Prop
91 gets Chamber endorsement
JANUARY
2008 - The
Government Relations Council, under Emergency Action, voted to endorse
Proposition 91 (Transportation Funding Initiative Constitutional
Amendment and Statute) which will appear on the February 5 Ballot.
Background
California
funds its transportation systems primarily with a mix of state and local
funds. State Transportation Funds
The
state imposes various taxes and fees on motor vehicle fuels and the
operation of motor vehicles (discussed below) to support transportation
programs. In 2007-08, revenues from these sources are projected to total
about $9 billion.
Article
XIX Revenues —
Fuel Taxes and Motor Vehicle Fees. The state imposes an excise tax of 18
cents per gallon on gasoline and diesel fuel used in motor vehicles that
are driven on public streets and highways. It also charges truck weight
fees, driver license fees, and vehicle registration fees. Article XIX of
the State Constitution restricts the use of these revenues to specified
transportation purposes—primarily highways, streets and roads, and
traffic enforcement. (These revenues are often referred to as Article
XIX revenues.)
The
Constitution, however, allows these revenues to be loaned to the General
Fund if the amount is repaid in full within the same fiscal year (that
is, essentially for short-term cash flow purposes), except that the
repayment may be delayed up to 30 days after adoption of a state budget
for the following fiscal year.
Under
specified conditions, these revenues may also be loaned to the General
Fund for up to three fiscal years.
Sales
Tax on Gasoline and Diesel
— The state imposes a 6.25 percent sales tax on gasoline and
diesel fuel.
•
Public Transportation Account
(PTA). A portion of the revenue from the gasoline and diesel sales
tax is deposited into the PTA for public transit (bus and rail) and
transportation planning purposes. The State Constitution allows funds in
the PTA to be loaned to the General Fund for short-term cash flow
purposes. The loan must be repaid within 30 days after a state budget is
adopted for the following fiscal year. Under specified conditions, PTA
funds may also be loaned to the General Fund for longer periods, up to
three fiscal years.
•
Transportation Investment Fund (TIF).
A portion of the state gasoline sales tax revenue not deposited into the
PTA is transferred to TIF to be used for highways, streets and roads,
and transit systems. The State Constitution allows the transfer of these
monies to be suspended, thus leaving the money in the General Fund, when
the state faces fiscal difficulties. However, only two suspensions may
occur in ten consecutive years, and suspensions must be repaid in full,
with interest, within three years.
The
transfer was suspended partially in 2003-04 and fully in 2004-05. The
State Constitution requires that these suspended amounts be repaid by
June 30, 2016, at a specified minimum rate of repayment each year. After
a repayment is made in 2007-08, $670 million will remain to be repaid
from the General Fund.
Local
Transportation Funds
Local
governments provide substantial funding for transportation from local
sales tax revenues. Each county has a “local transportation fund” (LTF)
with revenues generated from a statewide one-quarter percent local sales
tax collected in that county.
Under
the State Constitution, revenues in LTFs can be used only for specified
transportation purposes — primarily public transit. In 2007-08, sales
tax revenues to LTFs are projected to total about $1.4 billion.
In
addition to the statewide one-quarter percent local sales tax for
transportation, counties have the option of levying an additional local
sales tax, upon approval by two-thirds of the voters, for county
transportation uses. Currently, 19 counties impose a local optional
sales tax for transportation.
Proposal
This
measure amends the State Constitution in the following ways:
Suspension
of Transfers to TIF.
The measure eliminates the state’s authority to suspend the transfer
of gasoline sales tax revenues to TIF for transportation uses. In other
words, these revenues could not be used for non-transportation purposes,
but would have to be used for transportation purposes. In addition, the
measure requires that amounts suspended in 2003-04 and 2004-05 be repaid
by June 30, 2017, at a specified minimum annual rate of repayment.
Loaning
of Transportation Funds. The
measure deletes the authority to loan Article XIX funds to the General
Fund for multiple years. These funds could still be loaned to the
General Fund for short-term cash flow purposes within a fiscal year, and
must be repaid within 30 days of the adoption of a budget for the
following fiscal year.
The
measure authorizes the loaning of TIF funds to the General Fund for
short-term cash flow purposes within a fiscal year, to be repaid within
30 days of the adoption of a budget for the following fiscal year.
Similarly, the measure may be interpreted to allow LTF monies to be
loaned to the General Fund for short-term cash flow purposes within a
fiscal year. The measure requires that any short-term loans from the
above transportation funds not impede the transportation purposes for
which the revenues were generated.
In
addition, the measure deletes existing constitutional restrictions that
limit loans of PTA funds to the General Fund. It is unclear whether the
restriction that loans are only for short-term cash flow purposes, as
discussed above, would apply to loans of PTA funds to the General Fund
Fiscal
effects
By
deleting the state’s authority to suspend the transfer of gasoline
sales tax revenue to TIF and limiting the state’s ability to borrow
these funds as well as Article XIX revenues for non-transportation uses,
the measure would make state funding from these sources for highways and
streets and roads—the main uses of these monies—more stable and
predictable from year to year. At the same time, the measure may be
interpreted to allow PTA funds to be loaned to the General Fund with no
express time limitation for repayment.
This
may make the availability of these funds for public transit less stable.
Similarly,
if the measure is interpreted to allow the loaning of LTFs to the state
General Fund for short-term cash flow purposes, the availability of
local transportation funding could become less stable.
To
the extent the repayment of an outstanding TIF loan is stretched out by
a year, to June 30, 2017, as allowed by this measure, there could be
some additional interest costs to the General Fund.
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