The State Controller’s Office (SCO) today announced that it has moved to correct an underpayment of State Transit Assistance allocations for the first quarter of Fiscal Year 2011-12. The adjustment will result in an additional $16.6 million in first quarter payments, with the additional amount to be included in second quarter installments expected to be issued in January.

Initially, the SCO had published a first quarter allocation of $82,747,500. However, this amount differed from what had been reported by the Board of Equalization (BOE). According to BOE, a transfer was made pursuant to Revenue and Taxation Code Section 7102 (4.75 percent tax base on diesel fuel) in the amount of $86,258,000 to the Public Transportation Account (PTA), of which the STA program receives 50 percent. Furthermore, the additional 1.87-percent tax increment on diesel, of which the STA receives 100 percent, generated $33,237,000. Finally, AB 105 [Chapter 6, Statutes of 2011] directs a one-time appropriation of $23 million from the PTA to the STA. Therefore, the amount of the first quarter allocation for FY 11-12 of the STA program should be $99,366,000. The SCO’s adjustment announced today reflects the correct amount.

Per the provisions of the “Gas Tax Swap” agreement enacted in 2010 (and re-instated in 2011 in compliance with Proposition 26) the STA program is now reliant upon actual consumption of diesel rather than a budget appropriation. Consequently, the allocations will likely fluctuate from quarter to quarter. In May, the Department of Finance estimated that the STA program would be funded at $416 million. Assuming that this quarter's allocation, minus the one-time $23 million transferred pursuant to AB 105, is comparable to allocations for the next three quarters (approximately $76 million per quarter), STA may end up being funded at roughly $327 million for the 2011-12 fiscal year. Recipients of STA funding are urged to be judicious with the money they do receive, due to the lack of predictability and fluctuation that comes with relying on consumption of diesel fuel.