The wheels come off

Sacramento Regional Transit has had a rough year. The agency imposed two fare increases, cut deeply into local bus service and lost tens of millions of dollars in state aid.

It’s about to get worse.

Earlier this month, Gov. Arnold Schwarzenegger proposed permanently shifting gas tax revenue from dedicated public transportation accounts into the general fund. The move would “put the final nail in the coffin” for public transportation funding, says RT general manager Mike Wiley.

It’s not like things weren’t bad enough already. Wiley is in the midst of making a major mid-fiscal-year correction in RT’s $140 million operating budget to fill an unexpected shortfall of $16 million. It turns out RT’s plan to fill earlier holes with increased fares isn’t panning out. Ridership is falling because of high unemployment, low gas prices and the effect of “Furlough Fridays” on Sacramento’s large state workforce. Less work means fewer commuters. Fewer commuters means less money in the farebox.

Higher fares are also leading to changing buying patterns among riders. Sales of monthly passes are down and daily passes are more popular. More people are using discount student passes. Farebox revenue isn’t falling, but it’s projected to be about $7 million less than anticipated. The recession and subsequent decline in state and local tax revenue accounted for the rest of the unexpected shortfall.

Wiley and his staff have their work cut out for them. They are currently working on recommendations to close the $15 million budget gap that will be submitted to RT’s board of directors for vote next month.

“Everything is on the table,” Wiley explained. Only there’s not as much left on the table. The agency has already eliminated four bus routes and cut back service considerably on others. Further service reductions can’t take effect soon enough to help close the immediate budget gap. After two fare increases in the past year, RT already has one of the highest base fares in the nation. Wiley said current fares “aren’t going to come down for the foreseeable future,” but worries that higher fares “would be counterproductive.”

There’s not much wiggle room, and after salvaging this year’s budget, Wiley faces the grim possibility of permanently losing a big chunk of RT’s $140 million operating budget—about $25 million annually—if Schwarzenegger’s plan to transform the state’s gasoline tax into an excise tax is approved.

Currently, Californians pay a 6 percent sales tax on gasoline, plus an 18 cents per gallon excise tax. By mandate, the sales tax from gasoline funds the state’s Public Transportation Account and is also used to calculate school funding required by Proposition 98. Schwarzenegger proposes to eliminate the sales tax and increase the excise to 28.8 cents per gallon, which would then go directly into the state’s general fund. The switch would grant a $1 billion tax cut to automobile drivers, since overall, they’d be paying less tax per gallon. At the same time, it would effectively eliminate all state funding for public transportation.

This isn’t the first time the governor has raided transit funds. Over the past three years, by diverting gas tax money that’s dedicated to public transit, the state has already shortchanged transit agencies by more than $3 billion. Wiley estimates that RT lost $70 million due to the state’s repeated diversions.

In 2007, the California Transportation Association—a coalition of local transit agencies like RT—sued the state, saying the repeated raids on transit funds were illegal under rules set by Proposition 42 and other transportation funding measures passed by voters over the past 10 years. The court agreed, and last year ordered the state to pay back $1.2 billion. None of it has been paid back yet, and transit advocates say it probably never will be if the governor’s gas tax scheme becomes law.

“This is basically a permanent raid on the state transit assistance account,” said Wiley, the latest in a long line of what he and others call “illegal raids” on public transportation money by the governor and Legislature. “It’s an assault on transit riders.”

The governor’s move has further angered backers of the Local Taxpayer, Public Safety and Transportation Protection Act, a proposed ballot measure being advanced by the CTA, the League of California Cities and the California Alliance for Jobs, a political arm of the state’s construction unions and building contractors.

Backers promise their measure will stop future raids on public transportation, while also protecting local redevelopment funds and property taxes from predation by state lawmakers.

Meanwhile, Wiley is pressing forward. Despite the tough economic times, he’s working on a proposal that would raise Sacramento County’s sales tax rate in order to pay for a dramatic expansion of the Regional Transit system. The board of supervisors has until August to consider placing any measure on the November ballot.