BILL:		AB 875

AUTHOR:	ASSEMBLY MEMBER MARK WYLAND
		(R- DEL MAR)

SUBJECT:	ALLOCATION OF STATE GAS TAX AND TRAFFIC CONGESTION RELIEF PROGRAM FUNDS FOR FREEWAY PURPOSES

STATUS:	PENDING HEARING IN ASSEMBLY TRANSPORTATION COMMITTEE

ACTION:	OPPOSE

RECOMMENDATION

Staff recommends that the MTA Board of Directors adopt an oppose position on AB 875.

PROVISIONS

Existing law establishes the State Gas Tax and specifies an allocation formula to transportation uses in accordance with the State Constitution.  Funds are allocated to the State Transportation Improvement Program (STIP) and are available for capital improvement projects including mass transit projects.  A portion of these funds are allocated to cities and counties; the so-called subventions.  Existing law, the Traffic Congestion Relief Program (TCRP) establishes that the sales tax on gasoline sales be allocated to transportation including a specified list of projects first with the balance to be split between the STIP, cities and counties, and, public transit.

AB 875 would require that beginning in 2008:

•	All funds generated by the state gas tax are apportioned by the California Transportation Commission (CTC) to the county in which those funds were generated.
•	All funds generated by the sales tax on gas be apportioned by the CTC to the county in which those funds were generated.
•	Require the CTC to program these funds for freeway purposes.

IMPACT ANALYSIS

AB 875 is an aggressive measure that would completely restructure the system of allocating transportation funds in the state of California.  The idea that all transportation related taxes should be allocated to freeway purposes has long been advocated by some of the more conservative members of the Legislature.  

Current law establishes an allocation formula for the state gas tax which requires subventions to cities and counties and allocation of funds to maintenance of the state highway system.  The remaining funds are allocated through the STIP and subject to county shares and the north-south split.  Many of these laws have been in existence since the inception of the state gas tax.  The allocation formula underwent its most recent and thorough restructuring in 1997 with the passage of SB 45.  This bill established the current STIP process whereby regions program 75% of the STIP funds.   

Additionally, under current law the sales tax on gas (TCRP) was shifted from the State General Fund to a variety of transportation uses.  Under the original statute, these funds were to be allocated to transportation through specified allocation formulas until 2006.  Subsequent budget agreements extended the allocations to 2008. Proposition 42 requires that the sales tax on gas be permanently allocated to transportation in accordance with the statutory provisions as they existed at the time of passage Proposition 42.  

AB 875 makes three major policy changes.  First, both the state gas tax and the sales tax on gas would be apportioned to counties on a return to source basis.  While this notion might be intriguing to a large urban County such as Los Angeles, the measure will garner opposition from those counties who would see a drastic reduction in transportation funds.

Secondly, rather than continue the eligible use of these funds in current law, AB 875 would require that all of the funds be used for freeway purposes.  These funds would not be available for the other uses for which they are currently eligible, including, street and road repair, public transit capital projects and a variety of other transportation program.

Lastly, AB 875 grants all programming authority to the State through the CTC.  This will completely overturn SB 45.  

Members of the MTA Technical Advisory Committee have expressed their concerns with this measure and have asked the MTA to oppose the bill. 

AB 875 would overturn both the TCRP and the Motor Vehicle Fuel Law by completely reallocating these funds.  Staff therefore recommends the Board oppose AB 875.