Auto Club Applauds Governor and Legislature for Agreeing to Prop 42 Fix on November Ballot; Agreement Means Gasoline Sales Tax Revenue Will Be Used for Transportation

LOS ANGELES--May 5, 2006--The Automobile Club of Southern California praised the Governor and the Legislature today for reaching agreement on a solution to stop the use of gasoline sales tax revenues for non-transportation uses. The agreement will be placed on the November ballot as a constitutional amendment.

In 2002 voters approved Proposition 42 guaranteeing the use of gasoline tax revenue for transportation purposes. However, the Legislature used the gas tax money for other purposes in two out of the last three budget years. The new constitutional amendment will, if approved by voters, prohibit the state sales tax on gasoline for being used for anything other than transportation. The measure will provide at least $1.4 billion annually for state and local transportation projects. The Governor and the Legislature will have the ability to borrow Proposition 42 revenues twice every 10 years. Any loans must be paid back in three years with interest and a second loan cannot be obtained until the first one is paid back.

"This is good news for all California motorists," said Thomas McKernan, president and CEO of the Auto Club. "The Governor and the Legislature have taken a major step toward improving the state's roads, highways and transit systems. This is a balanced approach to dealing with transportation needs."

The constitutional amendment will be placed on the November ballot along with a $36 billion bond package that will provide almost $20 billion in road and transit improvements along with money for schools, levees, flood protection and housing.