Transportation Development Act

1971 Southern California Rapid Transit District (RTD) Flyer announcing passage of SB325

Overview of SB 325

California’s Senate Bill 325 is a transportation funding bill that was signed into law by Governor Ronald Reagan on November 4th, 1971. The bill, also known as the Mills-Alquist-Deddeh Act and the Transportation Development Act, provided two new major sources of funding for public transportation in the State of California. The first was a reapportioned ¼ cent sales tax originally allocated to the state’s general fund, while the second derived from revenues generated by a gasoline sales tax, which had been prohibited prior to the law’s enactment. These two funding sources are known as the Local Transportation Fund (LTF) and the State Transit Assistance Fund (STA), respectively. To date, SB 325 generates annual revenues of $1.8 billion for public transportation in California.

Local Allocation

The Transportation Development Act’s (TDA) two funding sources are allocated using two very different formulae. The LTF portion of the TDA is allocated by the State Board of Equalization to county governments, based on the sales tax collected in each county, while the STA funds are allocated through a more complicated process. STA funds are initially allocated by the State Legislature to the State Controller’s Office, who then appropriate the funds to Regional Transportation Planning Agencies (RTPAs) across the state. Fifty percent of STA funds are allocated based on population, while the other 50% of funds are allocated based on the RTPA’s previous year’s revenues.

Money generated by the LTF and STA can go toward a wide variety of transportation programs, according to the law. These include pedestrian, bicycle, bus, rail, community transit, and public transit projects and services. For counties with populations under 500,000, LTF funds may be used for local street and road construction and maintenance as well, if there are no unmet transit needs.

Public Participation

Twenty six Regional Transportation Planning Agencies (RTPAs) were set up across the state with the passing of SB 325. These agencies are responsible for allocating 50% of the funds generated by the law. Before deciding which projects receive the money, RTPAs are required to organize public meetings that address local transportation needs and neighborhood concerns. As part of this public participation process, RTPAs were specifically required to establish Social Service Transportation Advisory Councils (SSTAC), made up of elderly, disabled, and low-income members of the local community, to solicit input and advice on transportation-related issues from each of these demographic groups.

Performance Measures

In order to qualify for SB 325 funding, local transit agencies must show on a yearly basis that their public transportation systems are meeting minimum farebox recovery ratio requirements. At the same time, performance audits are conducted every three years to measure the efficiency and effectiveness of the agencies and their operators. These audits are performed by an independent entity commissioned by the RTPA.

Additional Reading

California Budget Project. "Budget Backgrounder: How is Transportation Funded in California?" 2006.

This is a brief guide to transportation funding in California, written by an organization dedicated to nonpartisan analysis and education of California fiscal policies. It is useful for anyone seeking to better understand California's transportation finance structure.