GOP Likely to Block Davis’ Budget Switch

Gov. Gray Davis’ controversial plan to shift billions of dollars earmarked for transportation projects to help the state through a cash crunch appears to be headed straight for a Republican roadblock.

In releasing his revised 2001-02 spending plan this week, Davis proposed shifting about $2.2 billion from a plan to relieve urban traffic congestion for two years, instead using the money to help balance the upcoming budget and the following one. The proposal would allow the governor to avoid making additional cuts in existing services or further scaling back his plans for new ones.

But to pull off his maneuver by the start of the next fiscal year July 1, he must persuade the Legislature to pass, by a two-thirds majority, a measure that would authorize the shift. That would require Republican lawmakers to sign off on the change--an unlikely prospect, given their strong opposition to the idea.

Assemblyman George Runner, the Lancaster Republican who serves as vice chairman of the Assembly Budget Committee, described the funding shift Tuesday as one of the most disturbing elements of Davis’ revised spending plan. “That’s very disappointing for us,” Runner said of the proposal.

Added Assemblyman David Kelley (R-Idyllwild): “That money should not be transferred into the general fund and used for other purposes. The demand for freeways is so high, and the increase in cars and people just keeps coming at us.”

Davis’ finance officials say they are already at work on an alternative plan that would postpone the funding shift until January, which would make Republican approval a moot point because only a simple majority would be required to pass the necessary legislation.

In addition to diverting $2.2 billion raised through the gasoline sales tax from his Traffic Congestion Relief Program to the general fund, Davis’ revised budget relies on borrowing $238 million currently in the account that funds the six-year, $6.9-billion program.

That loan would require legislative approval and, because it is likely to be included in the budget bill, which needs a two-thirds vote, it would once again require Republican support.

Davis’ new plan also assumes that other loans totaling nearly $600 million will be made from a trio of transportation accounts, which fund everything from transit projects to California Highway Patrol operations, to replace the money diverted from the traffic relief program. The loans could delay projects that may have otherwise been funded through those accounts.

The loans include $280 million from the state’s Public Transportation Account, $180 million from the State Highway Account and $100 million from the Motor Vehicle Account, which is mostly used to fund operations for the CHP and the Department of Motor Vehicles. The money would be used to meet the traffic congestion relief plan’s cash flow needs in later years.

By limiting funding for the plan he introduced last year to ease California’s gridlocked transportation system, Davis runs the risk of removing incentives for workers to speed up projects that are already winding their way through the system.

Finance spokesman Sandy Harrison was quick to brush aside such a notion.

“The more quickly they move,” Harrison said, “the more likely it is there will be additional funds at some point down the road.”

Bruce Blanning, who represents the state engineers union, said he has no reason to doubt Davis’ contention that the funding shift can occur without delaying projects.

“That money was created when there was a surplus,” Blanning said. “Now that there’s a shortfall it’s not surprising that it’s going to disappear.”

There is no mechanism in place to guarantee that the $2.2 billion would be returned to the traffic relief program. The governor indicated that he plans to ask lawmakers to pass legislation that would extend the program two years--to 2007-08--so it could be made whole again.