Lynn M. Suter and Associates

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1 3 Lynn M. Suter and Associates Government Relations GM Memo No August 5, 2005 TO: Joe Wallace, President, and Members of the AC Transit Board of Directors Jim Gleich, DGM FR: RE: Lynn M. Suter & Associates Legislative Update Recessing: With the budget completed, the Legislature adjourned on July 15 for a month long summer recess. While the summer break included a couple of meetings between the Governor and leadership reaching a compromise on several of the initiatives on the November ballot, those efforts quickly fizzled. A compromise agreement is highly unlikely and the Legislature is not expected to return until August 15 th. Air Board Policy Reversal: In September the California Air Resources Board will consider three options to amend the emission standards for transit buses. The options include: maintain the existing standards; amend the state standards to conform to federal truck standards starting in 2007; or, eliminate the diesel fuel path. Eliminating the diesel fuel path would reverse the Board s longstanding policy of remaining fuel neutral. Such a shift would force AC Transit to switch mid-stream from the diesel path to the alternative fuel path. This would place a significant financial burden on the District to purchase alternative fuel vehicles and construct the infrastructure to support these vehicles. Meetings are being scheduled with CARB Board members, and our office has alerted AC s legislative delegation to this issue. It appears that the proposal to eliminate the diesel path was instigated from within the Governor s office. CARB staff along with transit operators has been working toward Option 2 that conforms state and federal standards in Eliminating the diesel path is supported by the theoretical assumptions that having all transit operators on the alternative path would achieve the greatest air quality benefit. CARB staff has done little research to confirm these assumptions and it would likely take a couple years before it could be confirmed and implemented. In addition, the proposal to eliminate the diesel path does not suggest how to fund such a dramatic shift in policy. For several months CARB staff has been examining a proposal to amend the state s emission standards for diesel buses to conform to federal truck emission standards th Street, Suite 512 Sacramento, CA Telephone 916/ Facsimile 916/ Internet: lmsa@lmsa.com

2 starting in Conformity is currently not scheduled until No engine manufacturer has plans to meet the state s 2007 standards, but the manufacturers are on track to meet the 2007 federal requirements. Moving conformity to 2007 would allow operators to purchase newer cleaner vehicles sooner. Bay Bridge Funding Agreement: The Governor signed into law AB 144 (Hancock), which enacts the Toll Bridge Funding agreement. However, SB 66 (Torlakson) that makes some clarifying changes to AB 144 awaits approval by the Senate when they return on August 15 th. SB 66 makes some necessary clarifying changes, and as a concession to LA it requires the CTC to revise how the Commission prioritizes reimbursing local agencies that advance local funds for state highway projects. This process is known as receiving a letter of no prejudice from the CTC. The changes contained in SB 66 should not impact projects in Alameda County. The following outlines the contents of the agreement and the changes that SB 66 will make if approved. If you have any questions or would like additional details on the funding agreement please contact our office. Administrative Elements: Creates the Toll Bridge Program Oversight Committee consisting of the directors of Caltrans, the California Transportation Commission, and the Bay Area Toll Authority. The Oversight Committee shall implement oversight and project control process for the toll bridges. Caltrans will provide monthly reports to the Oversight Commission and quarterly reports to the Legislature, the Governor, and the California Transportation Commission. Caltrans shall implement a comprehensive risk management program as specified in the bill for the Toll Bridge Program. The CTC shall adopt by December 31, 2005 a schedule for the payment of the remaining contributions to be made by the state. Financing Elements: $2.15 billion derived from a $1 dollar toll increase affective January 1, $820 million made available through the consolidation of toll revenues under BATA and refinancing of existing debt. $300 million from the state highway operations and protection program, or the federal Highway Bridge Replacement and Rehabilitation program for the demolition of the existing east span. $130 million from the State Highway Account from operational savings achieved by Caltrans. $125 million in spill over funds that may be available in the fiscal year. If these funds are not available, SB 66 limits the source of funding to the following: additional operational savings achieved by Caltrans, federal Highway 2

3 Bridge Replacement and Rehabilitation Program funds, or the State Highway Account. The CTC must approve any use of additional SHA funds. AB 144 allowed any shortfall to be made-up from any transportation fund account. $75 million from the Motor Vehicle Account. If the overruns are less than anticipated, the savings shall be proportionally divided between the state and BATA. If the overruns exceed the cost estimate, the shortfall shall be the responsibility of BATA to finance. BATA is authorized to use its authority to refinance debt, use existing seismic surcharge revenue, use other available toll revenue, or increase tolls. Letter of No Prejudice: Commencing with the fiscal year, the CTC is required to review its guidelines to assure agencies that received a letter of no prejudice prior to June 30, 2005 are reimbursed on an equitable basis. A letter of no prejudice allows a local agency to use its own funds to advance a project with the commitment that the state will reimburse the local agency for the state s share at a later date. SB 66 requires the CTC to take into consideration specific factors when revising its guidelines. LEGISLATION The Legislature will return on August 15 th for four frantic weeks of session. The following summarizes the bills we have been tracking that will be acted on during the final weeks. Since this is the first year of the two-year session, any bill that remains in the Legislature becomes a two-year bill that can be acted on next year. Bill Topic Status Client-Position AB 144 (Hancock) 07/18/2005- AC Transit-Watch C-07/18/2005 Bay Area state-owned toll bridges: financing. Chaptered by Secretary of State - Chapter No. 71, Statutes of 2005 (07/18/2005-A CHAPTERED) NOTE: AB 144 contains the agreement for financing the Toll Bridge Seismic Retrofit Program deficit. As signed by the Governor, AB 144 maintains the existing single tower design, transfers control of the tolls to BATA, increases project oversight and reporting requirements, and increases tolls by one dollar no sooner than January 1, In exchange for the state contributing $630 million toward the shortfall, any future overruns would be the responsibility of BATA. 3

4 AB 691 (Hancock) A-05/31/2005 Transit village plans. 06/16/2005-Read AC Transit-Watch second time. To third reading. (06/16/2005- S THIRD READING) NOTE: This measure was approved by the Senate Local Government Committee, and it is currently on the Senate Third Reading File. AB 691 would authorize a city or county to declare that a previously adopted specific plan or redevelopment plan is also a transit village plan if the city or county adopts findings prior to December 31, 2006 stating it conforms to the definition of a transit village. The bill was amended to require the city or county to publish a notice of the time, date, and place of the public meeting if an existing plan will become a transit village plan. AB 1462 (Torrico) A-04/14/2005 State Highway Route /13/2005-Read second time. To third reading. (07/13/2005- S THIRD READING) AC Transit-Watch NOTE: AB 1462 was unanimously approved by the Senate Committee on Transportation and the Senate Appropriations Committee. AB 1462 would allow the Cities of Fremont and Union City and the transportation planning agency to prepare and submit to the CTC for approval a local alternative transportation program for Route 84. This would allow the proceeds from the sale of excess right-of-way from the Route 84 project to be programmed to other transportation projects in Alameda County AB 1614 (Klehs) A-04/21/2005 Sales and use taxes: exemptions: alternative fuel passenger transit buses. 05/25/2005-In committee: Set, first hearing. Held under submission. (05/17/2005-A 2 YEAR) AC Transit-Sponsor NOTE: This bill provides a sales and use tax exemption on tangible personal property purchased by a qualified contractor used to manufacture alternative fuel prototype buses pursuant to a qualified research and development contract. The purpose of AB 1614 is to clarify a catch-22 in BOE regulations where the purchase of a prototype vehicle is exempt from the sales tax but the component parts purchased for installation on that vehicle are not. 4

5 AB 1614 is currently in the Senate Committee on Revenue & Taxation. Although this bill would cost the state only $300,000, it exceeds the Committee s $150,000 cost threshold for holding the bill in Committee, which will make it a two-year bill. However, we will continue to pursue passage of this bill this year. AB 1623 (Klehs) A-06/28/2005 County transportation agencies: congestion management and environmental mitigation fee. 06/28/2005-Read second time, amended, and rereferred to Com. on APPR. (06/28/2005-S APPR.) AC Transit-Support NOTE: AB 1623 was approved by the Senate Committee on Transportation & Housing and now moves to the Senate Appropriations Committee. Recently, Caltrans, the Department of Motor Vehicles, and the Highway patrol have taken an official oppose position on all vehicle registration fee bills. While the arguments used to oppose the bills are not strong, the departments remain firm in opposing this bill. This will make securing a signature on AB 1623 questionable. AB 1623 would authorize the Alameda County Congestion Management Agency and the transportation agencies in Contra Costa, Marin, Napa and Sacramento to impose an annual fee of up to $5 on motor vehicles registered within each county. The revenue would be used for traffic congestion projects, such as the Smart Corridors Program, and the mitigation of environmental impacts of motor vehicles within that county. SB 250 (Campbell) A-06/21/2005 Department of Food and Agriculture: hydrogen fuel standards. 07/06/2005-From committee: Do pass, but first be re-referred to Com. on APPR. (Ayes 10. Noes 0.) AC Transit-Support NOTE: This bill calls for the establishment of standards for hydrogen fuels and fuel cells. With hydrogen beginning to emerge as a transportation fuel, there is a need to establish standards for hydrogen that currently exist for all other types of transportation fuels, such and gasoline and diesel. 5

6 SB 275 (Torlakson) A-06/30/2005 Transportation needs assessment. 07/13/2005-Placed on APPR. suspense file. (07/13/2005-A APPR. SUSPENSE FILE) AC Transit-Watch NOTE: SB 275 would require the CTC, working with the Caltrans and regional transportation entities, to complete a 10-year transportation needs assessment to the Legislature by October 1, The needs assessment would examine the unfunded rehabilitation and operations needs for the state highway system, local streets and roads, the intercity rail program, and urban, commuter, and regional transit systems, including ferry systems, over the next 10 years. SB 682 (Simitian) A-07/07/2005 Identity Information Protection Act of /07/2005-Read second time. Amended. Rereferred to Com. on APPR. (07/07/2005- A APPR.) AC Transit-Watch NOTE: SB 682 is currently in the Assembly Committee on Appropriations. This bill would regulate the use of Radio Frequency Identification (RFID) in government issued identification documents. This would include bus passes and FastTrack passes with some limited exceptions. RFID technology permits information to be transmitted between an ID card and a reader without contact using radio waves. Supporters of the bill contend that such technology raises security and privacy concerns because a card can be read without a person's knowledge and can broadcast personal information about a person. SB 689 does exempt IDs currently in use prior to January 1, 2006, so long the purpose of use does not change, and the information stored, or amount of persons issued the ID does not increase. 6