State Budget

Legislature and Governor Approve 2007-08 State Budget, Divert $1.3 Billion Away From Transportation

After missing a June 15 deadline and the start of the state's 2007-08 fiscal year on July 1, the Legislature and Governor finally approved a budget on August 24. Unfortunately, the approved budget diverts $1.3 billion in public transit funds to non-transportation purposes, a move that runs counter to the clear message voters sent in November 2006: We want the state to spend more, not less, to reduce congestion. Budget highlights include:

• In accordance with Proposition 1A (approved by voters in November 2006 and supported by the Auto Cub), $1.48 billion in gasoline sales taxes went to help pay for state and local highway and transit projects. These funds, originally directed to transportation by voter approval of Proposition 42 in 2002, have often been diverted away from transportation in recent years. Proposition 1A protects these funds for transportation.

• $1.3 billion in public transit funds were transferred to the General Fund. The $1.3 billion came from an arcane 1970's era formula in state law known as the "spillover" - which normally directs sales taxes on gasoline that exceed a certain level (usually in times of rapidly rising fuel prices) to public transit - and prior year unspent transit capital funds. Local transportation agencies are still sorting out the impacts of this move, which could include delays to both needed public transit and highway projects.

• The overall state transportation budget is a record $13.9 billion - more than $2.7 billion over last year. However, $4.2 billion came from Proposition 1B bond funds (part of the $20 billion in bonds approved by voters in November 2006), which means state transportation spending without the bond measure would have actually been $1.5 billion less than the prior year, due in large part to the transfer of $1.3 billion away from transportation.

Go to our Legislative Action page to tell your elected officials that transportation must be a higher priority.