February 5, 2008 Ballot Prop. 91

Overview

Proposition 91 would eliminate the state's authority ability to spend transportation funds on non-transportation purposes after July 1, 2008. All transportation money used for non-transportation purposes previous to 2007 would be paid back into the transportation pool under the initiative. Prop. 91 would also severely limit loans made to the state General Fund from the transportation allotment.

Background

California levies a statewide sales tax of 6 percent on gasoline and diesel fuel. Prior to 2002, sales taxes paid on motor fuels were deposited in the state's general fund. Allocation of these funds was part of the annual state budget process, and there was no requirement that they be used for transportation purposes.

Proposition 42 (2002) amended the State Constitution to dedicate motor vehicle fuel sales tax funds to transportation programs. Instead of being directed to the General Fund, these revenues are transferred to the Transportation Investment Fund (TIF) to provide for improvements to highways, streets and roads, and transit systems. Proposition 42, however, allows the Legislature to suspend the transfer by a two-thirds vote subject to a gubernatorial declaration that the transfer would have a negative impact on the state's finances. The transfer has been suspended twice — partially in 2003-04 and in full in 2004-05. In 2006-07, Proposition 42 is projected to shift $1.4 billion from the state's general fund to the TIF.

Proposition 1A was placed on the ballot with the passage of SCA 7, introduced by State Senator Tom Torlakson (D-Antioch). The measure amended the State Constitution to limit the Legislature's authority to suspend Proposition 42 transfers of motor vehicle fuel sales tax funds to transportation programs. Previously, the Legislature could choose, but was not required, to treat as loans any amounts that are redirected to the General Fund as a result of a suspension. The new law requires that suspended allocations be treated as loans, to be repaid in full, including interest, within three years of suspension. Suspensions are permitted to occur only twice in ten consecutive fiscal years. All prior suspensions must be repaid before a subsequent suspension could occur. Transfers that were suspended during 2003-04 and 2004-05 must be repaid to the Transportation Investment Fund according to a specific schedule. Under the new law, the Legislature can also authorize the sale of bonds backed by Proposition 42 revenues.

At the same time Proposition 1A was being approved for the ballot, Proposition 91 was in the process of earning qualification for the ballot. Proponents of this measure accepted Proposition 1A as an achievable compromise and intended to abandon Prop. 91, which was very similar. But Prop. 91 received the minimum number of signatures and by law must appear on the ballot. Major proponents of Prop. 1A now claim that Prop. 91 is not needed and therefore should be voted against.

Proposition 91 would eliminate the state's authority ability to divert gasoline sales tax revenues to fund non-transportation purposes after July 1, 2008. All transportation money used for non-transportation purposes previous to 2007 would be paid back into the transportation pool under the initiative Prop. 91 would prohibit the General Fund from borrowing specified transportation funds for multiple years as is now the case. Transportation funds could only be borrowed within a 30 day deadline of adoption of the state budget. All loans made from transportation funds must not deplete the projects that the funds were intended for.

Key Provisions

• State would be unable to use gasoline sales tax funds for non-transportation projects.
• Transportation funds that were kept aside for other uses in 2003-04 and 2004-05 would have to be repaid. These repayments would have to take place by June 30, 2017, with a minimum amount paid each year.
• Money from the transportation allotment could be loaned to the General Fund for cash flow purposes within a fiscal year. This loan must be repaid within 30 days of the adoption of a budget for the following fiscal year.

Arguments For and Against

Proponents of transportation funding protection have declared that the success of Prop. 1A in November 2006 makes Prop. 91 irrelevant. They urge voters to reject the proposal. There is no official argument for Proposition 1A. However, the Southern California Transit Advocates have come out in favor of the measure. They claim that the legislature still took funds for non-transportation purposes after the passage of Prop. 1A and Prop. 1B, a transportation infrastructure expansion proposal also passed in 2006. The SCTA believes that Prop. 91 will close a loophole that the legislature and governor have exploited.

Official Voter Information

Title and Summary

Analysis by Legislative Analyst's Office

Individual Campaign Committees Committees formed to support or oppose the ballot measure.