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LWV CA Ed Fund LEAGUE OF WOMEN VOTERS OF CALIFORNIA EDUCATION FUND
Nonpartisan Pros & Cons of

Proposition 2

TRANSPORTATION: FUNDING.

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Legislative Constitutional Amendment

THE QUESTION

Should the state Constitution impose conditions on the repayment of loans of transportation revenues to the General Fund and local entities?

THE SITUATION

Californians pay state and local taxes and fees on their motor vehicles and fuel to pay for highway and mass transit construction. Funds also help enforce state traffic laws and the Air Resources Board. County boards of supervisors can also impose a uniform local sales and use tax rate up to 1 1/4 percent, a portion of which can be deposited in the county's local transportation fund to be used primarily for transit purposes.

During the early 1990s, when the state faced a severe recession and General Fund deficit, the Legislature and Governor borrowed transportation funds temporarily to balance the General Fund. Although the Constitution requires that these funds be repaid, it does not specify when. So these temporary loans have, in many cases, been diverted permanently to the General Fund. In 1995-96, the Legislature also authorized the diversion of $800 million in local transportation funds to mitigate Orange County's bankruptcy and a general funding shortfall in Los Angeles. Thus a total of almost $1.2 billion in state and local transportation resources has been diverted since 1991-92.

THE PROPOSAL

  • Loans or transfers from transportation funds must be repaid within the same fiscal year.
  • State transportation funds may be loaned to the General Fund for three years if the Governor proclaims a "state fiscal emergency," or if General Fund revenues are significantly less than the previous fiscal year.
  • Under certain conditions, the Legislature can authorize the loan of state transportation funds for up to four years to city and county transportation agencies.
Proposition 2 declares local transportation funds are trust funds and may not be spent for any purposes other than transportation.

FISCAL EFFECT

According to the Legislative Analyst, this measure would have little or no fiscal impact on state or local governments.

SUPPORTERS SAY

  • This is the voters' opportunity to stop the bureaucrats from siphoning transportation funds to other government programs.
  • Funding for road and bridge improvements has lagged 30 percent.
OPPONENTS SAY
  • Borrowing these funds prevents additional cuts in education, welfare, and MediCal.
  • Proposition 2 does not require the return of nearly $1.2 billion in transportation funds that have been loaned to the General Fund.
(Analysis prepared by the League of Women Voters of California Education Fund.)

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Last updated: September 7, 1998
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