Measure X Annual Audit Streamlining:

1. RECEIVE an update on the results of the Measure X annual audit and compliance reporting for 2017/18; and
2. RECOMMEND the Transportation Agency Board of Directors modify the Maintenance of Effort calculation.

Approved by 69% of the voters in 2016, Measure X was projected to generate an estimated $20 million annually, for a total of $600 million over thirty years.  Revenues have been collected since April, 2017, and in fact, the receipts for fiscal year 2017/18 totaled $28,026,311. The funding source is a retail transactions and use tax of 3/8 cents. The revenue from the sales tax measure can only be used to fund transportation safety and mobility projects in Monterey County.  A maintenance of effort requirement exists to assure that the cities and county do not use Measure X funding to backfill prior levels of transportation expenditures.  

The Transportation Agency has fiduciary responsibility for the administration of the voter-approved Transportation Safety and Investment Plan (Measure X) funds. Each jurisdiction entered into a tax sharing agreement with the Transportation Agency in order to receive their share of Measure X Local Streets & Roads revenues. In exchange, these agreements require the jurisdictions to submit audit reports annually to the Transportation Agency detailing the steps taken to comply with the implementing ordinance.

In accordance with the Policies & Project Descriptions for the Transportation Safety & Investment Plan, a Citizens Oversight Committee representing a diverse range of community interests was formed within 6 months of voter approval of Measure X.

The Measure X Citizen Oversight Committee established a subcommittee on January 15, 2019 to conduct the independent audit of the revenues and expenditure of Measure X funds. The subcommittee was asked to report the results of the audit to the full committee and to prepare the Measure X Annual Report.

Staff is evaluating this year’s process and recommends a few changes to help clarify the requirements and avoid reporting delinquencies in the future. One of the changes staff is recommending is an adjustment to the Maintenance of Effort requirement. The purpose of the Maintenance of Effort requirement is to assure that no funds previously used for transportation are shifted to other uses and then back-filled with Measure X monies - the so-called "bait and switch." Measure X currently has a rolling three-year average calculation of Maintenance of Effort. By contrast, the state's Senate Bill 1 program calculates Maintenance of Effort based on a fixed three years of past expenditures (Fiscal Years 2009/2010, 2010/2011, and 2011/2012). The goal of modifying the Measure X Maintenance of Effort is to  meet the Measure X Maintenance of Effort intent without penalizing agencies that make a large one-time investment in transportation. This issue was discussed by the Technical Advisory Committee and the Measure X Citizen Advisory Committee (X-TOC). The Measure X Citizen Advisory Committee recommends the fallowing modification to the Maintenance of Effort section of the Measure X ordinance:

The Transportation Safety and Investment Plan Policies includes an established process for how the policies may be amended:

• Recommendation of approval of the amendment from the Citizens Oversight Committee;
• Hold a noticed public hearing and provide a 45-day comment period; and
• Receive approval from the Transportation Agency Board by a 2/3 vote and by a simple majority weighted vote based on population.

Agency staff will present the review of the 2017/18 audit reports from the cities and county and requests a recommendation to the Transportation Agency Board of Directors to modify the Maintenance of Effort calculation to be consistent with the Senate Bill 1 Local Streets & Roads program.