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CA Sen. Steinberg Proposes New Spending Plan for Cap-and-Trade Revenue

Senator Darrell Steinberg’s new proposed spending plan for CA cap-and-trade revenue.

Senate President Pro Tempore Darrell Steinberg (D-Sacramento) announced a proposed plan to create a permanent spending strategy for cap-and-trade revenue [PDF] that prioritizes investments in affordable transit-oriented housing, transit expansion, and CA High-Speed Rail. Unlike the Governor’s plan for this year’s budget, Senate Bill 1156 also proposes investments in “complete streets” and transit operations.

Senator Darrell Steinberg (D-Sacramento)

Senator Darrell Steinberg (D-Sacramento)

Calling the plan a “long-term investment strategy in greenhouse gas emissions,” Steinberg said he wanted to spark a “healthy debate” about how the state should spend the revenue collected via the state’s cap-and-trade system created under A.B. 32, California’s Global Warming Solutions Act.

“This strategy is designed to achieve the objectives of A.B. 32 through significant reductions in greenhouse gas and the direction of public and private investment to California’s low-income and disadvantaged communities, which are disproportionately burdened by air pollution and the effects of climate change,” Steinberg said in a press release.

Steinberg’s staff emphasized that the plan provides a permanent funding stream for affordable, transit-oriented housing and mass transit, which are key to reaching the goals of A.B. 32 yet lack stable sources of funding. 

The proposal replaces a bill Steinber introduced in February to replace cap-and-trade with a carbon tax. Steinberg acknowledged that the carbon tax proposal was “not that popular.”

A.B. 32 requires California to reduce greenhouse gas emissions to 1990 levels by the year 2020, and calls for the California Air Resources Board to create a market system for helping achieve those reductions. In response, CARB created a cap on emissions from GHG producers and an auction system to allow those who don’t meet the cap to buy emission “credits” from those who do. This cap-and-trade system currently applies to the state’s manufacturing sector, and is scheduled to include fuel producers next year.

Meanwhile, the auctions are producing revenue, which by law must be spent on further reducing GHG emissions to help California reach A.B. 32′s the goals.

Steinberg’s proposal was well-received by transit advocates.

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Why You Should Be Angry About CA’s “Highest Gas Tax in the Country”

I know it’s tempting to gloat.

Today, newspaper headlines are blaring the news that with the newest increase in the state’s gas tax, that California now has the highest gas tax in the country.

As I said, I know it’s tempting.

But, it’s the result of bad policy. None of the money from that increased gas tax will go to fix California’s crumbling infrastructure, or restore and fund any local transit system, or paint an inch of new bike lanes. It’s all going to the general fund, thanks to Arnold Schwarzengger and a short-sighted legislature.

To balance the state budget in 2010, Governor Arnold Schwarzenegger proposed, pushed for, and eventually signed a law that changed the tax structure for gas taxes with a so-called “fuel swap.” The new tax structure eliminated the sales tax on fuel and raised the excise tax. The purpose of the change was to eliminate funds that were dedicated towards transportation from the gas tax so that the Governor could balance the state budget with fewer cuts elsewhere and no tax increases.

After years of Governors Schwarzenegger and Gray Davis “declaring a fiscal emergency” to basically rob transit operations funds that were dedicated by voters in 2002 and 2006, the State Supreme Court ruled that there had to be an actual emergency, not just a lack of political will, to declare and emergency. It was at this point, that Schwarzengger devised the “fuel swap” plan.

The program also allowed the state to raise gas taxes so that the amount collected remains static even as the amount of fuel consumed decreases. If this meant a consistent level of funding for transit and road repair projects, the program might be more popular and useful.

But it doesn’t. As George Runner, a member of the state Board of Equalization that approved today’s increase noted when he voted against it, “The goal of the fuel tax swap wasn’t good  tax policy. Instead, its sole purpose was to allow the Legislature to move more than a billion dollars in gas tax revenues into the state’s general fund.”

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CA Transit Operators Hopeful State Diesel Tax Will Create Stable Funding

When Governor Arnold Schwarzenegger proposed eliminating the sales tax on gasoline in his new budget, transit operators and advocates saw the announcement as a move to subvert a California Supreme Court ruling that required the state to stop raiding transit funds.

Rather than comply with the court's ruling, they argued, the Governor was eliminating the voter-established rules that required the state to fund transit operations with the sales tax on gasoline. Nevermind that several of those ballot initiatives passed by more than two-thirds margins and put explicit restrictions on how taxpayer money could or couldn't be used for transportation projects.

Now many of those transit operators are supporting two bills (ABX8 6 and ABX8 9) that would do as the Governor proposed by eliminating the sales tax on gasoline, but would retain the sales tax on diesel. Rather than cry foul, lobbyists for those operators worked with legislators to develop the bills.

California Transit Association (CTA) Communications Director Jeff Wagner said with the legislature and the Governor thwarting the law and the will of the voters for years by raiding the the State Transit Assistance fund (STA), which is fed in part by the sales tax on gasoline (as well as the sales tax on diesel and other sources), and with Supreme Court rulings in the CTA's favor doing little to change the situation, his organization was taking steps to secure some kind of steady state funding for operators.

"Our fundamental position is in opposition to the elimination of the sales tax [on gasoline], but that has long seemed a foregone conclusion," said Wagner. "Given that lay of the land, we've worked with the legislature to get some level of funding for public transit. What this package does give us is the ability for transit to get funding that it isn't currently getting."

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Transit Agency Representatives Push “Protect Local” Ballot Initiative

2303021074_3369616949.jpgThe California State Capitol in Sacramento. Flickr photo: Paraflyer
With the continued raids on voter mandated transit funding sources to plug holes in California's general fund, representatives from the state's many transit agencies and locally elected officials are pushing for a sweeping ballot initiative this November, one which supporters say would finally put an end to the raids, and force lawmakers in Sacramento to come up with solutions to their fiscal nightmare that don't come from the backs of transit riders.

As volunteers sweep the state gathering the anticipated 1.2 million signatures needed to comfortably qualify the ballot measure, transit agency lobbyists are also campaigning to drum up support from member organizations and advocacy groups concerned with what some have called the Death of Transit.

Proponents of the initiative, formally known as the Local Taxpayer, Public Safety, and Transportation Protection Act of 2010, sought support from TransForm, a transit and smart growth advocacy non-profit that has yet to take a position, at a meeting also attended by representatives of regional transit agencies like Muni, AC Transit, and the Valley Transportation Authority (VTA).

Joshua Shaw, Executive Director of the California Transit Association (CTA) and Amy O'Gorman, Regional Public Affairs Director at the League of California Cities, which represents local elected officials like city councilors, urged TransForm and its member organizations to do everything they can to support the initiative and get the word out, even if they haven't formally taken a position.

"Over the last several years, too many bad decisions have been made in Sacramento, not just in transit, but in local issues in general," said CTA's Shaw. "Just like any other vital local service, transit is a subsidized service and it's up to the state to maintain that function."

According to Shaw and O'Gorman, since 1992, state lawmakers have taken $11.2 billion in locally approved tax measures for the general fund, $5 billion of that coming from transit funding sources in the last ten years alone. Other diversions since 2004 have come from local property taxes and redevelopment agencies - $4 billion, according to O'Gorman, who said infill and smart growth development projects are often funded with this local money.

O'Gorman listed numerous polls that show the public is distrustful of Sacramento even while local tax measures continue to pass with high margins. "As distrust in state government continues to erode, confidence in local government continues to remain high," said O'Gorman. She also said the public doesn't realize that many of the measures they pass have loopholes that state lawmakers continue to abuse.

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It’s Official: Governor’s Budget Shorts Public Transit Once Again

gov_outlining_budget.jpgSchwarzenegger outlines his budget at a Capitol press conference. Photo: Governor's Press Office
Governor Schwarzenegger's budget (PDF), unveiled today at a Capitol press conference, confirms what transit agencies and advocates across the state have been fearing: a $1.5 billion proposed scheme to divert funds that would otherwise provide critical relief to California's struggling transit agencies.

"Once again, the governor offers shell games instead of solutions, and transit riders in California again suffer the consequences," said Joshua Shaw, the Executive Director of the California Transit Association (CTA). "The governor wants to disguise this as some sort of tax relief for families. What about the thousands of families who depend on public transit to get to work or to go out and buy food to put on their tables, the kids who need transit to get to school, or the elderly and disabled persons who rely on transit to access medical services? I guess they don't count."

The budget scheme defies a state Supreme Court ruling that declared the governor's continued raids on public transit funds illegal. Rather than adhere to the ruling, the governor proposes to eliminate the state sales tax on gas and replace it with an excise tax. "Instead of diverting money from the Public Transportation Account (PTA)," the CTA said in a press release, "the proposal would remove the funding stream that is supposed to flow into the PTA in the first place, effectively eliminating state funding for transit."

And according to the governor's budget document, the result is "an overall decrease in taxes on motorists of about five cents per gallon." So, drivers get a break while transit riders get a slap in the face.

"The governor doesn't seem to be able to make the connection between 21st century priorities...and a suitable 21st century approach to funding transportation needs," said Shaw.

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Another Court Decision in Favor of California Transit Agencies

In another rebuff to California's practice of moving spillover funding from the State Transit Assistance (STA) fund to fill the hole in the state's General Fund, a Superior Court ruled on Monday that the state had to pay back the approximately $1.2 billion it diverted from transit operators in the 2007-2008 budget cycle. The state has until April 1st to present the courts with its plan to restore the STA and replenish its reserves, though transit operators and their lobbying association hope negotiations and the blueprint for repayment come much sooner.

"It continues the trend of legal rulings in our favor," said California Transit Association (CTA) spokesperson Jeff Wagner, though he cautioned that the ruling would not move mountains overnight and the state is still strapped for cash. "For practical purposes, this just serves as a guideline to work out some way the state to restore those funds."

Wagner added that the CTA has developed an internal proposal to go to the Legislature and the Schwarzenegger administration that they hope will guide negotiations. "The end point is impossible to speculate about at this time," he said.

When asked if he believed the state would comply with the ruling, Wagner said they were negotiating in good faith and they expected the state to do the same. "Our understanding from our organization's talks with the Department of Finance, they were very surprised the court ruled in the way it did," he said, explaining that the state's position might have changed dramatically since the Supreme Court's decision against it.

Locally, BART General Manager Dorothy Dugger outlined the CTA's best case scenario in a letter to her Board of Directors [full PDF].

  • FY 2009-10 – Good Faith Transit Funding Restoration:
    • Allocate 100% of accumulated Spillover funds to a restored STA Program.
  • FY 2010-11 – Three Transit Funding Components Restored:
  1. Restore PTA base funding (Sales tax on diesel, Prop. 111 sales tax, and Prop. 42 sales tax) to legitimate expenditures, consistent with the lawsuit’s definition of legal public transit expenditures, so there is a predictable and stable STA Program available for transit operations, and some funds are funds.available for state and regional programming priorities, including needed commuter and intercity rail
  2. Allocate Spillover funds to both the PTA and to eligible General Fund (GF) relief (within confines of legitimate uses defined in lawsuit), for some period of time. Over time, provide increasingly more Spillover funds back to transit, and increasingly fewer Spillover funds to GF relief. Of the funds allocated to traditional PTA expenditures, ensure some level of STA Program funding.
  3. Provide a repayment plan, such that the debt owed by the GF from 2007-08 and 2008-09 Spillover diversions is appropriated over some number of years to the PTA, and allocated for legitimate transit expenditures.


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Transit Advocates Will Push Lawmakers to Rethink Transit Funding Cuts

IMG_0109.jpgCuts to transit funding could mean longer waits than ever. Photo: Michael Rhodes
It's no secret that transit agencies across California are reeling from years of raids on state transit assistance funds. A third of the MTA's $129 million budget shortfall this spring resulted from those raids, a $42.8 million loss for the agency, and statewide, nearly $3.4 billion in transit-dedicated funding has been diverted from local agencies over the past three years. Just two months after a court ruling that found that raiding to be illegal, without requiring the funds to be returned, transit advocates are planning to let the Legislature know how deeply the cuts have impacted transit, in the hope that lawmakers won't scheme to raid the funds again as California inevitably faces future budget crises.

At California State Assembly Committee on Transportation meetings this morning and Tuesday, the California Transit Association (CTA) and public transit agency representatives will discuss the challenges that state funding cuts have imposed on transit providers. Today's hearing is at the Los Angeles County Metropolitan Transportation Authority Board Room. The Tuesday hearing takes place in the Sacramento Regional Transit District Board Room.

The CTA especially hopes to alert lawmakers to the reality that future cuts would undermine California's greenhouse gas reduction goals set out in the state's landmark greenhouse gas reduction bills, AB 32 and SB 375 - a disconnect that even some environmentally-conscious lawmakers seem to overlook.

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High Court Rejects Appeal of Ruling Declaring Transit Fund Raids Illegal

397376904_5262ecc965.jpgMuni has lost $180 million over three years because of PTA fund raids. Flickr photo: skew-t
In what the California Transit Association called a resounding victory for transit providers and riders, the California Supreme Court has rejected Governor Schwarzenegger's appeal of a lower court ruling declaring raids on transit funds illegal.

"The Supreme Court has affirmed once and for all what we always maintained was true: that it's illegal to shift dedicated state transit funds away from transit agencies and their riders," said Joshua Shaw, Executive Director of the CTA. "This decision validates our position that this practice has been illegal since even before 2007, and that the definition of mass transportation adopted by lawmakers since then to mask these diversions is illegal."

As we've written, the governor has repeatedly raided the Public Transportation Assistance (PTA) fund while in office, to the tune of $1.19 billion in 2007-08 alone, while touting himself as a green governor who's leading the fight against global warming. Had Schwarzenegger not touched the fund, the MTA would have received nearly $180 million over the last three years, BART would have gotten $30 million last year, and AC Transit upwards of $26 million in 2008.

Said MTA Chief Nat Ford: "California has made a strong commitment to be in the forefront of environmental leadership, and properly funding public transportation is crucial to building a sustainable future. The state Supreme Court's decision should help transit agencies like the SFMTA better serve existing customers and make our services more attractive to Californians who are looking for ways to make healthier, more environmentally-friendly transportation choices."

The CTA, in partnership with other transit agencies, said it now hopes to work with the Schwarzenegger administration and the Legislature to restore the funds.

"We're very hopeful that the high court's decision will now enable us to work with lawmakers to restore these funds and help us to meet the ever-increasing demands for transit services in California," said Michael Burns, the general manager of the Santa Clara Valley Transportation Authority.

H.D. Palmer, a spokesperson for the governor's Department of Finance, said he was disappointed with the ruling but that it is the end of the legal road. He said the issue will go back to the lower court to "determine a remedy" and added "there will be no hard and fast ruling." Palmer said it will likely mean "we'll have to figure out how to come up with an additional billion dollars in budget solutions by the end of the year." 

It's unclear how soon transit agencies could see the funds replenished. The CTA's Shaw was quoted in the Mercury News as saying it's possible the repayment could be spread out over several years.

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Local Advocates Mourn “Death of Transit” as Part of National Campaign

RIP_BART.jpgMock funeral for transit today in Oakland. Photos: Matthew Roth

Transit advocates, transit riders, politicians, and religious figures mourned the continual underfunding of transit operations by staging a mock funeral for public transit above the 12th Street/Oakland BART station today. The event was tied to a national campaign led by Transit Riders for Public Transportation (TRPT), the Transportation Equity Network and Transportation for America to pressure Congress to provide funding for transit operations.

"Operating funds are desperately needed," said Rev. Scott Denman, Rector at St. John's Episcopal of Oakland and President of Genesis, which helped organize the Oakland event with Public Advocates, Urban Habitat, TransForm, CALPIRG, and BOSS. "It's time to understand and remember the grief that is in our communities because of what is happening to transit, the impact that transit cuts are having on our poor, the impact that it's having on our economy, the impact it's having on our environment."

As the recession deepens, public transit operators struggle with declining public funding and revenues, a situation that has led to fare increases (SFMTA, BART, AC Transit and East Contra Costa County buses) and expected increases (VTA, SamTrans, Caltrain) throughout the Bay area. According to press material from Public Advocates, operating deficits this year exceed $350 million regionally.

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Governor Schwarzenegger Finds Another Way to Rob Transit

5_15_09_Ahnold.jpgPhoto: Trinity County California Republican Party
This morning when I saw the L.A. Times headline about new budget cuts announced by Governor Schwarzenegger, I wasn't worried.  After all, I knew this time there wasn't anything else he could do to hurt transportation and transit.  How much more damage could be done after he abolished state subsidies to transit in his most recent round of budget cuts?

According to the California Transit Association, the governor wasn't finished.  An unexpected budget surplus created a lifeline for transit, and Schwarzenegger was there with the scissors to cut it. The revised budget proposal diverts another $336 million in transit-dedicated "spillover" revenue to instead cover transit bond debt service, which is by law a General Fund obligation.

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