AgdaPkt 2007-06-18 - Laserfiche WebLink

Browse Search

8A Page 2 'Prop.42'Continued frprn Page 1... This year,Gov. Schwarzenegger has proposed to divert spiAover funds away from transit, leading to discussions about long term protection of spillover funds dedicated to transit. A proposaf has circulated arouncf Sacramenio tnat wouid change the Prop.42 formula funding, giving cities a lower percentage. The current Prop.42 formula consists of 40 percent for the 5tate Transportatian lmprovement Program (STIP),20 percent for cities,20 percent for counties and 20 percent to transit. The new proposal reduces STfP to 25 percent, cities to 15 percent, GGi.itl�i2S tG'I�J�2fC811i aliu IiiCf�aS2S ii ai i5ii tv.,°i��2fCci�t, The new proposal,which passed out of Assembly Budget Subcommittee#5 last week,bases the changes on increased"spillover"funds. Supporters argue that the proposal would capture these funds and put them into Prop.42,thus increasing t#�e amounf of funding cities receive,despite the decrease in overalf percentage. (For a detailed explanation and hisfory of"spillover"funds see"The'Spillover'from the Sales Tax an Gasoline"on wuvw_CaiifomiaCityFinance com.) A key sticking point, however, is that projections have oniy been done for three years and spillover funds are subject to numerous changes.This would make any alteration of the funding farmula a risky proposition for cities, because there is no guarantee that cities woufd be alEocated a consistent amount of money. What this Means for Cities On ifs face, the change appears positive because it includes the addition of spillover funds to Prop.42, so fowering cities'percentage share may result in increased funding for fhe foreseeable future. In the long term, however it is impossible to accurately project spillover. The spillover money is, by its nature, highly volatile and unpredictable. !f there is a leveling-out of gas prices, and cities have a lower percentage of the spillover funds,fhis change could sacrifice #he long term stability in favor of a short term gain. There were 13 years within a 17-year period from 1986-2pQ3 with no spillover. In addition, alfhough Prop.42 funds have achieved Constitutional protection;the same is not true for spillover funds. Spillaver funds are stil!vulnerable. During any budget cycle,the state has the ability to divert the funds for other purposes, leaving less money available for citiss,counties and the STlP under the proposed farmufa change. !;,a year vrhen the spi!lo:��r fi:^ws go to Prcp.42, �er the prcposed formula,cities wi!?share F smaller portion of a larger pot of money.The concern arises in years when the state attempts to use spillover monies for ather purposes because this means that cities are now sharing a smaller percentage of a smaller pot of money. Consequently,cities face significant risk being at the whim of the state.Any reEiance on funding with this sort of turbulence will create uncerfainty, confusion and distress in focal budgets. Cities also need to cansider that in the lang term there are ather, better options to provide increased funding to transit. Take Action! If this proposal comes to fruition, cities'abiiity to protect,rr►aintain and expand locaf streets and roads would be threatened. The League encaurages local officials to contact the Republican members of the State Assembly, letting them know how detrimental any change in the Prop.42 formula funding would be for cities. Here are some suggested talking points: � Cities were recently made aware of a proposal to change the Propasition 42 formula. • The Legislature should not change the existing formula. Cities counties worked hard to pass staEe ballat measures protecting these funds for our loca!streefs and roads. 2