By denying the petition for review, the Third District Court of Appeal's decision in the case – brought by the California Transit Association, is upheld, the association reported Thursday, adding that the decision was a “resounding victory.”
Joshua Shaw, executive director of the California Transit Association and lead plaintiff in the case, also noted that the Supreme Court “has affirmed once and for all what we always maintained was true: that it’s illegal to shift dedicated state transit funds away from transit agencies and their riders.”
He added, “This decision validates our position that this practice has been illegal since even before 2007, and that the definition of mass transportation adopted by lawmakers since then to mask these diversions is illegal.”
“That is just the greatest news,” said Mark Wall, general manager of Lake Transit.
Wall told Lake County News this week that the fund raids had created a funding gap for the local transit agency which was being filled in the short-term by federal stimulus funds.
He said the agency was looking at a possible loss of approximately $1,415,000, or nearly $500,000 annually for the three years the diversions have taken place. The agency's overall budget is about $3.5 million annually.
“It is a significant amount that we're owed, and a significant amount we're looking at each year,” said Wall.
The state may now be looking at having to repay billions of dollars.
“We're disappointed that the Supreme Court chose not to hear the case because we did prevail at the trial court level but were reversed at the appellate court level,” HD Palmer, spokesman for the California Department of Finance, told Lake County News.
Palmer said the next step is to remand the case back to the original trial court, whose job it will be to enforce the judgment and determine the legal remedies, which could include paying back the funds.
He said the court's petition of review denial will have several ramifications for the budget, including invalidation of a $138 million appropriate from the Public Transportation Account to the Department of Developmental Services for transportation of the developmentally disabled to regional centers, since it doesn't serve a transportation planning or mass transportation purpose.
The ruling also will affect $254 million in debt service for the current y ear and $622 million in general fund reimbursements for prior year debt service.
The bottom line, said Palmer, is that the state must now find an additional $1 billion to deal with the current fiscal year's part of the suit.
Still to be determined is whether the state will have to pay back funds from the three previous budget cycles, which the California Transit Association estimates totals nearly $3.5 billion.
In addition to those diversions, the association reported that transit funding took a critical blow when the budget agreement enacted in February of this year eliminated the State Transit Assistance program.
The association's original lawsuit, filed in October 2007, maintained that several successful ballot measures – from 1990's Proposition 116 through Proposition 1A of 2006 – established the Public Transportation Account as a trust fund and required that its revenues must be spent on “mass transportation purposes.”
While the initial superior court decision from January 2008 found that the 2007-08 budget violated the law by diverting $409 million from the Public Transportation Account to reimburse the General Fund for past debt service payments on Proposition 108 bonds, the court also allowed the state to transfer an additional $779 million to cover home-to-school busing and other programs that public transit advocates argued did not meet the definition of “mass transportation” as expressed in Proposition 116.
The association filed its appeal in September 2008 after it said the Legislature finished raiding the entire $1.19 billion intended for public transportation funding. The Third Appellate Court ruled against the state on June 30.
Wall said that with the funds now headed back to Lake Transit, they can maintain their services and grow.
“What it does for us is now we're going to be able to continue to develop and improve public transit in Lake County and not cut service,” he said.
He added, “It's very exciting.”
E-mail Elizabeth Larson at
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