LOS ANGELES — A gas tax repeal measure on California's November ballot could raise rating concerns about the state’s revenue flexibility, Fitch Ratings said.
Senate Bill 1 was approved by the state legislature in April 2017. Opponents gathered petition signatures to put a repeal of the measure on the ballot. If Proposition 6 passes and SB 1 is repealed, thousands of transportation infrastructure projects would face delays or
“Requiring voter approval for future tax increases could impair the state’s operating resiliency ties to its ability to raise revenues,” according to Fitch.
The state has already allocated money from the gas tax to support projects throughout the state.
The state estimates SB 1 will generate over $5 billion annually, allowing the state to direct an estimated $54 billion to transportation improvement projects over the next ten years.
Two-thirds of the money goes for highway and road repairs, with the remainder applied to other programs, including mass transit.
Proponents of Proposition 6 say transportation funding could be found elsewhere in the budget.
The measure would repeal the tax increases in SB 1 and require voter approval for increases in gas and vehicle taxes going forward. Voter approval would be in addition to the legislative two-thirds vote that is already required to increase taxes and fees.
Voters in June passed Proposition 69, a legislatively referred ballot measure to constitutionally limit spending of SB1 revenues to transportation.
Proposition 6 “highlights the extent to which the voter initiatives can limit the state of California’s operating flexibility,” analysts said.
Passage of the measure would increase the likelihood that infrastructure spending demands, often funded through the use of dedicated funds, have to compete with general operating needs, according to Fitch.
