On Tuesday, Governor Schwarzenegger vetoed budget legislation that would have effectively secured $350 million for annual transit operations as part of a “gas tax swap.” The measure would have swapped an increase in the sales tax on diesel with the elimination of the sales tax on gasoline, while dedicating funding for transit. This veto leaves transit operations and State Transit Assistance fund (STA) vulnerable to continued poaching by state legislators during the next budget crisis.
For years, the Governor and Legislature have raided the STA, which is supplied in part by the sales tax on gasoline and diesel, whenever they found themselves in a budget crisis. The gas tax swap legislation proposed by the Legislature would have firmly established a baseline of $350 million to be allocated annually to the STA, and made an immediate one-time allocation of $400 million to transit operators. Under the legislation, allocations to the STA were projected to reach $400 million in 2016-17 and $500 million in 2020-21, as compared with the annual allocation of approximately $258 million over the past five years and $190 million over the past ten years. In short, the Governor has cost transit operators and projects more than $1.7 billion over the next six years.
The Governor’s veto strikes an obvious blow to the budget of transit operators, struggling to provide an essential service in a down economy. More importantly, it perpetuates the larger, long-term problem of the state dipping into the STA, notwithstanding a California Supreme Court ruling that prohibits the practice. The Legislature clearly meant to right past wrongs and protect against poaching the STA with this legislation. While the one-time allocation of $400 million certainly would have benefited transit operators, it was the assurance that the STA would be securely funded in the future that will most be missed.