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Another Court Decision in Favor of California Transit Agencies

3:16 PM PST on December 17, 2009

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 2007-08and 2008-09 Spillover diversions is appropriated over some number ofyears to the PTA, and allocated for legitimate transit expenditures.

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