In October of 2007, the California Transit Association filed a lawsuit against the State of California in an effort to recover more than $1.19 billion that was diverted from state funding for public transportation in order to patch holes in the General Fund as part of the 2007-08 State Budget.  The suit maintained that a series of voter-approved constitutional provisions - from 1990's Proposition 116 through Proposition 1A of 2006 - established the Public Transportation Account as a trust fund and require that PTA revenues must be spent on "mass transportation purposes."

In January of 2008, the Superior Court of California ruled that, while $409 million of the funding shift violated state law, more than $779 million in diversions were within the guidelines specified by the initiatives, a finding that transit officials argue was based on a technical interpretation of Prop 116 that contradicts the clear intention of the voters.

Shortly after the court's ruling, the State Legislature re-instated the $409 million worth of cuts by re-configuring the law on which the court's decision was based, meaning that the entire $1.19 billion rightfully intended for public transportation funding had been raided.

In September, 2008, the Association began the process of contesting the Superior Court decision by filing opening briefs in the Third District Court of Appeal. The appeal process culminated in oral arguments before the appellate court on June 16, 2009.

On June 30, 2009, the Appeals Court ruled that all $1.19 billion of the diversions violated state law. Schwarzenegger Administration officials immediately announced they would appeal the decision to the State Supreme Court, thus delaying implementaion of the appellate court ruling and clearing the way for the diversion of another $1 billion in the budget agreement enacted in July, 2009.

On August 11, 2009, state officials followed through on their vow to file that appeal. But on September 30, 2009, the Supreme Court rejected the state's Petition for Review, thus upholding the appellate court's ruling and bringing the litigation process to a close.

While the legal action ultimately succeeds in outlawing any future diversions of Public Transportation Account funds, the best-case-scenario outcome is not to be: due to constitutional doctrine regarding separation of powers, the judicial branch cannot compel the legislative and administrative branches to reimburse the PTA the $1.18 billion owed to it. However, the final judgment does provide a platform for the Association’s efforts to convince future legislatures and governors to abide by the law and begin to make appropriations restoring the full $1.18 billion to the PTA.

Additionally, by outlawing more diversions that had been planned for 2009-10, the suit succeeded in freezing PTA funds, which have now been allocated to the State Transit Assistance (STA) program via the “gas tax swap” legislation signed into law by the Governor on March 22, 2010. The $400 million allocation for Fiscal Year 2009-10 and 2010-11 included in that legislation represents the immediately-tangible benefit of the lawsuit (and the second highest single-year amount ever allocated to the STA program). Furthermore, as a practical matter, the suit spawned the legislative agreement to dedicate a beefed-up diesel sales tax revenue stream to the PTA on an ongoing basis, allowing establishment of a minimum $350 million annual STA program, with the allocation projected to grow to half a billion dollars a year by the end of this decade. 

Thus, from a quantifiable perspective, it can therefore be said that this process has resulted in a $150,000 investment in legal costs having netted $400 million in the short-term, and long-term prospects for the kind of stable, robust funding that the Association set out to secure in the first place.