Public transportation in California is operated as a government service, similar to police, fire and library service. Transit service is typically provided by public agencies through cities, counties or joint powers authorities organized specifically to provide transit, or by special transit districts designated in state law. As government agencies, these entities all rely on a mix of different funding streams to pay for their programs, including taxes and bonds. Transit agencies also collect fees from riders, called fares.
Funding for transit capital projects – such as bus purchases, or design and construction of rail systems – is usually split among federal, state and local government grant sources, while operating funds – used to pay the transit labor force and purchase such necessities as fuel and power – typically come from farebox revenues and state and local governments.
In recent years, as government budgets have tightened, whether due to adverse economic conditions and/or political decisions, transit funding has too often been in the crosshairs. Decisions have been made by executive and legislative officials at state and federal government levels to cut or divert transit funding away from local transit agencies and into other government programs, causing reductions in local transit service, fare hikes and delays in planned capital projects.
One of the California Transit Association’s highest priorities is to protect state funding for public transportation. Our advocates work daily to educate California legislators, the governor, and administration officials about the necessity of maintaining vital sources of transit operating and capital revenue, so our transit agencies can provide reliable and predictable service. We work in partnership with other groups who care about healthy transit systems, to make the case for stable state transit funding.
Not only do we walk the halls of the Capitol in support of transit funding, we have also taken our case directly to the people, and, literally, to court. In 2007, after three successive years of steep state transit funding cuts by the legislature and governor, the California Transit Association filed a lawsuit in superior court, alleging these cuts violated several propositions previously approved by the people. After winning and then defending against the state’s appeal, the California State Supreme Court ultimately agreed with us, and in 2009 ordered a halt to future cuts.
Building on that success, we worked in partnership with other local government and transportation groups in developing an amendment to the California constitution, prohibiting further cuts to transit and other transportation funding programs. That effort became Proposition 22, which was overwhelmingly passed by the state’s voters in November of 2010.
Since those landmark actions to protect state transit funding, the governor and legislature have not only restored state transit funding, they have worked with us to enhance the main revenue stream dedicated to public transportation.
Multiple federal, state and local funding sources flow to California’s transit agencies, such as: funding from the Federal Transit Administration for transit programs in the form of grants from the federal excise tax on gasoline; state funding from the sales tax on diesel fuel or state bonds; and local funding from such sources as one-quarter-percent of the statewide sales tax, or one of the many county-option sales taxes.
Although the bulk of transit funding comes mostly in the form of excise and fuel-related taxes and from sales taxes, additional sources also contribute – like bonds, tolls and grants from air quality management districts.
The main source of state funding is the State Transit Assistance (STA) program. Since its creation in 1971, the STA program has been the only ongoing source of state funding for the day-to-day operations of public transit. Funded entirely from the state sales tax on diesel fuel, the STA program can account for as much as 70 percent of the total budget for some transit providers. The State Controller allocates STA payments to transit systems quarterly.
And, besides the fare paid by riders, additional transit funding is also generated by the activities of transit agencies, such as advertising, investments, leases, contracting services and parking.
While California’s transit agencies provide an excellent level of service, many observers have called for enhanced funding, in order to grow local and regional transit systems and expand service to more Californians. For instance, the independent California Transportation Commission recently published an interim draft Statewide Transportation System Needs Assessment – a comprehensive plan that includes a summary of needs analysis and associated revenue challenges facing various modalities comprising state and local transportation systems. This assessment identifies the need for nearly $175 billion over the next 10 years, from all sources, to preserve and rehabilitate existing transit systems, as well as to grow and expand future transit service.
The need for more funds to support transit is also found in the California Transit Association’s own report, California Unmet Transit Funding Needs: FY 2011 to FY 2020, which compares available funding to capital and operating needs, and reveals a 10-year $72 billion shortfall.
Through the California Transit Association’s decisive efforts, state transit funding has currently been restored. Together with our allies, the Association continues to work to enhance this funding and expand the sources available for future transit investments.
For instance, the state’s new Cap and Trade program offers promise as a potential new funding source for clean-fuel transit programs.