictional area with a population greater than 500,000.  
          Under current law, RTPA's have discretion to adjust the farebox 
          requirement to meet local needs for counties with a population 
          less than 500,000.  

          The purpose of this bill is to allow SACOG to make adjustment 
          for rural and smaller operators that are within the larger 
          urbanized Sacramento County thereby allowing transit operations 
          for the cities of Elk Grove, Folsom, Galt and the County of 
          Sacramento to remain eligible to receive TDA funding by creating 
          a regional ratio of fare revenues to operating cost.  The author 
          indicates that these operators are finding it difficult to meet 


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          the farebox recovery minimum requirements and asserts that "the 
          City of Galt, as a result of a modest population increase as 
          determined by the recent census, has gone from being considered 
          a rural community to an urban one.  The result is a requirement 
          that doubles the farebox recovery ratio requirement for South 
          County Transit/Link, which serves Galt and portions of 
          Sacramento County.  This is difficult for Galt to meet because 
          it has a transit service model based on the historic share of 
          state/local revenues and farebox revenues."  

          This bill would provide flexibility to SACOG in determining 
          compliance with TDA farebox recovery requirements.  For purposes 
          of establishing a group farebox recovery ratio, this bill would 
          allow the costs and revenues of the urban and suburban operators 
          within Sacramento County to be combined.  Additionally, as the 
          bill requires that Sacramento Regional Transit District cover no 
          less than 23% of the regional operating costs from fares, 
          minimum performance requirements are established for Sacramento 
          County operators to meet as a whole.  Combining farebox recovery 
          ratios as proposed by this bill are not new TDA allowances as 
          grouping requirements are currently authorized for the San 
          Francisco Bay Area Rapid Transit District service area and for 
          the service area of the Metropolitan Transit System in San 

          Writing is support of the bill as its sponsor, SACOG indicates 
          that RTPAs have discretion to adjust the farebox requirement to 
          meet the local needs for counties with a population less than 
          500,000 and that the bill would allow it to make adjustments for 
          rural and smaller operators within Sacramento County with a 
          population larger than that.  SACOG cites the difficulties of 
          the Cities of Elk Grove and Folsom in meeting farebox recovery 
          ratio requirements in addition to Galt mentioned above.  


          Sacramento Area Council of Governments (sponsor)  
          City of Elk Grove  
          City of Galt  
          City of Folsom
          County of Sacramento



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          None on file

          Analysis Prepared by  :    Ed Imai / TRANS. / (916) 319-2093