October 18, 2000
URGENT UPDATE - PLEASE DELIVER IMMEDIATELY
TO: City Managers
Please Route to Financial Officers and Public Works Directors
RE: AB 2928 Checks Issued to Cities
On Friday, October 13, 2000, cities were issued a CHECK, by the State Controller, to
allocate the cities share (in one lump sum) of the $400 million provided by AB 2928
(Chapter 91, Statutes of 2000). Every city received a REMITTANCE ADVICE, along with
the check that was issued in reference to TRAFFIC CONGESTION RELIEF.
This money is required to be deposited in the city account that is designated for the
receipt of state funds allocated for transportation purposes and ARE NOT to be
commingled with other local funds and thus can be tracked for auditing purposes by the
State Controller.
Background: AB 2928, (Chapter 91, Statutes of 2000) which was the budget trailer bill
for the transportation finance package, provides approximately $6.8 billion over the
next six years for both capital and preservation transportation projects, of which
$5.4 billion is dedicated to implement approximately 150 capital projects from the
Governor's Traffic Congestion Relief Plan. In addition, the bill provides
approximately $1 billion directly to cities and counties for preservation, maintenance
and rehabilitation of the local street and road system. In fiscal year 2000-01 the
bill allocates $400 million one-time to cities and counties for maintenance and
rehabilitation projects. The cities will receive $200 million on a per capita basis
formula, which is equivalent to about $7.20 per capita. (The counties will receive
$200 million on a formula based 75% on registered vehicles and 25% on maintained
miles.)
Use of these New Funds: These new monies must be used only for street and highway
pavement maintenance, rehabilitation and reconstruction of necessary associated
facilities such as drainage and traffic control devices. Rehabilitation or
reconstruction may include widening to bring the roadway width to the desirable
minimum pavement width consistent with accepted design standards for local streets and
roads, but does not include widening for increasing the traffic capacity of a street
or road.
Requirement for MOE (Maintenance of Effort): AB 2928 requires compliance with an MOE
provision. This new revenue for local streets and roads subventions is to be used for
specific maintenance and repair purposes; and imposes an MOE provision which requires
cities to maintain their current level of city general fund expenditures for
transportation purposes. To determine your MOE, you must calculate your average over
the last three years of city expenditures from the general fund for street, road and
highway purposes. This is a condition of continued funding for the new monies or the
city will lose the funding. The calculation is based on averaging the last three
fiscal years (1996-97, 1997-98 and 1998-99) which is the same approach utilized to
calculate the MOE when the last 9 cents gas tax increase was made in 1990. Complying
with the MOE is also essential to be eligible for future funding under AB 2928, which
is expected to be equivalent to approximately $100 million annually over the next five
years and is to be split 50% to cities and 50% to counties.
Use it or Lose it: The new law also contains a "use or lose it" provision, which
requires that the monies be expended by June 30th of the following fiscal year in
which it was received. Thus, this new money must be expended by June 30, 2002. Should
a jurisdiction fail to meet these tests, the monies must be returned to the State
Controller and redistributed to compliant jurisdictions.
As you may recall, the SR 8 (Burton) report completed by the California Transportation
Commission in 1999 identified $11 billion in unmet needs on the city street and county
road system. The report found that this need would grow by $400 million a year, if
new revenue is not directed to this critical problem. Therefore it is crucial to
expend the monies received this year under AB 2928. This should be an easy task given
the tremendous need identified. It will also help support advocacy efforts to secure
additional on going transportation dollars for cities and counties in the future.
For additional information please visit the League's website at www.cacities.org and
click on the "Transportation Funding" Icon at the bottom of the home page. The final
distribution should be posted on the Controllers website tomorrow.
Frances Medema
Policy Analyst
League of California Cities
1400 K Street Suite 400
Sacramento, CA 95814
phone: 916/658-8218
fax: 916/658-8240
email: [EMAIL PROTECTED]
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