May 24, 2006
Southwest California Businesses
Support Transportation Funds
The Southwest California
Legislative Council SUPPORTS the effort to place the “Close
the Proposition 42 Loophole Initiative” on the November 2006
ballot.
The SWCLC is a regional
business advocacy coalition of the Temecula Valley
Chamber of Commerce,
Murrieta Chamber of Commerce,
and Lake Elsinore Valley Chamber of Commerce.
Its mission is to provide a basis for the
three chambers of commerce
to act on local, state and federal government issues
to secure a favorable and profitable business
climate for the region.
Summary
A broad-based coalition of business, labor, local
government, and community leaders is collecting signatures
to qualify a constitutional amendment for the November 2006
ballot.
The passage of this measure is intended to close the Prop.
42 loophole, uphold the will of voters, and ensure once and
for all that the sales taxes paid at the pump are used for
transportation improvements.
This measure would prevent the Governor and Legislature from
diverting the sales taxes on gasoline to non-transportation
expenses.
It will also require the State to reimburse the $2.5 billion
in funds previously diverted. It responsibly allows 10 years
for repayment to avoid any immediate fiscal impact.
Background
In 2002, nearly 70% of California voters overwhelmingly
passed Proposition 42 that dedicated the existing state
sales tax on gasoline to fund transportation projects like
congestion relief, road repairs, transit needs, and safety
improvements.
However, a provision was included in Prop. 42 that allows
the legislature and Governor to divert funds to
non-transportation expenses. What was only intended for
emergency fiscal issues has been abused repeatedly. The will
of the voters is not being upheld.
Two out of the last three budget years’, the sales tax on
gasoline has been diverted to fund non-transportation state
expenditures in the State General Fund.
Nearly $2.5 billion in these gas taxes has been diverted to
non-transportation expenses since 2002. As a result, state
and local agencies have had to delay or stop many critical
safety improvements, congestion relief projects, road
repairs and other transportation needs.
In fact, California has the worst roads in the nation,
according to a recent report by the Road Information
Program. Three out of 10 of the state's overpasses and
bridges are structurally deficient or functionally obsolete.
And approximately half - 49 percent - of California's urban
freeways are considered congested.
This transportation crisis is threatening our economy and
the safety and quality of life of every Californian.
Features
The initiative simply requires retention of funds earmarked
for the Transportation Investment Fund in the General Fund
for use unrelated to transportation after 7/1/08.
Requires repayment by 6/30/17 of transportation funds
retained in the state general fund in years prior to
2007-08.
Eliminates General Fund borrowing of specified
transportation funds, except for cash flow purposes.
Repayment of funds would be required within 30 days of
adoption of the budget.
Fiscal Effect
Legislative Analyst and Director of Finance estimate that
there will be no revenue or cost effects. Increases
stability of funding to transportation in 2007-8 and
thereafter.
