California Transit Association


Transit Funding Overview

The California Transit Association is committed to protecting and securing state funding resources for public transportation. Currently, state funding is comprised of bond proceeds that are allocated to capital projects and the sales tax on diesel fuel, which is deposited into the Public Transportation Account (PTA) and can be used for either capital or operating purposes.

Transit funding has seldom been safe from the budget ax. The initial “Gas Tax Swap” package of bills, ABx8 6 and ABx8 9 [Chapters 11 and 12, Statutes of 2010] diverted $1.586 billion in state funding for public transportation in FY 10-11 from the four historic sources of funding: spillover, Proposition 42, sales tax on diesel, and Proposition 111. Prospectively, only the sales tax on diesel is retained, and this source was enhanced through 2011’s refinement of the Gas Tax Swap, as contained in AB 105 [Chapter 6, Statutes of 2011].

Proposition 22 built on the Supreme Court’s ruling which denied the state an appeal of the favorable ruling in Shaw v. Chiang in late September of 2009, validating the appellate court’s decision that transfers made from the Public Transportation Account in the 2007-08 budget year (and subsequently repeated since) were illegal.

Below is a brief description of the various state funding sources for public transportation:

State Transit Assistance

Since its creation in 1979, the State Transit Assistance (STA) program has been the only ongoing source of state funding for the day-to-day operations of public transit. It accounts for as much as 70 percent of the total budget for some transit providers.

Continuing a near-decade-long trend, which saw nearly $10 billion in funding illegally diverted from transit, the 2009-10 State Budget eliminated the STA. The program was reinstated as part of the original “Gas Tax Swap” agreement of 2010, which reconfigured the funding streams that flow into the program. STA is now fully funded by the sales tax on diesel, and can be used for operating and capital purposes.

Proposition 1A

Proposition 1A, the Safe, Reliable High-Speed Passenger Train Bond Act of 2008, provided for $950 million in bond funds to fund capital projects that improve other passenger rail systems in order to enhance these systems’ capacity, or safety, or allow riders to connect to the high-speed train system. Of the $950 million, $190 million is designated to improve the state’s intercity rail services. The remaining $760 million would be used for other passenger rail services, including urban and commuter rail, and would be allocated based on a formula developed and supported by all the Association’s rail transit members.

The Association was successful in enacting legislation, SB 1029 (Leno), Chapter 152, Statutes of 2012, that appropriates the $950 million in regional rail connectivity funds provided by Proposition 1A.

Proposition 1B Transit Capital

Senate Bill 88 [Chapter 181, Statutes of 2007] directed the allocation of the first $600 million of Proposition 1B funds appropriated from the Public Transit Modernization, Improvement, Service Enhancement Account (PTMISEA). In 2008, the Legislature allocated $350 million via AB 268 [Chapter 756, Statutes of 2008], using the same factors established in SB 88. The Association supports application of SB 88’s principles, policies and structure to all future appropriations of PTMISEA funds, which includes maintaining the determination of all operators’ and regions’ shares of PTMISEA based on the average of the State Transit Assistance (STA) Program allocations from the 2004-05, 2005-06, and 2006-07 years for the remainder of the available funding left in the program, as well as providing a mechanism to advance funding to eligible recipients. The Association sponsored a bill, AB 1072 [Chapter 271, Statutes of 2010], to lock in the formula for all future PTMISEA appropriations.

This law also authorizes an expenditure program mechanism, whereby agencies were required, in the first year, to submit an expenditure plan for their share of the remaining funds available, in order to support advocacy for sufficient annual appropriations from the PTMISEA.  To date, $1.344 billion of the $2.8 billion that has been appropriated has been allocated to program recipients.

Proposition 1B Transit Security

A program was put into place in 2007 through SB 88 [Chapter 181, Statutes of 2007] to direct the Governor’s Office of Homeland Security (OHS) and the Office of Emergency Services (OES) with developing guidelines for allocating the full $1 billion to be appropriated from Proposition 1B’s Transit System Safety, Security, Disaster Response Account (TSSSDRA). AB 427 [Chapter 527, Statutes of 2011] streamlines the process to maximize the utilization of all allocations made to the program. The Association will monitor this process and inform all members of the annual grant process and timeline.