Latest news from Sacramento: Metro could lose millions in state funding

This year’s California state budget saga took another turn on Tuesday, when Gov. Arnold Schwarzenegger said he would veto the latest Democratic proposal.

Part of that proposal was to preserve some state funding for mass transit. If that funding does not ultimately survive the budget process, it could cost Metro and Los Angeles County $120 million.

Metro CEO Art Leahy discussed the budget in an email to agency staff yesterday:

Governor Schwarzenegger Announces Veto of Gas Tax/Sales Tax Swap

Governor Arnold Schwarzenegger today announced that he will veto the gas tax/sales tax swap legislation passed by the Legislature. The Governor transmitted a letter to the Legislature expressing his concern that the Legislature did not pass elements of his job creation package and that the swap proposal did not include a reduction in taxes paid at the pump, providing relief to consumers. The impact to us is that the $400 million made available statewide for transit operators will not be available at this time. Los Angeles County’s share of that appropriation would be approximately $120 million and would have covered the remainder of this fiscal year and next. The budget deal as adopted by the Legislature also retained the sales tax on diesel fuel which would have provided ongoing revenue for transit operations. Indications are that the transit elements of the proposal were not in dispute and that the Legislature will reconsider a similar package in the future.

Leahy announced last week that he intended to restructure Metro to reduce overhead — a move that includes some job cuts.

Still confused about the state budget and who-is-proposing-what? Here’s a good explanation of the budget impasse from the Los Angeles Times’ story:

The centerpiece of the legislation Schwarzenegger said he would reject Tuesday is a complicated change in the way California taxes gasoline, allowing lawmakers to divert money from mass transit to pay down the deficit.

Schwarzenegger said he would reject the lawmakers’ gasoline tax plan because it differed from the proposal he first made in January. Schwarzenegger’s plan would have lowered gas taxes by 5 cents per gallon. The plan Democrats pushed through the Legislature would keep gas taxes at their current level.

Democratic lawmakers said they doubted oil companies would pass along to consumers the savings projected by the governor.

Instead, the Democratic plan had left some gas tax money in the state budget for public transit. The governor’s plan eliminated it.

Of course, there’s two sides to every story. Here’s a link to the Governor’s veto message, published on his website.

Government budgets often take a long time to assemble — even more so in California. I suspect there’s a lot more haggling ahead. It should be noted, however, that the Metro Board of Directors must soon tackle the budget for the next fiscal year, which begins July 1.

It’s a hard enough process, not made easier when the agency doesn’t know if millions of dollars from the state will be coming its way.

Categories: Policy & Funding

Tagged as: