BILL:		SCA 7

AUTHOR:	STATE SENATOR KEVIN MURRAY
		(D-CULVER CITY)

SUBJECT:	LOANS OF TRANSPORTATION FUNDS TO THE STATE GENERAL FUND

STATUS:	SENATE COMMITTEE ON CONSTITUTIONAL AMENDMENTS

ACTION:	SUPPORT

RECOMMENDATION

Staff recommends that the MTA Board of Directors adopt a support position on SCA 7.

PROVISIONS

The California Constitution requires that funds in the State Transportation Fund and the Public Transportation Account (PTA) may be loaned to the General Fund under certain conditions.  These conditions require that the loans be repaid within one year or within three years with interest.  Current law does not cover loans made from these accounts to other accounts in the State.  

SCA 7 would require that the loan repayment conditions for the State Transportation Fund and Public Transportation Account be applied to any loan that is made from motor vehicle fuel and vehicle-related revenues to any other fund or account in the State.

IMPACT ANALYSIS

SCA 7 is being offered in response to the continued effort by the State to use transportation resources to resolve a General Fund deficit.  In the early 1990’s the state began to experience considerable General Fund deficits.  The State Highway Account (SHA) was used to resolve the deficit. These loans and transfers were never repaid.  At the time, the Constitution required repayment but did not specify timeframes.  As the state has entered the most recent era of General Fund deficits, the state has continued to attempt to use transportation resources as a solution.  

Under current law, loans from the SHA and the PTA can be made to the General Fund with specified repayment conditions.  These conditions were imposed by SCA 2, (Murray) in 1998. 

Last year the Legislature approved the current budget language that allows a transfer or SHA and PTA funds to the Traffic Congestion Relief Program with these restrictions in place. Current law then allows the TCRP to loan funds to the General Fund. Since the SHA is not engaged in a direct loan of funds the General Fund, the repayment provisions of the State Constitution do not apply.  Principle amongst these provisions is the repayment of loans with interest since interest income in the SHA can be significant. 

SCA 7 would tighten the language added by SCA 2 to impose the repayment provisions on loans from the SHA and PTA to any other fund in the state.  This will prevent any future transfer of motor vehicle related revenues without repayment provisions.

Staff recommends the Board support SCA 7.