About Face: Governor Signs Gas Tax Swap Legislation, After All

Although Governor Schwarzenegger indicated last week that he planned to veto the the Legislature’s modification of his gas tax swap budget proposal, the Governor did an about face tonight and signed AB X8 6 and AB X8 9 into law.

AB X8 6 and AB X8 9 form the pair of budget bills (explained in more detail in this earlier post) executing a gas tax swap.  The Governor initially proposed a completely inadequate gas tax swap measure, which the Legislature then modified with these two bills.  The Legislature’s version allocates a one-time sum of $400 million of operating funds for transit agencies, and then generates about $350 million annually for agencies statewide, starting in FY12.

The initial allocation will provide critically-needed funding for the Bay Area’s transit agencies in these tough times — including $36 million for Muni, $26 million for BART, $15 million for VTA, and $13 million for AC Transit — to be put to use through the upcoming fiscal year.

As we have discussed before, that sum does not come close to restoring funding that the State has repeatedly appropriated in the past to balance its budget, and the bills do not accomplish all that they could.  Therefore, this legislation neither can nor should end the important conversation about how the State ought to fund transit operations in the future.  Still absent from the discussion are stable revenue streams that prioritize transit service in a way that is consistent with the State’s goals of reducing greenhouse gas emissions and encouraging smart growth. Nonetheless, this allocation is a small step in the right direction, in that it will provide transit agencies with some assistance to weather the budget deficits that loom in the upcoming fiscal year.

I would strongly encourage transit agencies to use this money in a way that preserves service for riders to the maximum extent feasible.  Transit-dependent riders have already experienced significant hardship during this economic downturn, having been obliged to pay higher fares for inferior service.  I particularly direct this comment to my home transit agency, the San Francisco MTA.  The MTA Board is once again discussing a possible declaration of fiscal emergency, which would allow the agency to cut service without preparing the environmental documentation that would otherwise be required under CEQA.  When given such a flexible tool, the MTA Board has historically demonstrated a willingness to put it to use, by cutting service and raising fares.

However, worth noting is that the initial $36 million allocation from the State, when combined with some of the FY11-12 revenue measures that the MTA Board has begun to evaluate, would be enough to obviate the need to declare fiscal emergency.  Obvious measures (PDF) to examine at this point include extended Sunday meters ($2.8 million), a general parking meter extension ($6.3 million in FY11), elimination of free reserved on-street spaces ($2.8 million), adding one thousand new metered spaces ($0.8 million for a half-year), enforcing existing laws regarding parking garage charges in the C-3 zone ($3 million for a half-year), a possible extension of that policy to garages citywide ($2.6 million for a half-year), and a reduction in work orders ($6.5 million).  Consolidation of transit stops, which would save about $3 million per year, is another measure that will be considered by the MTA Board.

There are good policy reasons to implement this suite of measures, quite apart from raising revenue.  But these measures are also necessary to close the gap between the State’s initial allocation and the MTA’s total FY11 budget deficit.  They should be evaluated thoroughly before riders are made to suffer any further cuts to service or increase in fares.

It is nice to see the Governor finally agree to give some money back to transit, and the Legislature should also be recognized for its work in pushing through a partial fix for transit agencies, in spite of the Governor’s reluctance to support a revenue-neutral piece of budget legislation.  Imperfect though it may be, this legislation and the funding it promises will be a welcome booster shot for California’s cash-strapped transit agencies.