Protect Public Transportation Funding: 2008-09 State Budget

UPDATE: May Revise Budget

The governor’s May Revise Budget proposes even deeper cuts to public transportation. Governor Schwarzenegger would redirect $1.4 billion in public transit funds—a 64% increase in cuts compared to his January budget proposal.

As gas prices continue to rise, even more Californians are turning to mass transit. Transit ridership is rising across the state, and some systems are experiencing overcrowding. Yet, because of previous cuts we’re simultaneously seeing fare hikes and service cuts. Download a fact sheet that outlines the context of the budget cuts.

Contact the governor and tell him that enough is enough! It’s time to stop redirecting critical public transit funds.

Contact your legislators and tell them how important public transit funding is to you.

Transit suffered in last year’s state budget as the Governor and legislature redirected $1.259 billion in dedicated transit funds to non-public transit purposes. The 2007-08 budget also included a new statute that would automatically redirect half of all future Spillover revenue to the General Fund.

This year’s budget process promises to be at least as tough for public transit as last year. The state is faced with a $14 billion shortfall. With gas tax revenue (transit’s source of state funding) likely to reach record highs, transit funding is very likely going to be targeted to help balance the budget.

Protect State Transit Funding
What you can do
What is the Spillover?
Why do we need to save public transit funding and protect the Spillover?
How big is the Spillover?
Where did the Spillover come from?
Results of our campaign on the 2007-08 budget
Doesn’t the advent of Proposition 42 eliminate the need for transferring the Spillover revenue to transit?
Selected news coverage of the campaign to protect public transit
 
Protect State Transit Funding
Last year the Governor and legislature redirected $1.26 billion in dedicated transit funds to non-public transit purposes, including all of the State “Spillover” funds. Transit fares better in the Governor’s proposal for the 2008-09 budget. As legislated through the 2007-08 budget process, $455 million -- half of the Spillover funds -- were directed to public transit and half redirected to the General Fund. Prop 42 was fully funded.

This is just the beginning of the budget process though, and with the immense revenue deficit, we’re going to need to fight to ensure that transit maintains this funding.

If we’re going to get our friends in the legislature to stand up for transit, they have to know how important well funded public transit is to Californians’ quality of life, environment, and economy.

TALC, CALPIRG, and Odyssey submitted a letter to the Governor and legislature urging them to protect public transit funding in the 2008-09 budget.
What you can do

  • Write a letter to the editor

  • Call or write the Governor’s office to tell him how important funding for public transit is. Phone: 916-445-2841, Fax: 916-558-3160

  • Call or write your state legislators: tell them how important funding public transit is to you. To find your state legislators, enter your zip code at: http://www.leginfo.ca.gov/yourleg.html  

Talking points for your letters and calls:

Transit and climate change: If we are really serious about reducing greenhouse gas emissions, we have invest in public transit. Transportation contributes about 40% of California’s greenhouse gas emissions, mostly from personal vehicles. This is not the time to cut funding for one of our best strategies to reduce our greenhouse gas emissions and keep Californians moving.

Transit and congestion: California is home to the two regions with the worst traffic congestion in the country—the Bay Area and Los Angeles.  Public transportation is key to reducing traffic congestion. Without the current level of transit service and use in the Bay Area, the region would experience 26,263 million more hours of delay each year.

Transit and Access: Public transportation provides invaluable access to jobs, education, and other opportunities and services for thousands of Bay Area residents. Young and elderly people, people with physical disabilities, and people with limited incomes rely on transit services. Cutting transit limits opportunities for critical access.
What is the Spillover?
Across the state, public transit operators have a hard time funding day-to-day operations, including fuel costs. As gas prices rise, transit operations cost more to provide. This increases the risk of service cuts and fare hikes. Funding cuts threaten important access to health care, jobs, and education. Most state transit funds and all of the money from the transportation infrastructure bonds can only be used for capital expenses. There is one hope, funds known as the “gas tax spillover,” which are intended by law to fund public transit when gas prices are higher.

The Spillover is a source of revenue for the State Public Transportation Account (PTA), where 25% of the funds go to transit capital improvements and 75% go to discretionary regional transit funding that can be used for transit operations. The PTA is the sole source of ongoing state transit funding, and represents the only way the state addresses its critical transit operating needs.

In general, the Spillover isn’t triggered every year, but only when gasoline and diesel fuel prices grow at a faster rate than the rest of the economy. It is precisely these times that Spillover dollars are most needed for transit services and capital projects.
Why do we need to save public transit funding and protect the Spillover?
People seek more transit options when the price of operating their cars increases and transit agencies need to pay the higher costs of their own fuel budgets. Suspension of Spillover dollars has become a habit in California, contributing to our deteriorating public transportation systems that cannot meet the needs of the communities that depend on them. We can’t have reliable public transit without reliable funding for public transit operators. Furthermore, 41% of the state’s greenhouse gas emissions come from transportation, mostly from private cars and trucks, so if Californians are serious about curbing climate change, funding public transit operations is an imperative.

Since FY2000-01, suspension of Spillover dollars and other shifts, loans, and transfers of transit funding have denied more than $2.9 billion in revenue to the PTA. The 2007-08 State Budget alone cost the PTA account $1.259 billion.

PTA’s Revenue Losses Since 2000-01

 

$ Loss

Where PTA $’s Went

2000-01

$70 million

Loan to Toll Bridge Seismic Retrofit Program

 

$275 million

Loan to the Traffic Congestion Relief Fund

2002-03

$100 million

Loan to the General Fund

2003-04

$87.5 million

Transfer “spillover” to General Fund

 

$93.4 million

Suspension of the PTA’s share of Proposition 42

2004-05

$108 million

Divert revenue from sale of Caltrans property

 

$105.8 million

Suspension of the PTA’s share of Proposition 42

 

$140 million

Transfer “spillover” to other programs

2005-06

$380 million

Transfer “spillover” to other programs

2006-07

$200 million

Partial repayment of Proposition 42 suspension

 

$125 million

Seismic retrofit of Bay Area toll bridges

2007-08

 $948 million Bond debt service
  $129 million Regional paratransit services
  $99 million Home-to-school transport
  $83 million Repayment of Prop 42 suspension

Total

$2.935 billion

 

These revenues rightfully belong to public transportation, and are much needed for transit operations given the number of service cuts and fare increases across the state. This funding is needed to protect commuters, working families, communities of color, and youth and seniors from further reductions in service.
How big is the Spillover?
The amount of Spillover changes from year to year, depending on increases in fuel prices. The state projects that there is $1.177 billion in 2008-2009 State Spillover funds. The Governor's May Budget Revise would redirect nearly all of these funds away from public transportation.
Where did the Spillover come from?
The Spillover formula dates back to 1971 when the gasoline sales tax was first established. It occurs when collections from the sales tax on gasoline increase at a faster rate than all other taxable items. The transfer is based on a theoretical calculation required by law to be made every year, which compares the revenue estimated to be generated by a state sales tax rate of 5% on all goods except gasoline to the revenue generated by a sales tax rate of 4¾% on all goods plus gasoline. If the amount estimated at 4¾% is greater than the amount estimated at 5%, then the difference (the Spillover) is supposed to be transferred to the Public Transportation Account. This mechanism is defined in Revenue & Taxation Code section 7102(a)(1).

Results of our campaign on the 2007-08 budget

September 2007 Update. After years of state budgets redirecting transit money, we knew we were in for a tough fight when the Governor’s initial budget for 2007-08 proposed to cut more than $1.1 billion in dedicated public transit funding.

TALC fought hard against the Governor's proposal. Highlights from our campaign included:

  • Lobby Day: TALC brought 35 coalition members and met with 30 legislative offices

  • Testimony: Provided testimony at Senate and Assembly Budget Subcommittee hearings

  • Sign-on letters: TALC generated and circulated letters in support of full funding for public transit from environmental and social justice organizations, transit and bike/ped advocates, and local elected officials.

  • Media attention: TALC and coalition members generated op-eds, letters to the editor, and kept media attention on the importance of transit funding.

TALC was successful in making major inroads with legislators in identifying the structural budget problems that make transit funds vulnerable. We were encouraged that the budget process included a proposal from Assembly member Feuer that would expand protection and funding for transit.

Unfortunately, by the end of the budget process, over $1.25 billion in transit funds were redirected to general fund purposes. This includes $727 million in Spillover and $532 million in base PTA funding.
Doesn’t the advent of Proposition 42 eliminate the need for transferring the Spillover revenue to transit?
No. The spillover revenue has historically been authorized by the legislature to promote statewide public transit policies and programs, and it is intended to function separate from Proposition 42’s funding stream (the state sales tax on gasoline).

Proposition 42 funds a number of different transportation programs, and transit is only one such mode. Proposition 1A, which voters passed in November 2006, protects only Proposition 42 funds; Spillover funds are still vulnerable to being redirected away from transit.

Selected news coverage of the campaign to protect public transit
 

Update: 9/6/07 

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