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(SB1) Road Maintenance and Rehabilitation Program FAQs

Introduction

Senate Bill (SB) 1, Chapter 5, Statutes of 2017, created the Road Maintenance and Rehabilitation Program (RMRP) to address deferred maintenance on the State Highway System and the local street and road system, and the Road Maintenance and Rehabilitation Account (RMRA) for the deposit of various funds for the program. A percentage of this new RMRA funding will be apportioned by formula to eligible cities and counties pursuant to Streets and Highways Code section 2032(h) for basic road maintenance, rehabilitation, and critical safety projects on the local streets and roads system.

Cities and counties receiving RMRA funds must comply with all relevant federal and state laws, regulations, policies, and procedures. Expenditure authority for RMRA funding is governed by Article XIX of the California Constitution; Revenue and Taxation Code, Division 2, Part 5, Chapter 6, section 11051; and Streets and Highways Code, Chapter 2, Division 3, section 2030 (b). Program requirements include Streets and Highways Code sections 2034, 2036, 2037, and 2038.

The following information is intended to provide guidance on specific questions relating to the RMRA-Local Streets and Roads (LSR) funding. The list is not all-inclusive, but covers the most frequently asked questions about the RMRP. To obtain additional information, contact the State Controller’s Office (SCO), Division of Audits, Local Government Bureau by email at AUDstreetsroads@sco.ca.gov or by telephone at (916) 327-3928 (for cities) or (916) 324-6984 (for counties).

Frequently Asked Questions

Use of Funds

  1. Can a city or county spend its RMRA-LSR fund apportionments prior to receiving the funds? Can a city or county incur expenditures for eligible projects using other funds and reimburse these other funds once it begins to receive its RMRA-LSR funding?
    • Yes. Cities and counties can use their apportionments received under Streets and Highways Code section 2032(h)(2) to reimburse the allowable expenditures incurred within the fiscal year of apportionment.
  2. Can a city or county use the RMRA-LSR funds for the costs of utility relocations?
    • Utility relocations are generally not allowable unless there is a legal street or road obligation to do so.
  3. Can the RMRA-LSR funds be expended on phases of a project including planning and engineering?
    • Yes. RMRA-LSR funds can be expended on all phases of eligible projects that are street‑related or road‑related.
  4. Can a city or county use RMRA-LSR funds to pay street or road crew salaries for major maintenance programs and for purchasing materials?
    • Yes. A city or county can use RMRA-LSR funds to reimburse the costs of work performed by its own employees on street‑related or road‑related projects that are otherwise RMRP-eligible and in compliance with applicable state laws and regulations.
  5. Can a city or county use RMRA-LSR funds for bridges and culverts?
    • Yes. Cities and counties may use RMRA-LSR funds for eligible maintenance and rehabilitation projects provided that the bridges and culverts are street‑related or road‑related.
  6. Can agencies pool resources by developing Memoranda of Understanding to share RMRA-LSR funds locally in order to implement projects sooner?
    • No. The Streets and Highways Code does not allow agencies to pool resources with funds apportioned under Streets and Highways Code section 2032(h)(2).
  7. Will the city or county need to submit invoices for reimbursement in order to receive the RMRA-LSR fund apportionment?
    • No. Cities and counties need not submit invoices in order to receive the RMRA-LSR fund apportionment. However, the city or county should retain sufficient supporting documentation for all expenditures and retain such documentation consistent with the record‑retention requirements applicable to its jurisdiction.
  8. Can a city or county carry over allocations to future years?
    • Yes. A city or county can carry over unexpended RMRA-LSR funds apportioned under Streets and Highways Code section 2032(h)(2) to subsequent fiscal years.
  9. If a city or county accounts for the RMRA-LSR funds in its Gas Tax Fund or Road Fund, can the city or county simply allocate all interest to the fund itself and not allocate it to each individual funding source?
    • Yes. A city or county can allocate RMRA-LSR interest earned at the fund level (Gas Tax Fund or Road Fund).
  10. Can a city or county issue bonds for RMRA funded projects and use RMRA-LSR funds for debt service payments?
    • Article XIX section 6 (b) of the California Constitution allows “[u]p to 25 percent of the revenues allocated to any city or county” from revenues imposed by the State on motor vehicles to be used “for the payment of principal and interest on voter-approved bonds issued by that city or county” for purposes specified in Article XIX section 2 of the California Constitution.

Maintenance-of-Effort

  1. Where can a city or county view the existing state records that show expenditures that the city or county reported for fiscal year (FY) 2009-10, FY 2010-11, and FY 2011-12?
  2. Can a city or county amend the annual street or road reports filed for FY 2009‑10, FY 2010-11, and / or FY 2011-12?
    • No. The SCO does not accept amendments to annual reports that a city or county has filed once the deadline for the report has passed. Specifically, Streets and Highways Code section 2151 requires cities and counties to file an annual report of expenditures for street or road purposes with the SCO on or before October 1 of each year. The deadlines for the annual reports filed for FY 2009-10, FY 2010‑11, FY 2011-12, were October 1, 2010, October 1, 2011, and October 1, 2012, respectively. Therefore, no amendments to these reports will be accepted.
  3. Will the SCO provide a mechanism for a city or county to request an adjustment to the maintenance-of-effort (MOE) requirement?
    • Yes. At the end of August 2017, the SCO sent each city and county a MOE Calculation Summary Sheet that must be completed and returned to the SCO by October 17, 2017. The MOE Calculation Summary Sheet shows the average general (discretionary) fund expenditure for FY 2009-10, FY 2010-11, and FY 2011-12 based on expenditures reported by the city or county in its streets or roads reports for those fiscal years. The city or county can either accept the MOE as calculated or request specific adjustments.
    • The SCO may deny or approve requested adjustments after a review of the adjustments.
    • If your city or county has not received the SCO’s MOE calculation letter, please contact the SCO by email at AUDstreetsroads@sco.ca.gov.
  4. Will the SCO consider economic hardship and grant a city or county additional time to meet its RMRP MOE requirement, or allow a city or county to expand the number of fiscal years it uses from three years to five years when calculating the MOE amount?
    • No. The Streets and Highways Code section 2036 establishes the RMRP MOE requirements; and does not provide for economic hardship considerations to allow additional time to meet its MOE, other than as stated in Streets and Highways Code section 2036(f), or to expand the number of fiscal years for MOE calculation.
  5. If a city or county has an existing MOE requirement for another program, can the General Fund expenditures used to satisfy the existing MOE requirement also be used to satisfy the RMRP MOE requirement?
    • Yes. The General Fund expenditures that satisfy the MOE requirement for another program can also be used to satisfy RMRP MOE requirements.
  6. Can a city or county use RMRP fund expenditures to satisfy the RMRP MOE requirements?
    • No. RMRP funds are not considered discretionary funds, and therefore cannot be used to satisfy the Streets and Highways Code section 2036 MOE requirements.
  7. A city or county reported General Fund street-related engineering costs in its FY 2009-10, FY 2010-11, and FY 2011-12 annual streets/roads report. Can the city or county have these costs removed from the average General Fund expenditures for these fiscal years or, alternatively, can the city or county include these costs in its annual General Fund expenditures to satisfy the MOE requirement?
    • All General Fund street‑related or road‑related costs should be included in a city’s average General Fund expenditures for FY 2009-10, FY 2010-11, and FY 2011-12. These costs, if still incurred, satisfy the MOE requirement.
  8. What revenues qualify as “one-time allocations” that will not be considered when calculating a city’s or county’s annual General Fund expenditures?
    • Streets and Highways Code section 2036(b) describes one-time allocations as funds that may not be available on an ongoing basis. If a city or county believes that one-time allocations have been included in its average General Fund expenditures for FY 2009-10, FY 2010-11, and FY 2011-12, it can request an adjustment to remove these allocations.
  9. Will the calculation of the MOE requirement (the average General Fund expenditure for FY 2009-10, FY 2010-11, and FY 2011-12) be updated in the future using amounts from more recent fiscal years?
    • No. The MOE requirement will be calculated once and will not be updated.
  10. Can a city or county include non-General Fund money to satisfy its annual MOE requirement?
    • Yes. Any unrestricted funds that the city or county may expend at its discretion may be included to satisfy its annual MOE requirement. The funds do not have to be from the General Fund.
  11. Streets and Highways Code section 2037 states that a city or county may spend its apportionment of funds under the program on transportation priorities other than those allowable pursuant to this chapter if the city’s or county’s average Pavement Condition Index meets or exceeds 80. Does this impact a city’s or county’s MOE requirement?
    • No. This section does not impact the MOE requirement.
  12. A city currently receives Measure M2 Local Fair Share funds from the Orange County Transportation Authority and uses these funds for street-related expenditures. These fund expenditures are reported as “Other Discretionary” in its annual street report. Can the city use these expenditures to satisfy its MOE annual requirement?
    • Yes. If these funds are discretionary, the city can use the expenditures to satisfy its annual MOE requirement.

Fund Apportionment

  1. How can a city or county obtain or view its apportionment of RMRA-LSR funds?
  2. If a city or county does not submit a project list to the California Transportation Commission (CTC) by October 16, 2017, what happens to the funds that were apportioned to that city or county in the corresponding fiscal year?
    • Pursuant to Streets and Highways Code section 2034(a)(1 and 2), the CTC will submit to the SCO an initial report of eligible cities and counties. The SCO will apportion available RMRP funds to eligible cities and counties included in the initial report. If a city or county is not included in the CTC initial report, the SCO will retain for 90 days, the monthly share of funds that would otherwise be apportioned and distributed to that city or county. If the SCO receives a subsequent report from the CTC within 90 days of receiving the initial report, that a city or county has become eligible to receive an apportionment, the SCO shall apportion the funds retained to that city or county. Any RMRA funds retained by the SCO for a city or county that still remains ineligible after 90 days from the initial report to the SCO by the CTC, will be reapportioned to all other eligible cities and counties.