OPPOSES
Proposition 51 - Transportation. Distribution of Existing
Motor Vehicle Sales and Use Tax
Initiative Statute

This initiative, sponsored by the Planning and Conservation League, directs 30 percent of the state sales tax received on motor vehicle sales and leases to a Traffic Congestion Relief and Safe School Bus Trust Fund, to be used for transportation and environmental programs.

The measure specifies 17 program categories which will receive funds from the Trust Fund and the percentage of the total funding which will go to each. These include programs for mass transit and highway improvements, local street and road repairs, replacement of certain school buses, bicycle and pedestrian improvements, and environmental enhancement/mitigation programs. Within those categories, funding for 45 specific projects is earmarked, totaling $210 million in 2003-2004 and decreasing over time. Table 1 from the California Budget Project's analysis of Proposition 51 shows the 17 program categories and the percent of funding that will go to each.

The Legislative Analyst estimates that $420 million will be removed from the General Fund and allocated to the transportation Trust Fund in 2002-2003. The amount will increase to $910 million in 2003-2004, with subsequent annual increases depending on the increase in taxes raised on sale and lease of motor vehicles.

The transfer of money from the General Fund to the Trust Fund will be suspended or reduced in years when General Fund revenues decline or fail to increase sufficiently to cover the transfer. However, the California Budget Project points out that those provisions would not take effect in many instances where the state faces a severe budget shortfall. As California grows, revenues do increase in almost every year. However, the revenue growth needed to cover the impact of inflation; population, enrollment, or caseload increases; reductions in federal aid; or economic or demographic shifts in demand for state services is not taken into account by the initiative.

The provisions of the measure, including the specified program categories and their percentages of the funding, could not be changed except by a vote of the people on a subsequent ballot measure.

California levies a state sales tax of 6 percent on most goods. (An additional 1.25-2.5 percent sales tax goes to local governments.) In 2000-2001, approximately $27 billion in state sales tax revenues were collected, including about $3.4 billion from the sale and lease of motor vehicles. Most of the revenues from the state sales tax go to the state General Fund and fund a variety of programs.

California spends about $16.5 billion a year on transportation, with funding coming primarily from federal and state taxes (including state sales tax) on gasoline and diesel fuel, truck weight fees, and local taxes.

Table 2 (adapted from the California Budget Project) illustrates current funding for transportation from various California sources. Several provisions are in the state Constitution, including the dedication of the revenues from the "gas tax" (excise tax on gasoline and diesel fuel) to transportation. Vehicle registration fees are earmarked for transportation-related public safety and regulatory activities. The revenues available for public transit increased in 1990 when Proposition 111 increased the gas tax and dedicated the sales tax on that increase to the Public Transportation Account. In addition, Proposition 42, passed in March 2002, amends the Constitution to earmark the sales tax paid on gasoline for transportation-related programs ($1.3 billion in 2003-04).

State law imposes a 1/4 percent sales tax rate for local transportation programs. 18 counties, accounting for 82% of the state's population, have also adopted a local-option sales tax rate to fund transportation programs.

Table 2: Transportation Projects Currently Receive Funding From Various Sources
Transportation Funding Source	2002-03 (in Billions)
Excise Tax on Diesel and Gasoline Fuel	$3.2
Vehicle Registration Fees	$2.1
Sales Tax On Fuel Dedicated to Public Transit (Proposition 111)	$0.2
1/4-Cent Local Sales Tax	$1.2
Total:	$6.7
Sales Tax On Fuel Dedicated to Transportation Beginning in 2003-04 (Proposition 42)	$1.3

Source: Department of Finance and Legislative Analyst's Office.

• Proposition 51 violates the principles of sound tax and spending policy and key concepts of good government. It will permanently tie the hands of our elected representatives as they attempt to set priorities and budget for the current needs of California.



• Prop 51 mandates a $1 billion "spending contract" every year for its long list of projects and programs, leaving essential state programs and services in danger of being cut back or eliminated. In tough economic times, programs like child care, health care, social services, higher education, and public safety may suffer cuts because of the autopilot transportation spending required by Proposition 51.



• Proposition 51 will add $1 billion a year to a state budget deficit that is predicted to total about $50-$60 billion over the next four years. This is no time to give one area of state spending a free ride through the budget process.



• Proponents claim that "safeguards" in Prop 51 mean it would be suspended during a major budget crisis. However, if Prop 51 were already the law, it would be in effect for 2002-03, when lawmakers and the governor have had to paper over a $24 billion deficit to adopt a budget. Prop 51 only allows money to be put back into the General Fund in years when General Fund revenues do not increase from the previous year. This has only happened on four occasions since 1940!



• Prop 51 would circumvent the local and state transportation planning process. None of the 45 specific projects written into the initiative are State Transportation Improvement Program (STIP) projects developed through a collaborative local/regional/state process. Prop 51 locks in the funding percentages for its 17 programs, and the geographical distribution of its 45 prescribed projects has also been criticized.



• Although the proponents call this measure the "Traffic Congestion Relief and Safe School Bus Act," only 8 percent of the funds would go toward improving school bus fleets.



• Many of the specific projects in this initiative benefit powerful development interests and other special interests that have contributed to the campaign to qualify and pass the measure. These benefits include funding of freeway interchanges, road improvements, and other special projects that are not included in local transportation priorities.



• Proposition 51 and Proposition 49 set a dangerous precedent. Other well-known sponsors with deep pockets, or politically savvy organizations, are likely to try to guarantee money for their pet projects through the initiative process. Discretionary spending is already limited in the state budget, and measures like these further tie up funds so that changing needs could not be met.

Table 1: Proposition 51 Creates Permanent Spending Categories For Trust Fund Resources
Account	Percentage Of Funds	Funding Level (In Millions)
Congestion Bottleneck Projects	16%	$152.0
Transit Capital (Facilities, Rolling Stock, Rights of Way)	17%	$161.5
Transit-Oriented Development Incentives	3%	$28.5
Transit Service Expansion and Enhancements	16%	$152.0
Senior and Disabled Transportation	2%	$19.0
Rail/Street Grade Separations	4%	$38.0
Bicycle and Pedestrian Safety Law Enforcement	1%	$9.5
Pedestrian Utilization And Safety Projects	1%	$9.5
Bicycle Projects	2%	$19.0
Safe/Clean School Bus	8%	$76.0
Rural Public Transit	2%	$19.0
Traffic Safety Improvements	5%	$47.5
Passenger Rail Security	4%	$38.0
Improving Intercity Travel
Intercity Rail Capital/Operations	4%	$38.0
Environmental Responsibility And Improvement
Water Quality Transportation Enhancements	2%	$19.0
Air Quality Transportation Grants	3%	$28.5
Environmental Enhancements/Mitigation	10%	$95.0
Total:	100%	$950.0

Source: Planning and Conservation League and Legislative Analyst's Office. Calculations based on LAO [May 2002] estimate of funds controlled by the initiative for 2003-04.

The rebuttal to the supporters' argument was signed by Jon Coupal, President, Howard Jarvis Taxpayers Association, Lenny Goldberg, and Lewis K. Uhler.

Other opponents include the California State Association of Counties (CSAC), Service Employees International Union (SEIU), the Children's Advocacy Institute, and a number of Councils of Governments and local and regional transportation agencies.

Anne Henderson, LWVC Legislative Director, annehenderson@att.net

Marion Taylor, LWVC Government Director, mtaylor@got.net

Trudy Schafer, LWVC Program Director/Advocate, and Eric Wooten, LWVC Advocacy Aide, 926 J Street, Suite 515, Sacramento 95814. Phone: 916-442-9210, Fax 916-442-7362, tschafer@lwvc.org, eric@lwvc.org

California Tax Reform Association, 926 J Street, Suite 710, Sacramento 95814. Phone: 916-446-4300, www.votenoonprop51.org

Proposition 51: Should California Earmark the Sales Tax on Motor Vehicles?, California Budget Project (CBP), June 2002. Available from CBP (916-444-0500) and at www.cbp.org/2002/bb020601.htm

SAMPLE LETTER TO THE EDITOR

Note: Please adapt this letter to your own community and check your local paper's word limit for published letters.

Editor:

At first glance, Proposition 51on the November 5 ballot might seem like a good idea. The initiative's proponents claim that it will increase transportation spending without raising taxes or requiring other state programs to be cut.

But under closer inspection, Prop 51 reveals itself to be a permanent spending contract that contains inadequate provisions for the tight budget times facing California in upcoming years.

Healthcare, higher education and child care programs will likely suffer cuts in order to pay for the autopilot spending mandated by Prop 51.

With California facing expected budget deficits totaling $50-$60 billion over the next four years, we cannot support the long list of guaranteed entitlements contained in Prop. 51, including millions of dollars benefiting private developers and projects that are not included in lists of local transportation priorities.

Join taxpayers groups, children's advocates, local governments, labor organizations and the League of Women Voters and vote NO on Prop 51.

Sincerely,