SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 1442 (Luz Rivas) - Income taxes: credits: Share Our Values Tax Credit

Bill Summary:

AB 1442 would create a tax credit for Film and TV productions either moving from or choosing to not film in states that have passed specified abortion laws.

Fiscal Impact:

• The Franchise Tax Board (FTB) estimates that this bill would result in General Fund revenue losses of $9 million in 2020-21 and $35 million in 2021-22, would peak at $60 million in 2025-26. FTB’s implementation costs would be minor and absorbable.
• The California Film Commission would incur increased costs to administer the new tax credit program and report to the Legislative Analyst’s Office (LAO), FTB, and the California Department of Tax and Fee Administration (CDTFA), as specified. The Commission estimates these cost to be $485,000 annually over the five-year period (General Fund).

Background:

Tax expenditure programs (TEPs) are special tax provisions that reduce the amount of revenues the “basic” tax system would otherwise generate in order to provide (1) benefits to certain groups of taxpayers, and/or (2) incentives to encourage certain types of behavior and activities, such as charitable giving. Specifically, current law provides for, among other things, various income and corporation tax credits and deductions, as well as exemptions from the sales and use tax. The Department of Finance is required to publish a list of TEPs (currently totaling several hundred), which currently total $65 billion annually.

In 1985, the Legislature established the California Film Commission (CFC) to co-ordinate state and local governments’ efforts to provide an environment conducive for the film industry. In 2009, the Legislature enacted a tax credit for qualified motion picture production in California as part of the state budget, directing CFC to allocate $100 million in credits annually. The program was subsequently extended, such that credits were awarded through 2016-17. In 2014, the Legislature enacted a second film tax credit program, and later, a third one. Currently, CFC can allocate $330 million in credits each fiscal year through 2024-25. The credit’s application and allocation processes have underdone various changes in the last decade.

Proposed Law:

This bill would create the “Share Our Values” Tax Credit, which is substantially similar to the current Film and TV Tax Credit. It would authorize CFC to allocate $100 million annually for fiscal years 2020-21 through 2024-25.

The bill’s tax credit would be different from the existing one in several ways. First, in addition to the requirements of the Film and TV Tax Credit, this bill would require taxpayers to provide a narrative describing how they share California’s values with regard to women’s reproductive rights. Second, it would define a qualified motion picture as one that either (1) relocates to California from a state that has pending legislation or existing law that restricts a women’s access to abortion services after eight weeks, or (2) that the qualified taxpayer chooses to pay or incur costs in California rather than in a state, that has one of these laws. Third, the bill would not allow taxpayers to sell their credits or carry forward any unused credit amount.

Among other duties, the bill would require CFC to annually provide the LAO, FTB, and CDTFA with a list of qualified taxpayers and the tax credit amounts allocated to each qualified taxpayer, as specified.

Staff Comments:

As noted previously, if applicants provide a narrative describing how they share the State’s values concerning women’s reproductive rights, they could qualify for this bill’s tax credit. Taxpayers that would qualify for this bill’s tax credit can already apply for the current one. Thus, this bill would essentially add an additional $100 million to the annual allocation, provided the applicant is willing to provide the specified narrative.

The LAO published a preliminary report reviewing the film tax credit in April, 2014. While this LAO report did not make recommendations, its key takeaways for the Legislature were: (1) ideally, states would not compete on the basis of subsidies, but (2) given that other states and countries offer subsidies, it might be difficult for California not to do so and still maintain its leadership position in this industry, so (3) if the State wishes to continue or expand the film tax credit, it should do so cautiously, as responding to other jurisdictions’ subsidies could be very expensive and for state government, the film tax credit does not “pay for itself.” In July 2019, the LAO issued an updated report, which noted the following:

“Since our previous report, other independent researchers have studied the effectiveness of public subsidies for film and television production. They found that incentives do not help states establish a new local film industry or create lasting economic development. Like our research, these studies confirm production is mobile, susceptible to influence by financial incentives, and that film production subsidies provide some tangible benefits. However, these studies have all concluded that the benefits are small relative to the subsidies’ cost. A notable new finding in this research is that changes in the number of motion picture industry jobs—increases and decreases—are not affected by the existence of a tax incentive in that state or in other states. When the number of jobs in states with an incentive increased, jobs also increased in some states that did not have an active incentive program—such as Florida and Nevada. This suggests that incentives have less effect on film industry jobs than other factors—discussed in our first report—such as the growth of the U.S. economy and technological changes.”

The California Film Commission indicates that the bill’s focus on reproductive rights as a determining criteria for awarding the credit would require dedicated regulations and new staff. This focus would add some complexity to the current evaluation process of applicants. Applicants would likely apply for the Share Our Values tax credit in addition to the existing credit; consequently, determining eligibility and awards between the two competing programs would be time-consuming.

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SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2019 - 2020 Regular

Income taxes: credits: Share Our Values Tax Credit

Creates the Share Our Values Tax Credit, which is a tax credit for Film and TV productions either moving from or choosing to not film in states that have passed strict abortion laws.

Background

Tax expenditures. California law allows various income tax credits, deductions, exemptions, and exclusions. The Legislature enacts such tax incentives either to compensate taxpayers for incurring certain expenses, such as child adoption, or to influence certain behavior, such as charitable giving. The Legislature uses tax incentives to encourage taxpayers to do something that but for the tax credit, they would otherwise not do. The Department of Finance is required annually to publish a list of state tax expenditures, currently totaling around $65.2 billion per year.

Unlike deductions, which reduce the amount of earnings subject to tax, taxpayers apply credits after they have calculated their taxable income. Tax credits reduce — dollar for dollar — the amount of taxes owed.

Film and TV Tax Credit. In 1985, the Legislature established the California Film Commission (CFC) to coordinate both state and local governments’ efforts at providing an environment conducive for the film industry. In 2009, the Legislature enacted a tax credit for qualified motion picture production in California, directing CFC to allocate $100 million in credits annually until the 2012-13 fiscal year, commonly known as “Film and TV Tax Credit 1.0” (SBx3 15, Calderon and ABx3 15, Krekorian, 2009). If any credits were unallocated, CFC could carry them over to the next year. Both measures directed CFC to allocate two years’ worth of credits—$200 million—in the first fiscal year, 2009-10, which meant that in future fiscal years, CFC was allocating credits for the following fiscal year. For example, when CFC allocated credits on July 1, 2012, the allocation was for credits authorized in FY 2013-14. In 2011, the Legislature extended the program for one year to 2014-15 (AB 1069, Fuentes). In 2012, the Legislature extended the program again, for an additional two years until 2016-17 (AB 2026 Fuentes and SB 1197, Calderon). CFC allocated the last $100 million allocation of Film and TV Credit 1.0 on July 1, 2015.

In 2014, the Legislature enacted “Film and TV Tax Credit 2.0,” which directed CFC to allocate $230 million in credits in 2015-16, and $330 million in credits in fiscal years 2016-17, 2018-19, and 2019-20 (AB 1839, Gatto). The lower amount in fiscal year 2015-16 reflected the $100 million remaining under Film and TV Credit 1.0. In 2018, the Legislature enacted “Film and TV Tax Credit 3.0,” which directed CFC to allocate $330 million in credits for fiscal years 2020-21 through 2024-25 (SB 871, Committee on Budget and Fiscal Review). While the Film and TV Tax Credit has undergone multiple iterations over the past 10 years—with various changes in the credit’s mechanics as well as the credit’s application and allocation process—the goal of credit has remained the same: to retain and attract motion picture productions in the state.

Credit mechanics. If CFC approves their project, taxpayers may claim a credit under either the Personal Income Tax Law or the Corporation Tax Law that equals either:

• 20 percent of the qualified expenditures attributable to the production of a qualified motion picture, or a television series that relocated to the state in its second or subsequent years of receiving a credit; or
• 25 percent of the qualified expenditures attributable to the production of either a television series that relocated to California in its first year of receiving a credit, or an independent film.

The credit provides additional credits or “uplifts” to projects, which qualified for a 20 percent credit, for incurring specific costs. The uplift amounts—subject to limitations—are equal to five percent of the following expenditures (excluding qualified wages):

• Original photography that took place outside the Los Angeles zone, as defined.
• Visual effects, as defined.

The credit provides another additional uplift to productions for qualified wages paid for services performed by individuals outside the Los Angeles Zone relating to original photography. If the project qualifies for a 20 percent credit, the additional uplift is limited to 10 percent of qualified wages paid. If the project qualifies for a 25 percent credit, the additional uplift is limited to 5 percent of qualified wages paid.

Qualified expenditures are amounts paid or incurred to purchase, or lease, tangible personal property in the state. It also includes qualified wages, or services performed in the state, attributable to the motion picture production. Qualified expenditures do not include, among other things, expenses related to the following: licensing or residual compensation; creating ancillary products such as toys and games; marketing; or financing the project. Additionally qualified expenditures do not include, among other things, wages paid for the following: writers, directors, music directors, music composers, producers, and performers (other than background actors).

Qualified motion pictures are motion pictures produced for distribution to the public, regardless of the medium, and must meet all of the following requirements:

• Have 75 percent or more of its production days in the state, or 75 percent of the production budget incurs payment for services, purchases, or rentals of property in the state;
• Complete production within 30 months of the date in which the taxpayer’s application is approved;
• Obtain a copyright from the United States Copyright Office; and
• Commence principal photography within 180 days (if the project has a budget with qualified expenditures of less than $100 million), or 240 days (if the project has a budget with qualified expenditures of at least $100 million), from the date that CFC approved the application.

Qualified motion pictures do not include specific projects such as commercial advertising, music videos, motion pictures for noncommercial use (ex. weddings), news and public events programs, talk shows, game shows, reality programming, documentaries, and pornographic films.

CFC can allocate credits to any of the following projects:

• A feature with a minimum production budget of $1 million.
• An independent film, as defined.
• A miniseries consisting of two or more episodes each longer than 40 minutes (exclusive of commercials) with a minimum production budget of $1 million per episode.
• A new television series with episodes longer than 40 minutes (exclusive of commercials), a minimum production budget of $1 million per episode, and produced in the state.
• A pilot for a new television series, as defined.
• A television series that relocated to California, as defined.

Taxpayers with receiving credits for independent films may sell their credit so long as the taxpayer reports the sale along with specified information to FTB. Corporate taxpayers can assign its credits to another member of their unitary group if the credit exceeds its tax liability. Statute sets forth several procedural requirements a corporate taxpayer must following when assigning a credit. All other taxpayers can claim the credit directly: they can elect to apply it against their sales and use tax liability, or they can carry it forward for up to eight years to offset future tax liability.

Application process. To apply for a credit, taxpayers have to submit information to CFC, which includes, but is not limited to, the following:

• The production budget.
• The number of production days.
• The diversity of the workforce employed.
• Financial information, if available.
• The amount of qualified wages the applicant expects to pay.
• The applicant’s written policy against unlawful harassment.
• A statement establishing that the credit is a significant factor in the applicant’s choice of location for the project. It must include information regarding whether the qualified motion picture is at risk of moving to another state.
• Any other information CFC or Franchise Tax Board (FTB) deems relevant.

CFC must then allocate credits to applicants with the highest “job ratio,” which is equal to the amount of qualified wages paid by the production divided by the amount of credit (not including uplifts) as computed by CFC. For purposes of the calculation, CFC only considers 70 percent of visual effects payments as qualified wages. CFC may increase the jobs ratio by up to 25 percent according to specified criteria that measures economic impact such as use of production facilities in the state.

Allocation process. CFC annually allocates the $330 million in tax credits, in at least two or more allocation periods per fiscal year, using the following percentages:

• 40 percent for a new television series, pilots for a new television series, movies of the week, miniseries, and recurring television series,
• 35 percent for features,
• 17 percent for relocating television series,
• 4.8 percent for independent films with qualified expenditures of $10 million or less, or
• 3.2 percent for independent films with qualified expenditures in excess of $10 million.

If CFC issues a credit for a television series, a relocating television series, or any new television series based on a pilot, it must issue that same show a credit for each subsequent season as long as CFC is allocating tax credits. In addition to the annually authorized amounts, CFC also allocates any remaining unallocated credit from the previous year, any difference between allocated and certified credit amounts (discussed below), and any credits returned due to the change in the applicant’s jobs ratio (discussed below). CFC may only reallocate credits in a manner prescribed in statute.

If CFC approves the application, it will issue the applicant a credit allocation letter indicating the amount of credit reserved, pending continuing eligibility and final documentation. Statute allows projects that encounter specified events that delay production such as natural disasters, terrorist activities, etc., to maintain eligibility for the credit.

Once the project is completed, the applicant must provide final documentation to CFC necessary to verify the qualified expenditures eligible for the credit, plus a copyright certificate. CFC then determines whether the project is still eligible for the credit, and if so, the amount of qualified expenditures, and the applicable credit percentage. CFC must also use final documentation to recalculate the jobs ratio. Based on information received from the applicant, if CFC determines that the jobs ratio for a project reduced by more than 10 percent, CFC reduces the credit by an equal percentage. If the jobs ratio reduced by more than 20 percent, CFC is barred from accepting an application from that taxpayer, or any taxpayer within its unitary group of corporations. CFC does not reduce the jobs ratio if a taxpayer demonstrates that the difference is due to reasonable cause, as defined.

Upon completion of its determination, CFC issues the taxpayer a credit certificate, which reflects the credit amount allocated. CFC can allocate an amount that is less than the amount reserved under the credit allocation letter. Furthermore, any denial is final.

Other provisions. CFC must obtain, when possible, information from applicants that did not receive tax credits. For example, whether the applicant completed the qualified motion picture that was the subject of the application; if completed, which state the applicant completed the photography in; and whether that state gave the project any financial incentives.

CFC must annually post specified information on its website, which includes, but is not limited to, the following:

• A list of qualified taxpayers and the amount of tax credits each taxpayer received.
• The number of production days in California the qualified taxpayer represented in its application would occur.
• The number of California jobs the production would create as represented in the qualified taxpayer’s application.
• The total amount of qualified expenditures the qualified taxpayer represented in its application would produce.
• A narrative staff summary describing qualified taxpayer’s production as well as background information about the qualified taxpayer.
• A list of initiatives by locality that encourage motion picture production.

LAO report. When the Legislature extended Credit 1.0 for the third time in 2012, it required LAO to report on both the economic effects and the administration of the credit before January 1, 2016. LAO published a preliminary report entitled “Overview of Motion Picture Industry and State Tax Credits,” in April, 2014. While this LAO report did not make recommendations, it did contain a few key takeaways. First in an ideal world, states would not compete on the basis of subsidies. Second, some factors might lead the Legislature reasonably to consider extending or expanding the state’s film tax credit. Given that other states and countries offer subsidies, it might be difficult for California not to provide subsidies and still maintain its leadership position in this industry. However, if the Legislature wishes to continue or expand the film tax credit, the LAO suggested to do so cautiously. The report highlighted several factors to consider such as (1) responding to other jurisdictions’ subsidies could be very expensive and (2) for state government, the film tax credit does not “pay for itself.” In other words, projects that receive these credits do not generate enough economic activity in the state to offset the revenue lost from the initial credit.

Recent abortion laws. The U.S Supreme Court Case, Roe v. Wade, 410 U.S. 113 (1973) was a landmark legal decision, in which the U.S. Supreme Court struck down a Texas statute banning abortion, effectively legalizing the procedure across the U.S. The court held that a woman’s right to an abortion was implicit in the right to privacy protected by the 14^th Amendment to the U.S Constitution. However, the Court argued that the right to abortion must be balanced with the life of the child and the health of the mother. The state had a right to intervene if an abortion would cause harm or death to the mother, or the fetus had become viable. In other words, the fetus has the ability to live outside the womb, which usually happens between 24 and 28 weeks after conception.

Over the past year, at least six states have passed—and many more are considering—legislation to restrict access to abortion. Georgia Gov. Brian Kemp recently signed HB 481, which outlaws abortions after a doctor is able to detect “a fetal heartbeat in the womb,” which usually occurs around six weeks. Doctors and physicians note that many women do not even know they are pregnant at six weeks, leaving no ability for them to seek the medical procedure. The bill includes exceptions in the case of rape or incest, but to qualify, the victim must have filed a police report. Additionally, if a woman has a miscarriage, the state could legally pull her into an investigation to determine if someone performed an illegal abortion on her.

Another state, Alabama, passed The Alabama Human Life Protection Act, which makes performing an abortion in Alabama a felony. Under the Act, there are only two reasons a person could have an abortion: if the fetus has a lethal anomaly—that leads to death either before or shortly after birth—or if it is necessary to prevent a serious health risk to the mother. The Act does not include an exception in the case of rape or incest. Both Georgia and Alabama’s laws are part of the onslaught of anti-abortion bills states are passing in hopes of bringing a challenge to Roe.

However, these controversial laws have led numerous entertainment companies, who film in these states, to rethink the locations of both their current and next projects. Multiple directors, actors, and producers have gone on record saying they do not want to work in states with these types of laws. The author would like to provide an incentive to get these individuals and companies to produce motion pictures in California.

Proposed Law

AB 1442 creates the “Share Our Values” Tax Credit, which is substantially similar to the current Film and TV Tax Credit. AB 1142 authorizes CFC to allocate $100 million annually for fiscal years 2020-21 through 2024-25.

The Share Our Values Tax Credit differs from the Film and TV Tax Credit in the following ways:

• In addition to the requirements of the Film and TV Tax Credit, AB 1442 requires a taxpayer to provide a narrative describing how the qualified taxpayer shares California’s values with regard to women’s reproductive rights.
• AB 1442 additionally defines a qualified motion picture as one that either relocates to California from a state that has pending legislation or existing law that restricts a women’s access to abortion services after eight weeks, or that the qualified taxpayer chooses to pay or incur costs in California rather than in a state, that has one of these laws.
• AB 1442 does not allow taxpayers to sell their credits.
• AB 1442 does not allow a taxpayer to carry forward any unused credit amount.

AB 1442 states that Section 41 does not apply to the Share Our Values tax credit.

State Revenue Impact

Pending.

Comments

1. Purpose of the bill. According to the author, “In 1973, the U.S. Supreme Court made the landmark decision in Roe v. Wade that affirmed that every woman has a fundamental right to control her own reproductive decisions and the autonomy to decide to carry a pregnancy to term or seek an abortion. Several states that previously lured film production out of California have since revisited their assaults on women’s rights. Alabama, Georgia, Ohio, Kentucky, Mississippi, Missouri, and Louisiana have recently passed legislation restricting a woman’s right to seek an abortion.

AB 1442 provides the film industry an opportunity to show they stand with women and share our values, while bringing critical jobs back to the state. This bill establishes the Share Our Values Tax Credit which allocates $100 million for relocation of film productions from states restricting a woman’s right to an abortion. In order to qualify, applicants seeking the credit will be required to submit a narrative statement discussing how they share California’s values for a woman’s right to choose.”

2. Money, money, money. While AB 1442 provides a tax incentive to the film industry looking to relocate or move from a state with abortion laws objectionable to many Californians, it also provides a tax incentive to movie production companies that are not actually relocating, but rather choosing to do business in a state that doesn’t oppress women. As long as the applicant provides a narrative describing how the qualified taxpayer shares California’s values concerning women’s reproductive rights, the applicant could qualify for AB 1442’s tax credit. Currently, the state allocates $330 million each year in tax credits for movie production companies that want to film in the state. Taxpayers that would qualify for AB 1442’s tax credit, can already apply for the state’s current Film and TV Tax Credit. In other words, AB 1442 essentially adds an additional $100 million to the pot, so long as the applicant is willing to provide the specified narrative. While the recent actions of other states seek to deny woman of their constitutional rights, is an additional $100 million in Film and TV Tax Credits justified? The Committee may wish to consider reducing the allocation amount, or making a onetime allocation.

3. What is the windfall? Tax expenditures produce two different outcomes. First, they reward behavior that would have occurred without the tax benefit, referred to as windfall benefit. For example, some producers will make movies or television shows in California without a tax credit. In these situations, the state receives no marginal benefit for awarding these producers tax credits, and instead, provides a windfall benefit to the director or producer. Second, they generate economic activity resulting from investments that would not have occurred but for the tax credit. For example, some producers will only make their movies or television shows in California if they receive a tax credit since the tax credit made it more affordable to film in the state. A successful tax credit would lead to more economic activity than to windfall benefits.

In September 2016, LAO issued “California’s First Film Tax Credit Program” which assessed Credit 1.0. The report found that about one-third of the film and television projects receiving credits under this program might have been made in California anyway. However, this level of windfall benefits may be low compared to other tax credits, suggesting that Credit 1.0 targeted the types of production vulnerable to being filmed outside the state relatively well. Additionally, the $800 million in credits under Credit 1.0 will eventually go to more than 350 projects, which generated or will generate billions of dollars of economic activity over the life of the program. The net amount of new economic activity is uncertain, with benefits offset somewhat by economic opportunity costs and other changes in the state’s economy. While LAO’s report was on Credit 1.0, AB 1442’s credit contains many similarities in its mechanism, as well as its application and allocation process. It is unclear whether AB 1442 will drive more economic activity for the state or produce a windfall benefit.

4. Other states. CFC states that California is the first choice for the majority of producers. However, the film and television industry is more mobile than other industries, since most movies and TV shows can shoot anywhere. Therefore, it is more responsive to incentives. Over the past decade, many other states have enacted significant incentives to lure motion picture production away from California, often at the request of the motion picture industry. These incentives have been remarkably effective. According to CFC, Georgia realized a 1500% increase in production spending since its program began in 2005, and Georgia’s motion picture union experienced a 980% growth in membership from 2005 to 2015.

In July 2019, LAO issued “An Update on California’s Film Tax Credit Programs.” The report notes:

“Since our last report, other independent researchers have studied the effectiveness of public subsidies for film and television production. They found that incentives do not help states establish a new local film industry or create lasting economic development. Like our research, these studies confirm production is mobile, susceptible to influence by financial incentives, and that film production subsidies provide some tangible benefits. However, these studies have all concluded that the benefits are small relative to the subsidies’ cost. A notable new finding in this research is that changes in the number of motion picture industry jobs—increases and decreases—are not affected by the existence of a tax incentive in that state or in other states. When the number of jobs in states with an incentive increased, jobs also increased in some states that did not have an active incentive program—such as Florida and Nevada. This suggests that incentives have less effect on film industry jobs than other factors—discussed in our first report—such as the growth of the U.S. economy and technological changes.”

5. What about us? LAO estimates that 90 percent of film and TV jobs are in Los Angeles, with a large post-production cluster in San Francisco. As a result, California’s Film and TV Tax Credit predominantly benefit the Los Angeles economy. However, AB 1442 provides an additional credit uplift of 5 percent for certain costs incurred outside of Los Angeles for specified projects. It also provides an additional credit uplift of 10 percent of wages paid for services performed related to original photography that take place outside Los Angeles. Even with these additional incentives to expand the economic benefit outside of Los Angeles, is it equitable to provide a large state tax exemption for an industry that provides an economic benefit to only a one part of the state?

6. Section 41 shall not apply. SB 1335 (Leno, 2014), added Revenue and Taxation Code Section 41 to require that any bill introduced on or after January 1, 2015 that allows a new income tax credit to contain specific goals, purposes, and objectives that the tax credit will achieve. In addition, SB 1335 requires detailed performance indicators for the Legislature to use when measuring whether the tax credit meets the goals, purposes, and objectives. This bill provides that Section 41 does not apply to this credit. The Committee may wish to consider the appropriateness of this exemption.

7. Let’s get technical. In Sec. 17053.99(f)(8) and Sec. 23699(f)(8), AB 1442 references “subparagraphs (B) and (E) of paragraph (1) of subdivision (h).” However, there is no subdivision (h)(1)(E) in either Section. Committee staff recommend striking the reference to (h)(1)(E).

Assembly Actions

Not relevant to the current version of the bill.

Support and Opposition

(8/12/19)

Support: California Teamsters; IBEW Local 40; National Women’s Political Caucus of California; OP&CMIA Local 755; LiUNA! Local 724; Teamsters Local 399; and California State Council of Laborers.

Opposition: California Teachers Association.

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Date of Hearing: April 22, 2019

ASSEMBLY COMMITTEE ON TRANSPORTATION

Jim Frazier, Chair

ABPCA Bill Id:AB 1442 (

Author:Luz Rivas) – As Introduced Ver:February 22, 2019

SUBJECT: California Transportation Commission

SUMMARY: Authorizes rather than requires the California Transportation Commission (CTC) to create four specific committees related to historical governmental structures.

EXISTING LAW:

1. Establishes the 13-member CTC and provides that the commission is responsible for appointing an executive director who is to serve at the pleasure of the commission.
2. Directs the CTC to advise and assist the Secretary of Transportation and the Legislature in formulating and evaluating state policies and plans for transportation programs in the state.
3. Requires CTC to organize itself into at least the following four committees:
   1. The Committee on Aeronautics, which shall consider issues related to aeronautics;
   2. The Committee on Streets and Highways, which shall consider issues related to streets and highways;
   3. The Committee on Mass Transportation, which shall consider issues related to the movement of groups of people within urban areas, and between rural communities and between cities; and
   4. The Committee on Planning, which shall be responsible for transportation planning issues.

FISCAL EFFECT: Unknown.

COMMENTS: The Legislature originally created CTC in 1978 as a result of concerns that the state lacked a single, unified transportation policy. The 13-member Commission oversees and coordinates the activities of the state’s transportation sector, including planning and allocating money for the construction of highway, rail, and transit improvements throughout California. CTC also advises and assists the Secretary of the California Transportation Agency and the Legislature in formulating and evaluating state policies and plans for California's transportation programs.

In creating CTC, the Legislature combined a number of state transportation boards and commissions, in order to consolidate state transportation planning and funding and increase the effectiveness and efficiency of developing and constructing the state’s system. Not everyone was happy about the new commission, as stakeholders of particular transportation sectors were concerned that their interests would subordinated by the loss of their boards. In order to address the needs of the stakeholders of the consolidated boards, the Legislature required CTC to organize itself into four committees related to aeronautics, streets and highways, mass transportation, and planning to reflect the former boards.

While these focus areas were important at the time, the transportation world has changed dramatically in the last 40 years. The state is less involved in aeronautics and mass transportation, but plays a larger role in transportation technology as well as air quality and emission reductions. At this point, it is unclear whether CTC should continue to organize itself into the four committees outlined in statute or should adopt some other arrangement. This bill seeks to give CTC more flexibility in the formation of its committees and therefore be more responsive to the challenges of today’s transportation world.

According to the author, “This proposal creates flexibility for CTC to organize itself into committees it thinks are most salient to today’s needs and challenges. Forty years is a long time to hold on to the same priorities; it seems reasonable for the Legislature to reduce the constraints in existing law and provide the flexibility CTC needs to be relevant in today’s changing world.”

REGISTERED SUPPORT / OPPOSITION:

Support

None on file.

Opposition

None on file.

Analysis Prepared by: Eric Thronson / TRANS. / (916) 319-2093