TTAC STAFF REPORT

SUBJECT: Transportation Development Act Reform

MEETING DATE: March 5, 2020 AGENDA ITEM: 11

STAFF CONTACT: Michael Becker

RECOMMENDATION: Receive a report on the status of reforming the Transportation Development Act.

DISCUSSION: The Transportation Development Act (TDA), formally the Mills-Alquist-Deddeh Act of 1971, provides funding for transit services in through two programs: the Local Transportation Fund (LTF) which is funded by ¼ of one percent of sales tax collected in the state, and the State Transit Assistance Program (STA) which is funded by a sales tax on diesel fuel.

In 2018, the state legislature tasked the California Transit Association with developing a task force to recommend reforms to the TDA. The task force was requested to supply proposed reforms by the end of 2019 for consideration during the 2020 legislative year. The underlying request from the legislature was to look at the adequacy of performance measurement when compared to other state goals, such as reducing greenhouse gases. The California Transit Association assembled a task force including representation from the following agencies: County Connection, SANDAG, Golden Empire Transit District, San Diego MTS, LA Metro, SamTrans, , Santa Clara VTA, MTC, Santa Cruz Metro, Monterey-Salinas Transit, Santa Monica’s , OCTA, Stanislaus COG, , Victor Valley Transit Authority, and Sacramento RT. Others were offered opportunity to provide comments.

Though the task force missed its 2019 reforms proposal deadline, it is in the final phases of approving a final reform package for consideration by the legislature. The draft framework includes the following. • Retain TDA’s current farebox recovery ratio requirements • Remove financial penalties for farebox ratio non-compliance o Change the farebox ratio from a requirement to a target • Lower farebox recovery ratio requirements/targets o From 20 percent to 15 percent for urban area operators o From 10 percent to 7.5 percent for non-urban area operators • Revise farebox recovery ratio definitions o Permit federal funding and LCTOP funding to be considered in farebox calculations o Exclude all E&H/ADA paratransit operating costs o Exclude operating costs associated with compliance of the innovative Clean Transit regulation o Exclude operating costs from pensions added by new GASB 65/GASB 70 rules • Subject agencies missing farebox targets for three years to one of two options (at the operator’s choosing):

o Develop an action plan to meet farebox requirements with implementation monitoring by the RTPA, or o Work with the RTPA to develop new performance targets

Note that the draft proposed changes only seek to change the LTF portion, and its associated requirements, of the TDA. The STA portion is proposed to remain unchanged for the time being.

The task force is currently seeking feedback on its draft framework concept. It expects to submit the final framework concept to the legislature early this year – assuming major changes are not required based on the public review.

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