election. in the first senate district, roger neli, a sitting assembly republican squared off against ted gaines in the primary. gaines is now going to go against democratic rancho cordova kell cooley. he is a very experienced sacramento hand if he is able to pull off. supervisor mar: supervisor maxwell has a well. supervisor maxwell: can you say the independent in central valley went back to being a democrat? >> no, the seat went back to democrat. it had been a democrat seat and a democrat prevailed. that keeps the numbers at 52. in the senate, once the two seats settle out, both expect

to go the way they have for decades. we expect gaines to win, and we expect a democrat to replace peza. and that would put their proportion at 254615. >> so in your memo, you recorded a rolling wave with the democratic governor, lieutenant governor and both house us. this is the first time in how long that much of a democratic power shift? >> yes, it is significant. you would have to go back to -- in greg davis' administration, there were prompt proportions in both houses but not at the level we have in the assembly. you might have to go back to jerry brown's governorship to have that dominant of a caucus in both houses. [inaudible] >> that's true. supervisor mar: but it does sound like california is

bucking the trend of the nation? >> yes. supervisor mar: it is interesting. if you look at how the california voters voted for the propositions, where it looked more like the rest of the country. but in terms of the elected efficiency, nowhere near the kind of sweeping wave. in congress there is only the one seat that is still under contest, and that was congressman jim costa. if you think about the so-called blue dogs across the country, a bunch of those were swept away in the wave. >> what about mcnierny. supervisor mar: you are right. on the ballot measures, there are several i could talk about, but the two prominent ones that affect transportation are 22-and 26. i will note that the passage of

25 will have and's yet undetermined positive impact on agencies buildingings. 26 is the measure that allowed the legislature to adopt a budget. i subscribe to this argument, but i'm not trying to push people into adopting my perspective, with the comment penant numbers we are seeing in both caucuses, by the time we get to a budget vote in june and july, if we hold to that schedule, it will be much easier for them to put a budget together with this governor on time. what that means for the transportation agency, for the last several years the late budget has gone so late that it has threatened to interrupt the payment of ongoing contracts for work underway, and halted noah aloccasions and new

distributions -- allocation and distribution decisions. it probably feels real to the contractors on workers on the job when the jobs shut down. that is one measure that is going to have a beneficial affect. proposition 22, if you recall, sponsored by the league of cities in combination with the california transit association, sought to lock down a number of revenue sources at the city-county level. it locked in redevelopment funds and prevented funds from being shifted, and it also protected tax revenues and regional and state level. so in a transit-dominant community -- and i was at the sacramento regional transit board last night talking about this -- the very important aspect of prop 22 is is that it protects about $1.4 billion.

that is t.d.a. money that goes throughout the state, and $400-plus million is the amount provided to mass transportation at the state or local level as a result of a fuel tax swap earlier this year. it providing over $400 million from the state to local agencies for transit. one of the first things that prop 22 does is protect both those sources of funding. in addition, it protects, and this will be prosecutor for projects like the presidio parkway -- it will protect the highway users tax account from being borrowed and goes a step further and prohibits the use of highway users' tax account funds to pay for general

obligation debt service. the legislature in enacting the swap was trying to generate some revenue to help the general fund, and they did. it is booked at about $1 billion. proposition 322 those thorough -- proposition 22 throws that into doubt. some say that relief will be lost. at this point, the pretty clear reading that the general fund is going to be hit at the state level at about a $1 billion level on top of everything else. there is a provision in there that says anything enacted from october of 2009 through the passage of that measure that is not in compliance is in invalidated. some folks have said the fuel tax swap may violate that in some regard, but it would take some sort of action before anybody would ever say the fuel

tax swap is undone. >> i know supervisor maxwell is on the league of california cities and national league of cities. i sit on the california state association of counties, and it was kind of a battle. what will be the impact of passage of 22 on health and human service programs that go to the counties? supervisor mar: the $1 billion that was booked from the fuel tax is vulnerable, is likely gone as a resource to the general fund. now i have been meeting on baffle of the coalition i lead over the last three days trying to come up with an approach to take to the lendl slache that re-- to the legislature that protects a vast majority of the $1 billion and protecting the fund i have been talking about.

prop 26, the key thing it does there, at the state level it does two key things. the first one, it does away with a tool the legislature has had for years where if they want to make an adjustment in taxation, particularly it has been helpful in federal tax conformity. you can combine a tax increase with an equal amount of tax reductions. this past year there has been the ongoing potential for an oil searches tax on california home oil companies,off set by minor reduction ns a host of other taxes -- reductions in a host of other taxes. now that result requires a 2/3 vote. so it pretty much takes that revenue blending tax shifting off the table.

the second thing it does at the state level is it redefines regulatory fees and taxes and requires them to be passed with a 2/3 vote. if you have heard of the sinclair-paint division -- decision where it was used for other cases, that is now illegal. unless it is passed by a 2/3 vote of the legislature. that is the key things it does at the state level. >> at the local level what prop 26 is requires us to public --

put regulatory fees before the public? mar or a regulatory fee. supervisor mar: commissioner maxwell? supervisor maxwell: give us an excellent? >> alcohol. >> that was passed prior to 2010 and just stays the same. you will be able to leave that on the books. if you increase it or extend it, if it was sunsetted, then you would have to play by the new rules, requiring a vote of the people. >> one i have wondered about if we were to ever impose a congestion fee impacted by prop 26? would we have to go to the electorate now? >> it could be. you could design the fee and

have fight findings and dedicate the revenues. you get outside that and use the fee revenues for other things, it becomes a little more subject to 26. supervisor mar: economicser maxwell? supervisor maxwell: no. >> one last comment is there is a school of thought that the fuel tax swap, either in part or in whole, may be in validated. now a provision in prop 26 that anything that was enacted in 2010 that is in violation of the provisions of the act have a weir from election day to be revalidated, but under the new rules. that is where the new scrutiny is going on in sacramento.

on the one side, the statute actually says the tax, the tax that is in violation of prop 26 has to be revalidated. it doesn't say the act. in that case we could have a situation where the sales tax which was eliminateded under the fuel tax swap and replaced with an excise tax, if that is found to be in violation of 26, and we don't get a fwirds vote of the legislature to restore the excise portion of the fuel tax swap, we could lose the equivalent of 17 cents a gallon. the other professor is the whole fuel tax swap is undone, and we return to a world where we had prop 42 plus the spill 46 over -- spill-over for transit. and the loss of the excise tax. we have had discussions with

drafters of this to give us some breathing room to figure it out. this did not draft prop 26 with the fuel tax swap in mind. it is possibly a casual bystander. they don't see the state losing over $1 billion in transportation revenues if they can work it out. that is my record. i will conclude with one update. there were seven of the sb-83 campaigns, the $10 registration fee. congratulations to you. 51% or approximately, and as well four of the our seven counties were successful. the bay area showed the rest of the state they can pull off a fee increase at a time when the rest of the state was not even willing to put it on the ballot. that is pretty remarkable what

you were able to do in this part of 9 country. supervisor mar: thank you, mr. watts. any other questions from colleagues? let's open this up for public comment. is there anyone that would like to speak? seeing none, public comment was closed. this was an informational item. mrs. cheng, are there any other items? >> yes. item number irks, introduction of new items. this is an information item. supervisor mar: seeing none. let's open this up for comment. is there anyone that would like to speak? already seeing none public comment is closed. >> next i'm? >> public comment. supervisor mar: public comment is closed. >> item number 8, adjustment. supervisor mar: with that, the meeting is adjourned. thank you.

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