Transit Agencies Upset by Governor Schwarzenegger’s Plan to Divert Funds

Despite California Governor Arnold Schwarzenegger’s pledge to be a good steward of his state’s environment, the governor is expected to release a budget proposal this week that would gut transit funding and contravene both a state Supreme Court ruling and numerous public referendums mandating secure transit funding, a slap in the face to a proven green transportation strategy, say transit operators.

As reported recently in the LA Times, to close a looming $20.7 billion budget deficit, Schwarzenegger is expected to release a plan this Friday to eliminate the state’s gas tax, which has specific mandates to provide funding for transit, and replace it with an excise tax that would not have transit funding requirements. The net effect would be 5 cents less per gallon at the pump and continued decimation of state funding for transit operators.

"It’s what we feared," said California Transit Association (CTA) spokesperson Jeff Wagner. "This proposal circumvents both the law and the will of the voters. The court ruled they had to stop doing it, so what do they do? They change the laws that were in place. Time and again, transit has been the piggy bank they’ve gone to to fill
in the gaps in the other stuff. It’s shortsighted and it’s in blatant
contravention of the voters’ will."

"[The proposal] will likely reduce revenues and everyone agrees that the last thing we need to do right now is reduce revenues," said Stuart Cohen, Executive Director of TransForm, a non-profit supporting transit and smart growth. "We’re seeing service cuts and fare hikes that are larger than we’ve ever seen. Many agencies have already depleted their reserves dealing with cuts over the past two years. I don’t think these agencies can take another year of it."

Wagner and the CTA were tempered in their reaction to the victory in court last year, saying they assumed the governor could come up with a scheme to continue taking money from transit to plug the general fund hole. "We knew that our lawsuit victory would provide us with some reprieve, but we were cautious. We knew that it wasn’t beneath this administration."

Asked how the governor can profess a strong environmental record and still gut transit funding, Wagner offered: "I imagine he’s someone that has seldom had to rely on [transit]. There’s a real disconnect between this guy that’s obviously trying to hang his hat on his environmental record. At the same time he’s crowing about that, he’s eviscerating the funding for one primary program we have to reach those goals."

H.D. Palmer, Deputy Director for External Affairs at the California Department of Finance, would not comment on the governor’s plan, saying it would be premature to discuss the details before the Governor presents them to the legislature this Friday. When asked how the governor’s continued use of transit funds for general fund deficits would affect his environmental record, Palmer refused to speculate, saying only that to close the budget gap, his department is committed to "looking at every option to save money."

The reaction from local transit agencies was predictably unfavorable.

"The governor is trying to do an end run around the
California Supreme Court, which recently ruled the state’s last money
grab of transit funding was illegal," said BART spokesperson Linton Johnson, whose agency would have received over $30 million last year without the diversions. "It’s a shame he’s resorted to
this, but sadly not surprising."

The San Francisco MTA, which lost out on $152 million of state funding over the past three years, could be forced to make further service cuts or consider fare hikes if the governor’s plan is adopted. "Better transit service is one of the best ways to improve our
environment, so if the state of California wants to reduce
greenhouse gas emissions then it should re-consider the elimination of
transit funding," said the MTA’s Judson True.

Rather than bring another lawsuit to prevent raids, the CTA has joined with the League of California Cities and the California Alliance for Jobs to get a ballot initiative in this November’s election that would put a larger firewall around transit funding. The Protect Local measure, if passed, would prevent "the state from taking or borrowing local taxpayer funds dedicated to public safety, emergency response, transportation and other vital local government services," according to the official website.

A press conference announcing the ballot initiative campaign will be held in Santa Rosa this Thursday, January 7th, and the campaign hopes to collect more than 1 million signatures in five months.

"A robust public transportation system is just as important a part of a vibrant community as a healthy police force or good schools. It’s a community resource," said the CTA’s Wagner.

Added BART’s Johnson, "It’s more important than ever for voters to consider the
proposition we expect to be on this November’s ballot.
This initiative will help to put an end to the budget chicanery that
has resulted in nearly $3.5 billion of transit funding
 diverted in just
the last three years."

The advocates, however, have not taken a position on the initiative. "There is a major concern about the impact locking down these funds would have on
health and services," said TransForm’s Cohen. "Our groups are doing our due diligence to figure
out all the impacts before we take a position."

Added Cohen, "The best solution is
using the success of transportation initiatives at the ballot box to grow the pie and find climate
impact fees that dedicate the revenues for public transit. Ideally
we’d be growing the pie, not just guaranteeing a slice of it for

  • Maybe the SFMTA could look at parking meter rate increases instead of service cuts and fare hikes… Just saying (over and over and over).

    But yeah, the Gov is much like Newsom in the fact that they act grean but only in the sense of pushing the status quo (i.e. hydrogen cars, electric cars). They are politicians so it isn’t in their political interest to make people step out of their comfort zone. That comfort zone isn’t only their cars, but also paying taxes and fees for services rendered.

  • zsolt

    My first impulse knee-jerk outrage, but in all honesty I don’t envy Arnold. I think we all will have to “buckle up” (pun intended) for at least the next couple of years or maybe for many more years…. the fiscal situation will only get worse and worse. That’s not to say we shouldn’t be fighting nail and tooth for transit funds.

  • I don’t envy him either. When you are working with a legislative body that can’t pass anything, your hands get tied rather quickly. But dropping the state car registration was his mistake and now transit agencies are paying the price.

  • patrick

    I don’t have any sympathy for Arnold. He knew what he was getting in to, and especially his claims of supporting the environment, while continually undermining the truly environmentally beneficial alternatives, do not make me inclined to be on his side.

    If this actually becomes part of his budget plan I will call & write my representatives (including Boxer and Feinstein) and let them know that if this happens I will vote against them in any election.

    If the California democratic party cannot stop something like this, then I no longer have any use for them.

  • Clutch J

    Matthew, here– “Schwarzenegger is expected to release a plan this Friday to eliminate the state’s gas tax, which has specific mandates to provide funding for transit, and replace it with an excise tax that would not have transit funding requirements.”– you’re misusing a couple of terms.

    “Gas tax” normally refers to a per-gallon excise tax (The state and federal excise taxes are each around 18-19 cents/gallon, with neither having been increased or even indexed to inflation since the early 1990s). You’re right: Article XIX of the CA Constitution specifies that excise tax proceeds may not be used for transit operations.

    What Guv proposes to eliminate is the state sales tax on gasoline, similar to the sales taxes you pay on most purchases that support the general funds of state and local governments.

    Some background:

    A decade ago when the CA transit lobby joined forces with the highway lobby to grab state general funds for transportation– thereby contributing to state budget woes and taking money away from aid programs for the poor– they and their highway lobby allies deceptively started using the term “gas tax” as a euphemism for “state sales tax on gasoline”. The confusion you and others have experienced was not unintended.

    In 2002, this alliance sponsored Proposition 42 to set aside state general fund moneys generated by the state sales tax on gasoline for transportation purposes, with 20% of those funds going for much-needed transit operations support (80% for local and state roads).

    Over the years, as the budget crisis deepened, the Guv has sought to not fund the transit operations portion of the mandate. This proposal is the culmination of that effort.

  • Clutch J

    The “Protect Local” measure will only make things worse by further restricting budget flexibility and increasing pressure on the remaining general funds used to house, feed, clothe and provide health services to the state’s neediest residents.

    However, one could argue that deepening the crisis is necessary to provoke the needed constitutional reforms.

  • This is insanity. We should be tripling the gas tax and using it to fund public transit and high density housing along transit corridors as fast as possible. Even if we could care less about sustainability and the world our children will inherit, with Peak Oil at hand, the era of Happy Motoring is over. Dead. Defunct. The coffin is built; the funeral is next week.

    For our economy to function we need viable ways for people to get to work without reliance on fossil fuels. We shortly are going to be very grateful for every inch of bike lane and every foot of transit infrastructure we have managed to put in place, and we will wonder why the heck we spent the last ten years twiddling our thumbs.

    San Francisco has a chance at viability in the coming “new” economy precisely because of its density, its transit infrastructure, and the strides it has made city-wide with energy efficiency. Also, because of its sheer adaptability and willingness to try new ideas. Other communities are going to be less fortunate. (Yes, we may have trouble with food and water supplies. Can’t have everything. Might be a good idea to start a vegetable garden and get a rainbarrel or two.)

    We do need to balance our budget. It’s time for creativity. I offer the Governor these ideas to save/raise money:

    –all government employees making over $50,000 a year take a 10% pay cut. This includes union employees.
    –release all small-time drug users from prison. Legalize marijuana and tax it.
    –increase tax on all natural resources–water, minerals, ores, energy. Water should not be cheap enough for people to hose down their driveways, have swimming pools, or to grow cotton and rice in a desert.
    –raise car registration tax based on gas mileage efficiency of car. Gas-eating car=very high registration cost.
    –tax of $5 per gallon on all liquids containing high fructose corn syrup (will reduce health care costs by significantly reducing obesity and diabetes)

  • Clutch J, that is interesting. As a fairly new comer to the state I’d love to hear more about the transit lobby in bed with the highway lobby. In my opinion, it comes back to this want to have everything and not ever really pay for it. All the bond measures and promising limited tax revenue to multiple agencies and projects.

    taomom, agreed but your tax on HFCS will only counter act the huge subsidies that corn already gets. We need to cut that off at the source. Which also touches on the fact that corn is heavily dependent on fossil fuels which makes ethanol even more of a stupid prospect as a green energy.

  • Diane

    taomom for Governor!

    I’d like to see all of the state- and city-provided vehicles taken away from elected public officials. They should all be required to take transit. That would save the taxpayers a lot of money as well…

  • I agree with you, Mikesonn, no more subsidies for corn, period, but I think that’s at a federal rather than a state level. Ending corn subsidies would be positive on so many levels–it would raise the price of HFCS, ethanol and feedlot beef. Personally, I’d like to see California ban ethanol in its gasoline. (If I could buy ethanol-free gasoline, I would do it.) I would be glad to subsidize the growing of crops that actually might provide people of the world with nutrition. (Wheat, vegetables)

    Diane, good point about the state and city-provided vehicles. I’m scratching my head why they have them in the first place . . .

  • Benjamin

    Those who read this and want to do something for transit, should learn about transit’s ballot measure. Like me, you might consider collecting signatures to get the measure protecting funding on the November ballot. To request petitions go to this online form:

    Also, let us not forget all the good that transit does:

    1) Reduced fatalities and disabilities due to reduced auto crimes.
    2) Reduced asthma and lung illness due to reduced air pollution.
    3) Reduced climate change due to reduced air pollution.
    4) Increased mobility for the young, old and disabled due to increased transit, pedestrian and cycling options.
    5) Increased lifestyle options due to reduced expenditure for transport.
    6) Increased national security due to reduced reliance on imports from unstable regions, unfavorable balance of trade and political and military interventions overseas, and increased efficiency of use of domestic resources and labor.
    7) Increased preservation of farmland and wild lands due to increased attractiveness of higher-density living.
    8) Increased community interaction due to less automobile traffic and more free-time in transit.


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