Law Sought on Transit Funds’ Interest : Panel Would Use Earnings From $85 Million for Highway Work

Orange County transportation commissioners unanimously voted Monday to seek legislation in Sacramento that would allow the use of interest earned on $85 million in banked federal transit funds for street and freeway projects instead of mass rapid transit.

State Sen. John Seymour (R-Anaheim) has agreed to introduce the bill but said Monday the legislation is still being reviewed by the legislative counsel’s staff in Sacramento.

Seymour and Supervisor Bruce Nestande, who on March 1 becomes chairman of the California Transportation Commission, both predicted the bill would be controversial.

In separate interviews Monday, both officials said other counties may question why Orange County has stockpiled federal transit money and why the county should not be forced to return the unused federal funds so that other metropolitan areas in need of scarce transit project dollars, including Los Angeles, can use them.

‘Outrage in Saramento’

Nestande, who has called for spending all stockpiled transit money on highways and road improvements, said, “There will be outrage in Sacramento over this bill” because legally the funds were obtained from the federal treasury for transit projects.

Orange County has delayed spending the funds while attempting to raise enough local money through proposed tax increases and other methods to pay for major transit lines, including light rail. Such projects would cost an estimated $1 billion or more.

The county’s 12-member Sacramento delegation is expected to support the measure, Seymour added.

Under the proposed legislation, the county Transportation Commission, Transit District and California Department of Transportation (Caltrans) would be permitted to spend about $8.5 million annually in interest from the banked transit money.

The legislation would, unless amended, apply only to Orange County, where county officials estimate they are $200 million short of the funds needed to pay for backlogged street and freeway maintenance and improvement projects.

Proposed guidelines call for the $8.5 million in interest payments to be split evenly between freeways and local streets.

The Orange County Transportation Commission’s action Monday is partly a reaction to the voters’ overwhelming defeat last June of Proposition A , a ballot measure that would have imposed a one-cent sales tax for transit and highway projects.

Santa Ana Mayor Dan Griset, chairman of the county Transportation Commission, said the proposed state legislation would ease current transportation problems “and still build tomorrow’s transportation system” because only interest earned, and not principal deposits, would be tapped.