Senate Standing Committee on Governance and Finance

We're going to begin our hearing today as a subcommittee. And our first agenda item -- first and only agenda item -- is SB 862 by Senator Laird. We are hearing this bill under Senate Rule 29.10D, where we are considering the amendments to the bill made in the Assembly. Before we -- well, we need to wait until other Members come to establish a quorum. So we're going to go ahead and get started as a subcommittee. Want to invite Senator Laird to please come to the podium and tell us what amendments were done.

Thank you, Madam Chair and Member. I'm pleased to present this bill, and as the Chair just said, it was substantially amended in the Assembly. It cannot be re-amended in the Senate. But this is a hearing to give it just airing on the issues. And Senate Bill 862 will allow the Santa Cruz County voters to decide if the county of Santa Cruz should raise the combined tax rate limit above 2 percent, for the Metropolitan Transit District of Santa Cruz County.

If left unaddressed, a fiscal cliff really exists in the future for the transit system. And while the Legislature addressed it this year, budgetarily, with some assistance, it's a one year assistance, and the real question is ongoing assistance. The Santa Cruz Metro is in a situation where 65 percent of its customers earn less than $24,000, and 60 percent of the customers, or ridership, do not have access to a car. And we saw, the hard way, there was a strike of the transit workers roughly ten years ago, and it went on for a period of weeks. And at the UC campus -- and I know Senator Caballero is familiar with that -- it's this long road up to the campus for a mile, or a mile and a half, and cars diagonally parked the entire way up. Traffic jams existed that didn't usually exist.

People struggled to get to their jobs and their schools, and we really saw what happens if you don't have this transit system, and we saw who is affected. So the Metro is significantly working to overhaul their service to regain riders, after what happened during the pandemic. And the analysis, also -- I want to just be really direct -- the analysis mentions two cities in the district.

Well, this will bring it up to 10.25 percent, if it were to go to the voters and pass. And there are over 80 cities, in that category, in California now. This is not unique. It has happened wherever there is a place that this limit has been changed, and there's always a few cities in it, and it exists in some of the metropolitan counties in California. The opposition believes that this will hurt working families and low-income residents, but this is a choice.

It is if 60 percent of the riders do not have access to a car and that access goes away, it's a choice between the two. And that access to work and to school becomes much more important. A key piece of this is the city of Watsonville, which I know Senator Caballero used to address, and I know where Senator Durazo is tired of me talking about it, because we were seatmates last year when I went through the Watsonville Hospital situation and explained exactly who lived in Watsonville and the number of reduced and free meal students, the number of people that had housing challenges and language challenges. And it is a substantial part of this district, where transit is integral to that city.

With this additional tax capacity, the Metro could go to the ballot in 2024 to pursue a half cent transaction and use tax, and the revenue would be used to support the ParaCruz and other transit services. And I should be clear, this bill just allows the voters to consider this. This bill, itself, does not change the taxes. And it passed the Assembly on a 52-16 vote, in the amended form. And at the appropriate time, I would respectfully ask for an aye vote. And here to testify in support is Michael Tree, who's the CEO and general manager of Santa Cruz Metro.

Welcome.

Chair Caballero and Members, it's really a pleasure to be here, and I'm very thankful to Senator Laird for carrying this important bill. I just want to reiterate that what I'm really hoping to gain is an opportunity to talk to the public about Santa Cruz Metro and an opportunity to talk about minimizing future cuts, which would include cuts for senior and disabled on the ParaCruz and important fixed routes that serve Watsonville, as Senator Laird has said, which is a disadvantaged community and also the university.

Santa Cruz Metro has just been a victim of cost increases, expenditures that outpace revenues. And I was chatting with our board the other day, when we were talking about this, and I mentioned that in 2023, we're providing 50,000 service hours less than we were in 2000. And that's just a victim of expenditures over time, outpacing contributions -- expenditures like fuel costs, health care, retirement and so on. And so really grateful that you're taking consideration on this today. Would appreciate an aye vote.

And I would be remiss if I didn't say that I'm really appreciative of the state for the stopgap funding that you've provided Metro and other transit agencies throughout the state. And we're hopeful to do our part in keeping Metro healthy by continuing to talk to residents at a local level, on the continuation of their service. So I appreciate the opportunity to be here today. Thank you.

Thank you very much for coming. We appreciate your testimony. Is there anybody else who would like to speak in support of the bill? Anybody else? I want to welcome you to come to the mic. Those that are in Room 2200. Seeing none. We'll move on to opposition. Is there anybody in opposition of the bill? Want to invite you to please come to the mic and state your opposition. Seeing no opposition. We'll move on to the teleconference line and ask the moderator if you could please queue up. Once again -- if you could give me a second -- I'm going to read the number. The participant number is 877-226-8163, and the access code is 1618051. You mark that on your phone and we'll enter you into the committee.

Thank you, Madam Chair. Ladies and gentlemen, if you wish to comment, please press one, then zero on your telephone keypad. You will hear tone acknowledging your request. One moment, please. And we have no one, Madam Chair. You may continue.

Very good. Thank you very much for your assistance today. We'll bring the issue back to the committee and see if there are any questions. Senator Blakespear.

Thank you. I just have a quick question. If the tax rate goes up 0.5 percent, what is the expected annual revenue that it will generate?

I'll let Mr. Tree respond.

You bet. $27 million.

Okay. And is that significant enough for your operations?

It is. We project that that would allow the agency to continue its services and even make some improvements over a 15-year horizon, without deficits.

And you would use that for operations, not for capital?

That's correct. Although, in the expenditure plan, we'll put the match, the local match. for a few capital projects.

Okay.

Yeah. Especially the zero-emission bus program that we're working on with the state mandates.

Yes. Okay, great. Thank you.

Other questions? Comments?

Just to move the bill, Madam Chair.

There is a motion to move the bill. Oh, abs- we need to establish the quorum. But appreciate that swift movement. I have a couple of questions, just in terms of -- I'm going to support the bill. I think it's really important. And what is impressive is that it's very difficult to find public transportation services for rural California. So the fact that Watsonville is part of the district is really terrific. Most of my district does not have public transportation that goes to communities that desperately need it, so this is important. But I'm worried about the long term sustainability of transit. And I'm wondering if you have -- you can talk about short term and long term --what some of the solutions are going to be.

And I say this because here in Sacramento -- I live over near the UC Davis Medical Center -- and they just built, I want to say, maybe on the third, four-level parking structure within a block of where I live, and I'm a block-and-a-half from light rail. So what are we doing? That we're building these huge parking structures that can park a lot of individual riders, when we should be really focused on how do we get more ridership on the public transportation.

If I can take a whack at that.

Sure, absolutely.

On the budget side, this is a unique district. And the fact that there is a half cent general sales tax that exists already, that was passed at the same ballot that the voters were passing, Proposition 13. And it exists. The Cabrillo College and University of California have mandatory student fees that put a lot of money in the budget for transit that way. And in response to Senator Blakespear's question, a lot of the capital, that is the one place there are grant programs. And what was important is, as mentioned in the plan, that the match is what might come up here, that allows to get those outside grants. And when you put that all together, it allows for a sustainable spending plan. And then to get to the other part of the question: the transit centers, the main ones, are all where people live or work.

So the one in downtown Santa Cruz is now being used so that some of the high rise housing is not requiring the same amount of parking spaces, because transit exists right there. The same thing is true in Watsonville. And the Capitola stop is at the mall, where there's massive parking, and that all works. And that is not required parking that the transit district has to pay for or do. So there is built-in student ridership -- that allows to help for the low-income ridership. And there's two different funding sources if this passes and is allowed to do, and then you have the outside money for the capital things. Over time, with this, that makes it a sustainable system.

I appreciate that explanation, and I thank you for that. It appears as if we have a quorum. Let's take the roll, please.

Senators: Caballero. Present. Seyarto. Present. Blakespear. Present. Dahle. Durazo. Present. Glazer. Skinner. Wiener. Present. You have a quorum.

We have a quorum. So I'll entertain that motion. Senator Durazo moves the bill. Any further questions or comments? Seeing none. You may conclude.

I just appreciate the discussion. I respectfully ask for an aye vote.

Thank you very much. Please call the roll.

Motion is that the Assembly amendments be concurred in. Senators: Caballero. Aye. Seyarto. No. Blakespear. Aye. Dahle. Durazo. Aye. Glazer. Skinner. Wiener. Aye. 4-1.

The bill has four votes. We're going to keep the roll open for the absent Members. Thank you very much for being on time and good presentation. So we'll leave the roll open and take a break for a second.

Okay. We're going to open the roll again for the Governance and Finance Committee. We have one bill, SB 862. Please call the roll for the absent Members.

Motion is that the Assembly amendments be concurred in, with the Chair voting aye. Senators: Dahle. Glazer. Aye. Skinner. 5-1.

The bill is out, 5-1. And this concludes our committee hearing for today? Yes. Okay, then never mind. We're going to keep that roll open for one last absent Member.

So we're back in Senate Governance and Finance. We have the one bill, SB 862, by Senator Laird. Please call the roll.

Motion is that the Assembly amendments be concurred in, with the Chair voting aye. Senators: Dahle. Skinner. Aye. 6-1.

That bill is out. And that concludes our hearing today. And thank you for participating.