State Budget Update

Proposition 42 Diversion Would Harm Region's Transit Service and Delay Key Congestion Relief Projects

July 2008

MTC's Executive Director Steve Heminger sent letters to the Bay Area delegation and Governor Schwarzenegger in response to rumblings from Sacramento that legislative leaders were discussing the idea of suspending Proposition 42 as a way to help close the state's budget shortfall.

Proposition 42 dedicates the sales tax on gasoline to transportation purposes, but under the provisions of Proposition 1A (passed in November 2006), the funds may be loaned to the General Fund twice in a decade so long as they are fully repaid with interest within three years.

Given the structural nature of the state's budgetary problems, a diversion of Proposition 42 funds in FY 2008-09 would only worsen the state's ability to balance its books down the road. The suspension would furthermore shrink Bay Area transit operating funds by $75 million, while freezing funding for a number of key congestion relief projects and local street and road repairs.

MTC urges those concerned about the region's transit service and overall mobility to speak out against a suspension of Proposition 42.

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