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TRANSACTIONS NEWSLETTER ONLINE

May 2002

Ruling Benefits Transit

Thanks to intense lobbying by MTC and public transit agencies, the state Board of Equalization has modified its interpretation of a sales tax exemption for diesel fuel. The new ruling clarifies that fuel used to truck processed foods to the marketplace is not exempt from sales tax. Diesel sales taxes feed the state Public Transportation Account (PTA), which in turn feeds the State Transit Assistance Program — a critical source of transit operating revenues.

The new interpretation results in a $16 million reduction in annual PTA revenues statewide, instead of a $56 million reduction. For the Bay Area, this translates to a $2 million hit to State Transit Assistance as opposed to a $9.7 million cut.

"Our transit operators are already reeling from ridership and farebox revenue declines caused by the economic downturn," said Randy Rentschler, MTC's manager of Legislation and Public Affairs, "so we're grateful for the reprieve."
— John Goodwin

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