What the gas tax swap means for L.A. County

Gov. Arnold Schwarzenegger last week threatened to veto a complicated budget proposal involving the gas tax. The veto threat jeopardized mass transit funding in the state.

After negotations with the Legislature over proposals he sought, Schwarzenegger ended up signing the gas tax swap on Monday night. The gist of it: about $400 million of mass transit funding was included that was left out of Schwarzenegger’s original budget proposal.

It’s a good news-bad news deal for Metro and other transit providers in Los Angeles County. On one hand, the deal restored state transit assistance money that wasn’t provided the past couple of years and wasn’t supposed to be provided in the next two years. On the other hand, transit advocates say the money is still short of what the state should be providing under existing obligations.

Metro CEO Art Leahy included the following explanation in his daily email to staff:

Governor Signs Gas Tax Swap

Last night, the Governor signed the gas tax swap package, including ABx8 6 and ABx8 9, which the Legislature approved earlier this month. Specifically, the gas tax proposal eliminates the sales tax on gasoline and increases the excise tax by 17.3 cents. The funds generated by the excise tax will be allocated in the following manner: approximately $700 million off the top will pay for bond debt service on an annual basis, the remaining funds will be divided 12% to the State Highway Operations and Protection program (SHOPP), 44% State Transportation Improvement Program (STIP), 44% Local Streets and Roads.

In addition, the proposal retains the sales tax on diesel providing an annual allocation of $350 million split 75%/25% in favor of State Transit Assistance (STA) program. This represents approximately $80 million annually for Los Angeles County. These funds are not protected so they may be raided in future budget negotiations. The package also included a one-time appropriation of $400 million for the STA for the remainder of 2009-2010 and 2010-2011.This represents approximately $120 million for Los Angeles County.

We are still waiting the Governor’s signature on SB 70 that was passed by the Legislature as a technical fix to the gas tax swap to exempt off-road diesel users. Please click here to read the Governor’s signing message.

Categories: Policy & Funding

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