BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 227

                                                                    Page  1

          Date of Hearing:  May 7, 2015

                            ASSEMBLY COMMITTEE ON BUDGET

                                Shirley Weber, Chair

          AB 227  
          (Alejo) - As Amended April 15, 2015

          SUBJECT:  Transportation funding

          SUMMARY:  Makes several changes to transportation-related  
          funding streams and loans.

          Specifically, this bill:  

             1)   Eliminates the transfer of weight fee revenues for debt  
               service related to transportation general obligation bonds.
             2)   Requires all outstanding loans to the General Fund from  
               certain transportation special funds be repaid by December  
               31, 2018.

          EXISTING LAW:  The 2009-10 budget package included a complicated  
          fuel swap that allowed the State to use taxes on fuels to  
          achieve about a $1 billion annual General Fund savings by paying  


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          General Obligation Bond debts with weight fees instead of  
          General Fund.  As part of this swap, the State replaced the  
          State sales tax on gasoline with an excise tax that contained a  
          true-up mechanism to mimic the revenue growth of a sales tax  
          over time.  

          Prior to the fuel tax swap, cities and counties received 40  
          percent of the Proposition 42 portion of the sales tax on  
          gasoline.  In May of 2013, DOF estimated that in 2014-15,  
          Proposition 42 revenues would be $1.57 billion if the state  
          still charged a sales tax on gasoline.  Based on DOF's estimate,  
          the cities and counties share of Proposition 42 revenues would  
          be about $628 million in 2014-15, assuming fuel tax law prior to  
          the swap. 

          Under the swap, the state expects to collect about $2.5 billion  
          in swap excise tax revenues in 2014-15.  The first $958 million  
          of these funds backfilling weight fees used to pay GO debt  
          service, which saves the equivalent amount of General Fund.  The  
          remaining roughly $1.5 billion is then divided by formula, with  
          44 percent of the funds going to cities and counties.  For  
          2014-15, the swap excise tax revenue that replaced the  
          Proposition 42 transfer to cities and counties is projected to  
          be about $680 million, or roughly $50 million more than locals  
          would have received if the swap had not been enacted.

          FISCAL EFFECT:  This bill would result in a General Fund cost of  
          close to $1 billion annually from the shift of weight fees from  
          debt service payments.

          COMMENTS:  This bill would cost close to $1 billion to shift  
          wait fee revenues from their existing use as debt service  
          payment.  As a result, this bill results in an ongoing General  
          Fund cost of the equivalent amount.   The weight fees would  
          instead be deposited in the State Highway Account.


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          This bill also requires the General Fund repay all loans from  
          certain transportation special funds by December 31, 2018.    
          According to a report prepared by Department of Finance as of  
          December 31, 2014, the State has approximately $575 million on  
          outstanding debts that would have to repaid to the State Highway  
          Account, the Motor Vehicle Account, the Motor Vehicle Fuel  
          Account, the Local Airport Loan Account, and the Public Transit  
          Account.   In this report, Department of Finance projects all of  
          these loans to be repaid on or before 2016-17. 



          American Council of Engineering Companies 

          Association of Governments- Southern California 

          Blackburn Consulting

          California Asphalt Pavement Association

          California Association of Councils of Governments

          California State Council of Laborers 


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          California Transit Association 

          City/County Association of Governments of San Mateo County 

          Dimensions 4 Engineering Inc

          EFS Engineering, Inc. 

          HMH Engineers 

          Holdrege and Kull

          Kennedy & Associates 

          Kimley, Horn 

          Lane Engineers, Inc. 

          Lee & Pierce Inc. 

          Leighton Consulting, Inc. 

          Leptien, Cronin, Cooper, Morris, & Poore, Inc. 

          Michael Baker International 


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          Morton & Pitalo, Inc. 

          Orange County Transportation Authority 

          Pace Engineering

          Pacific Crest Engineering Inc. 

          RICK Engineering Company

          Robert L. Dewitt and Associates, Inc. 

          SA Associates

          Shannon & Wilson, Inc.

          Solano Transportation Authority 

          Stantec Consulting Services Inc. 

          Transportation Agency for Monterey County

          Transpedia Consulting Engineers 

          Towill, Inc. 


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          Valley Transportation Authority 

          Ventura County Transportation Authority 

          Whitson Engineers 

          Yeh and Associates, Inc. 


          None on file 

          Analysis Prepared by:Christian Griffith/ BUDGET /916-319-2099