BILL NUMBER: SB 727 CHAPTERED 10/04/95 CHAPTER 518 FILED WITH SECRETARY OF STATE OCTOBER 4, 1995 APPROVED BY GOVERNOR OCTOBER 4, 1995 PASSED THE SENATE SEPTEMBER 15, 1995 PASSED THE ASSEMBLY SEPTEMBER 15, 1995 AMENDED IN ASSEMBLY SEPTEMBER 14, 1995 AMENDED IN ASSEMBLY JULY 13, 1995 AMENDED IN ASSEMBLY JULY 5, 1995 AMENDED IN SENATE APRIL 3, 1995 INTRODUCED BY Senators Polanco and Hayden (Principal coauthor: Assembly Member Escutia) (Coauthors: Assembly Members Katz, Martinez, and Villaraigosa) FEBRUARY 22, 1995 An act to add Chapter 12 (commencing with Section 30600) to Division 3 of Title 3 of, to add and repeal Section 29530.3 of, the Government Code, to add and repeal Section 99310.55 of the Public Utilities Code, and to add Section 2106.4 to, and to add and repeal Section 188.95 of, the Streets and Highways Code, relating to transportation, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST SB 727, Polanco. Local government finance: Los Angeles County: Metropolitan Transportation Authority. (1) Existing law authorizes a county board of supervisors, pursuant to a contract with the State Board of Equalization, to provide for the deposit in a local transportation fund of those revenues attributable to a specified portion of the sales and use tax rate levied in a county pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law. This bill would, as provided, authorize the board of supervisors for the County of Los Angeles to modify its contract with the State Board of Equalization to require that $150,000,000 of those revenues be deposited in the county general fund during the 1995-96 fiscal year. (2) Existing law establishes the Transportation Planning and Development Account in the State Transportation Fund and provides that the funds in the account shall be available, upon appropriation by the Legislature, for expenditure for transportation planning and mass transportation purposes. Existing law further provides for allocations to be made from the account to local transportation agencies and commissions. This bill would, as provided, reduce the amount of revenue to be allocated to the Los Angeles County Metropolitan Transportation Authority by a specified amount if that authority fails to elect to deposit that amount into the local transportation fund of the County of Los Angeles. (3) Existing law establishes the State Highway Account in the State Transportation Fund and provides for the allocation of account funds by the California Transportation Commission with respect to the counties in accordance with certain programs and formulas applied for specified time periods. This bill would, as provided, reduce the amount of revenue allocated from the State Highway Account for expenditure in the County of Los Angeles by the difference between 2 amounts otherwise specified by this bill. (4) This bill would require the County of Los Angeles, as to the amount deposited in the county general fund pursuant to paragraph (1) that exceeds $50,000,000, to annually transfer to the Los Angeles County Metropolitan Transportation Authority over a 5-year period prescribed amounts appropriated to the county from revenues derived from the per gallon tax on gasoline (gas tax) and the use fuel tax (diesel tax), or from other transportation funds, or any combination of such funds, as determined by the county. The bill would thereby make an appropriation. (5) This bill would impose a state-mandated local program by requiring the Los Angeles County Metropolitan Transportation Authority to file reports with the Legislature and the State Auditor with respect to the effect of the enactment of the above provisions on specified matters. The bill would require the State Auditor to review the report and submit an analysis of the accuracy of the report to the Legislature. (6) Existing law requires the board of supervisors to adopt a county budget and grants the board other specified financial powers. This bill would require Los Angeles County to annually submit its proposed budget to the Governor, the Legislature, and the State Auditor, including actual expenditures and revenues for the current year, an analysis of the impact of the Governor's Budget for the next fiscal year and other pertinent information, to provide actual expenditure data for each program in its budget, and take other actions with respect to its budget, thereby imposing a state-mandated local program. This bill would require the State Auditor to perform and submit to the Governor and the Legislature an audit to assess the county's fiscal condition as well as the conditions and actions contributing to the budget shortfall and to perform specified semiannual reviews of county finances. The bill would also require the Legislative Analyst to conduct a review of the county fiscal emergency and to make specified recommendations. (7) This bill would make a finding and declaration that a general statute, within the meaning of Section 16 of Article IV of the California Constitution, cannot be made applicable and that a special statute is necessary. (8) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement, including the creation of a State Mandates Claims Fund to pay the costs of mandates that do not exceed $1,000,000 statewide and other procedures for claims whose statewide costs exceed $1,000,000. This bill would provide that, if the Commission on State Mandates determines that specified provisions of the bill contain costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions. The bill would provide that no reimbursement shall be made from the State Mandates Claims Fund for costs mandated by the state pursuant to other specified provisions, but would recognize that local agencies and school districts may pursue any available remedies to seek reimbursement for these costs. (9) This bill would declare that its provisions will become operative only if SB 1055 is enacted and becomes operative on or before January 1, 1996. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 29530.3 is added to the Government Code, to read: 29530.3. (a) Notwithstanding any other provision of law, with respect to local sales and use taxes levied for the 1995-96 fiscal year, the board of supervisors for the County of Los Angeles may, upon the adoption of a resolution approved by a majority of all of its members no later than October 1, 1995, modify its contract with the State Board of Equalization, as described in Section 29530, to require that fiscal realignment revenues be deposited in the county general fund. For purposes of this section, "fiscal realignment revenues" means that amount of those county sales and use tax revenues described in Section 29530 that otherwise would be allocated from the county's local transportation fund to the Los Angeles County Metropolitan Transportation Authority for the 1995-96 fiscal year, not exceeding one hundred fifty million dollars ($150,000,000). (b) It is the intent of the Legislature that funds made available to the County of Los Angeles pursuant to this section be used for the purpose of funding county owned and contracted health services, and that these funds not be used to supplant other county funds that have historically been used to fund county health services. (c) This section shall remain in effect only until January 1, 1997, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 1997, deletes or extends that date. SEC. 2. Chapter 12 (commencing with Section 30600) is added to Division 3 of Title 3 of the Government Code, to read: CHAPTER 12. LOS ANGELES COUNTY FISCAL CONTROL 30600. For the purposes of this chapter, "county" means the County of Los Angeles. 30601. The Legislature finds and declares that the severe fiscal emergency being experienced by the Los Angeles County government necessitates the enactment of the requirements of this chapter. 30602. In reporting on all fiscal matters, the county shall comply with the Accounting Standards and Procedures for Counties as promulgated by the Controller. 30603. The county shall annually submit its proposed budget to the Governor, the Legislature, and the State Auditor, including estimated actual expenditures and revenues for the current year, an analysis of the impact of the Governor's Budget for the next fiscal year, and any other pertinent information which may impact the county' s fiscal situation for the next fiscal year. 30604. The county shall, for each program in the budget, provide actual expenditure data to enable comparison of actual expenditures with the current estimated and proposed levels and to show expenditures by funding source. 30605. (a) In order to provide independent verification and validation of the county's financial position, the State Auditor shall perform an audit to assess the county's fiscal condition as well as the conditions and actions contributing to the budget shortfall. This review should include, but not be limited to, the following: (1) A review and assessment of the county's projection of revenues and expenditures. (2) A comparison of the county's budgeted revenues and expenditures and actual revenues and expenditures, including an analysis of any significant variances. (3) A review of budget actions taken in recent years to meet short-term and long-term funding needs that have had or will have an impact on future budgets. (4) A review of potential barriers to the implementation of corrective measures, including the county's charter, collective bargaining agreements, and maintenance of effort requirements imposed by the state and federal governments. (5) A review of the sources, uses, and terms of long-term debt financing entered into by the county and the extent to which it was utilized to fund ongoing operating expenses. (6) Recommendations, as appropriate, for improving the efficiency and effectiveness of the county's operations. (b) The report of the audit shall be submitted to the Legislature and Governor on or before March 31, 1996. The State Auditor shall not unnecessarily duplicate the efforts of the Legislative Analyst's Office, and shall utilize, to the extent possible, the data and analyses of the Legislative Analyst. 30606. The State Auditor shall also perform a semiannual review of the county's finances and prepare reports as described in this section. The first report shall be submitted to the Governor and the Legislature on or before September 30, 1996, and the last report shall be submitted on or before March 31, 1998. The reports shall include an analysis of whether the budget gap is being closed as well as a followup on issues, findings, and recommendations included in the previous reports. In addition, these reports may include recommendations, as appropriate, for improving the efficiency and effectiveness of the county's operations. 30607. (a) In accordance with Section 8545.2, the county shall provide the State Auditor with all data and records required for the reviews pursuant to Sections 30605 and 30606, including, but not limited to, the following information for the previous three fiscal years: (1) Revenues and expenditures by budget line item and by source. (2) Supporting schedules for the budgets. (3) Salary schedules for all classifications of county employees. (4) All collective bargaining agreements. (5) A detailed listing of all outstanding debt issues, including the type of debt, date of issue, copies of the official statements, and a description of the uses of the proceeds. (6) Caseload, expenditure, capacity, and utilization trends for health and welfare programs. (b) This section shall remain in effect only until March 31, 1998, and as of that date is repealed unless a later enacted statute that is enacted before March 31, 1998, extends that date. 30608. The Legislative Analyst shall conduct a review including identification of the principal factors contributing to the current county fiscal emergency and making recommendations concerning the following: (a) Structural changes in federal, state, and county fiscal and program relationships. (b) County operations that will minimize future county fiscal emergencies and promote long-term fiscal viability. SEC. 3. Section 99310.55 is added to the Public Utilities Code, to read: 99310.55. (a) (1) For the 1995-96 fiscal year, the amount to be allocated, pursuant to this article, to the Los Angeles County Metropolitan Transportation Authority shall be reduced by the transportation services support amount unless the authority elects to deposit that amount into the county's local transportation fund established pursuant to Section 29530 of the Government Code. Any moneys deposited in the county's local transportation fund pursuant to the preceding sentence shall be available for allocation exclusively to the Los Angeles County Metropolitan Transportation Authority for bus operations. (2) For purposes of this section, "transportation services support amount" means that amount of revenue that is equal to the amount of revenue transferred to the county general fund pursuant to Section 29530.3 of the Government Code, other than revenue that is necessary to fund the outstanding indebtedness or other outstanding contractual obligations of the authority, or revenue, the deposit of which, in accordance with paragraph (1) is prohibited by the California Constitution. (3) If the Los Angeles County Metropolitan Transportation Authority does not elect to deposit the transportation services support amount into the county's local transportation fund as provided in paragraph (1), and the transportation services support amount exceeds the amount to be allocated to the authority pursuant to this article in the absence of any reduction pursuant to paragraph (1), the difference between these latter two amounts shall, in accordance with Section 188.95 of the Streets and Highways Code, be deducted from the amount of revenues allocated from the State Highway Account for expenditure in the county for rail transit purposes. (b) (1) In any revelant fiscal year, the Los Angeles County Metropolitan Transportation Authority shall not do any of the following: (A) Reduce bus service or operations or paratransit service or operations directly or indirectly as a result of the enactment of this section or of any other provision of the act that enacted this section. (B) Replace any funding reduction or deduction described in this section with money from another source if doing so would be a detriment to bus service or operations or paratransit service or operations. For purposes of this paragraph, "detriment to bus service or operations or paratransit service or operations" includes, but is not limited to, fare increases, reductions in the number of routes served and the level of service on these lines, reductions in security, decreases in quality of service, delaying regular maintenance of vehicles, and lengthening the replacement schedule for vehicles that have reached the ends of their useful lives. (2) For purposes of this section, "bus service or operations or paratransit service or operations" includes service and operations of bus and paratransit services operated by the authority, including, but not limited to, the Immediate Needs Transportation Program, or any other bus or paratransit operator in Los Angeles County that receives funds from the authority. (3) For purposes of this section "relevant fiscal year" includes the 1995-96 fiscal year, and the two fiscal years during which funds are transferred to the Los Angeles County Metropolitan Transportation Authority pursuant to Section 2106.4 of the Streets and Highways Code. (4) Nothing in this section shall be construed to mean that the Los Angeles County Metropolitan Transportation Agency should not or may not directly or indirectly increase bus service or operations or paratransit service or operations. (c) This section shall remain in effect only until January 1, 2002, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2002, deletes or extends that date. SEC. 4. Section 188.95 is added to the Streets and Highways Code, to read: 188.95. (a) Notwithstanding any other provision of law, if the conditions specified in paragraph (3) of subdivision (a) of Section 99310.55 of the Public Utilities Code exist with respect to the 1995-96 fiscal year, the amount of revenue allocated for that fiscal year for expenditure in the County of Los Angeles from the State Highway Account shall be reduced by the excess of the transportation services support amount, as defined in paragraph (2) of subdivision (a) of Section 99310.55 of the Public Utilities Code, over the amount to be allocated for that fiscal year to the Los Angeles County Metropolitan Transportation Authority from the Transportation Planning and Development Account in the absence of any reduction pursuant to that same section. (b) This section shall remain in effect only until January 1, 1997, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 1997, deletes or extends that date. SEC. 5. Section 2106.4 is added to the Streets and Highways Code, to read: 2106.4. From funds apportioned to the County of Los Angeles pursuant to Sections 2104, 2105, and 2106, or from other transportation funds available to the county, or from any combination of those funds, as determined by the county, the county shall, beginning in the 1996-97 fiscal year, commence the annual transfer to the Los Angeles County Metropolitan Transportation Authority of funds in an amount calculated to amortize, in equal annual installments over a 5-year period, the amount by which fiscal realignment revenues deposited in the county general fund exceed fifty million dollars ($50,000,000). The highest priority for the use of the remaining funds apportioned to the county pursuant to this chapter shall be for safety and for maintenance of county facilities in urban areas with the highest backlog of maintenance and rehabilitation needs. SEC. 6. (a) The Los Angeles County Metropolitan Transportation Authority shall file a written report with the State Auditor and the Legislature within 60 days following the conclusion of the 1995-96 fiscal year with respect to each of the following matters, as affected by the enactment of Section 1 and Sections 3 to 5, inclusive, of this act, or any of those sections: (1) The specific amount and source of money, if any, used to replace funds diverted as a result of the enactment of this act. (2) Whether bus and paratransit services and operations have been maintained at consistent levels. (3) Whether this act has had any detrimental effect on the operational, administrative, planning, or construction activities of the authority, and if so, the nature of those detrimental effects. (b) The State Auditor shall review the report and submit an analysis of the accuracy of the report to the Legislature. SEC. 7. The Legislature finds and declares that a special law is necessary and that a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the uniquely severe fiscal crises currently being experienced by the County of Los Angeles. SEC. 8. Notwithstanding Section 17610 of the Government Code, if the Commission on State Mandates determines that Sections 3 to 6, inclusive, of this act contain costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code. If the statewide cost of the claim for reimbursement does not exceed one million dollars ($1,000,000), reimbursement shall be made from the State Mandates Claims Fund. SEC. 9. No reimbursement shall be made from the State Mandates Claim Fund pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code for costs mandated by the state pursuant to Section 2 of this act. It is recognized, however, that a local agency or school district may pursue any remedies to obtain reimbursement available to it under Part 7 (commencing with Section 17500) and any other provisions of law. Notwithstanding Section 17580 of the Government Code, unless otherwise specified, the provisions of this act shall become operative on the same date that the act takes effect pursuant to the California Constitution. SEC. 10. This act shall become operative only if Senate Bill 1055, proposed at the 1995-96 Regular Session, is enacted and becomes operative on or before January 1, 1996.