TO: MTA BOARD OF DIRECTORS
FROM: ROGER SNOBLE, CHIEF EXECUTIVE OFFICER
Governor Schwarzenegger yesterday released his 2005-06 Budget Proposal. The
following summarizes the major elements of the Governor’s proposal relating
- Proposition 42- The Governor is proposing to suspend Proposition 42 for
the 2005-06 fiscal year. Proposition 42 revenues statewide are estimated
to be approximately $1.3 billion for the FY 2005-06. This is the third consecutive
year in which Proposition 42 has been suspended. The suspension of this year’s
funds will be considered a loan with repayment to be made according to the
- Extension of Loan Repayment – The previous loans from Proposition 42 will
be combined with the proposed loan of Prop 42 funds and be repaid over a 15-year
period. Under current law, the previous loans were to be repaid by 2009.
This proposal will extend the loan repayment to 2021. In the press conference
presenting the budget the Director of Finance commented that the new repayment
plan would allow for the issuance of bonds, however, the details of this proposal
are very unclear at this point.
- Protection of Proposition 42 – The Governor is proposing a measure to protect
Proposition 42 beginning in the 2008 Fiscal Year. The exact details of this
proposal are not known at this point, as the Governor has not submitted his
proposed measure to the Legislature. The budget is silent on the prospects
of a Proposition 42 allocation in the 2007 Fiscal Year.
- Tribal Gaming Revenues - The tribal gaming revenues that were to be allocated
to transportation have not been allocated due to two lawsuits. One of the
lawsuits challenges the states program of issuing bonds backed by these revenues
so the state has not been able to issue the bonds. However, the state will
still receive the revenues from the gaming compacts. Metro representatives
in Sacramento are working with the Governor’s office and the Legislature to
explore the possibility of allocating the revenues, as they are received,
to transportation accounts without the issuance of bonds.
- Public Transportation Account (PTA) Spillover – The PTA is one of the only
sources of operating funds from the state. When the price of gasoline increases
more than other items, a mechanism in law allocates a portion of the increased
sales tax revenue to the PTA. That amount is estimated to be $216 million.
The Governor is proposing to retain the PTA spillover in the General Fund.
- Go California - The Governor has proposed an initiative to address transportation
titled Go California. This initiative would entail an approximate three-month
process to develop a program that would “enhance the impact of transportation
investments now and in the future”. Staff will be coordinating with the Governor’s
office and with the Secretary of Business, Transportation and Housing as this
If you have questions
concerning the State Brief, please contact Government Relations Manager for
State Affairs Michael Turner at (213) 922-2122.