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CITY COUNCIL AGENDA ITEM NO. 7

Meeting Date: January 22, 2002

Subject/Title: Approve a resolution supporting Proposition 42, which will require gasoline sales taxes paid at the pump to be used to improve the California Transportation System.

Submitted by: Karen Diaz, City Clerk

Approved by: John Stevenson, City Manager


RECOMMENDATION 
Approve a resolution supporting Proposition 42, which will require gasoline sales taxes paid at the pump to be used to improve the California Transportation System.

PREVIOUS ACTION
None

BACKGROUND
Proposition 42 is a constitutional dedication of the sales tax revenues on gasoline to transportation purposes, particularly beginning in 2008-09. Proposition 42 will provide a significant injection of new revenue for the entire transportation system and for a variety of multi-modal purposes, before the voters in March 2002. 

Beginning in 2008-09 and every year thereafter, funds generated from the sales tax on gas would be allocated 40% to the State Transportation Improvement Program (STIP), 20% to cities for the same purposes, 20% to counties for maintenance, rehabilitation, reconstruction and storm damage and 20% to transit. Revenue generated from the sales tax on gasoline is projected to reach $1.4 billion by 2008-09, meaning the STIP would receive approximately $560 million, counties and cities $280 each and transit $280 annually. Proposition 42 allows the 40/20/20/20 formula above to be changed, but only by a two-thirds vote of the Legislature. 

BENEFITS

Proposition 42, will provide significant new revenue for the transportation system without any negative effect on the dedicated education funding under Proposition 98.

Cities and counties will receive revenues dedicated to filling potholes and repaving city streets and county roads in dire need of repair throughout many communities in the State. Investing in these projects now will save the taxpayers 4 to 5 times should these repairs be delayed.

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