A California gas tax repeal would halt thousands of projects
Thousands of road projects funded by a recently enacted California gas tax are in jeopardy if voters repeal it.
A Republican-led effort to repeal the gas tax has qualified for November’s ballot and has signs of momentum.
A May 21 USC Dornsife/Los Angeles Times poll found that 51% of California voters favored repealing the law while 38% want to keep it. A poll by the Public Policy Institute of California in February had voters evenly divided with 47% favoring repeal and 48% opposing it.
Democratic state Sen. Josh Newman was recalled by voters in his primarily Orange County district June 5 after conservative talk-show host Carl DeMaio launched a recall effort after Newman voted for Senate Bill 1. DeMaio is also a leading figure in the effort to repeal the gas tax.
SB 1, the gas tax increase approved by the majority Democratic Legislature last year that is expected to raise $5.4 billion annually for 10 years, has fast-tracked projects, but that could stall if the repeal effort succeeds.
"The money collected since last November would still be available for projects since the repeal effort is not retroactive, but the 5,000 projects underway — or those slated to begin soon — would be halted in their tracks," said Roger Dickinson, executive director of Transportation California, a transportation advocacy organization that supported the gas tax.
“If they could not be paid for with existing funding, they would be dead — and that would apply to the vast majority of projects," Dickinson said.
“There are smaller ones that could be completed in a year, but many jurisdictions are planning on multi-year funding, and they would not be able to finish the projects they had programmed,” he said.
The tax raised $367 million last year for local streets and road repairs, which was a partial fiscal year for the program, and is expected to bring in $1.1 billion in fiscal 2018-19, said Mitch Weiss, chief deputy director for the California Transportation Commission, the state agency responsible for allocating funds for the state’s transportation construction projects.
The law increased the gasoline tax by 12 cents a gallon, the diesel excise tax by 20 cents a gallon and the diesel sales tax to 5.75% from 1.75%. It also raised annual vehicle registration fees by up to $175. And it created a $100 annual fee, starting in 2020 for zero-emission vehicles that don’t pay gas taxes.
The CTC in May approved $2.7 billion in funding for 61 projects in three programs funded by the gas tax.
Those allocations represent four years of funding for three of the 10 SB 1 programs: the Local Partnership Program, the Solutions for Congested Corridors Program and the Trade Corridor Enhancement Program, according to the state Department of Finance.
Weiss estimates that half of the 4,000 local streets and road projects are solely funded by SB 1 money and would have to be cut. It would then be up to local leaders to figure out how to fund the projects or call them off, he said.
“The bottom line is that projects that are only funded by the SB 1 gas tax are going to be stopped, because they would only receive a year’s worth of funding,” he said.
Santa Barbara and Sonoma counties received $132.8 million and $84.7 million, respectively, for projects that include adding carpool lanes on 15 miles of U.S. 101 through Santa Barbara and on 6.6 miles of the freeway through Marin and Sonoma counties. The San Mateo County Transportation Authority would receive $20 million toward the $540 million cost of a 22-mile carpool lane in both directions on Route 101 between San Francisco International Airport and the city. Other freeways throughout the state received funding for similar projects.
Many smaller cities received awards for everything from road reconstruction to bike lane projects. SB 1 funds also supplement a pre-existing California Department of Transportation program that distributes grants for transit projects.
Gov. Jerry Brown, who promised in his January 25 State of the State speech to do “anything in his power to defeat the repeal,” spent the last weeks of May attending groundbreakings of southern California projects funded by the gas tax.
Brown proposed $4.6 billion in spending from the gas tax in his 2018-19 budget proposal.
Planned projects to construct or rebuild highways, bridges, culverts, local streets and roads, and mass transit already programmed with SB 1 funding “would have to be rescheduled/reprioritized/reprogrammed by the state or local sponsors and moved out to future years to be funded over a longer period with the lower, existing, non-SB funding sources,” California Department of Finance spokesman H.D. Palmer said.
The state’s existing transportation programs are funded using federal and state gas tax revenues, and others receive funding through greenhouse gas cap and trade and diesel sales tax funding, Palmer said.
But new programs created through SB 1 including local partnerships, commuter rail and intercity rail, local planning grants, congested corridors and trade corridors would likely be halted, even on projects that have started, until funding alternatives are identified, Palmer said. Most of the programs received funding following a vigorous series of public meetings to develop program guidelines, he said.
If the gas tax is repealed, Palmer said the suite of projects selected to receive the $400 million estimated to be collected between passage and possible repeal may need to be reevaluated.
“If SB1 revenues are no longer collected, then there would be nothing against which to bond, and there are no plans at this point to pursue GO bonds to fund transportation infrastructure,” Palmer said.
Lodi Mayor Pro Tem JoAnne Mounce, former president of the League of California Cities and a Republican, fervently supports the gas tax.
“It took us almost 10 years to get legislators to come together to create SB1 – and there is nothing to replace it,” Mounce said. “In the meantime, the average citizen is spending $739 dollars annually on vehicle repairs due to the condition of our roads.”
The poor condition of the state’s roads and highways has resulted in highway deaths as well, Mounce said.
“As you know, with the rising cost of pensions, cities have less and less money to do anything else,” Mounce said. “Even in good times, there is not enough money for transportation, that is why the League has been tracking the condition of the state’s roads and bridges.
“We have been saying for the last 10 years they are in deplorable condition – and they are continuing to get worse,” she said.
Sen. John Moorlach, R-Costa Mesa, who supports the repeal, said there are alternatives and he has proposed them in the Legislature.
He advocates for reforms at the California Department of Transportation to better use the $13 billion the agency spends annually, rather than increase the budget to $18 billion.
“I believe there is money there. We just have to get an effective CEO to run Caltrans,” Moorlach said. “We have to have a completely different mindset in our budgeting. California just seems to spend everything every year – rather than setting money aside – and then wakes up and says, 'Our roads are bad.' ”
The state senator said he studied Caltrans in comparison to other state agencies and discovered it is among the least efficient in the country.
“We need to have a modification in the budget that if you build something you need to set aside money to repair or replace it,” Moorlach said. “California needs to be more disciplined in how it manages its finances in terms of addressing whatever it needs to maintain."
He proposed a bill that would stair-step Caltrans up to outsourcing 25% of its work, but it failed – and the brunt of the opposition came from the Caltrans engineers' union, not its leadership, he said.
SB1 does require Caltrans to produce efficiencies that result in $100 million in savings, but Moorlach said no metrics have been created to track that goal.
What he believes should happen is first reforms should be made so that the state agency spends the money it already has well – and then if more money is needed, voters should be asked to approve a tax increase. Of every $1 that Caltrans spends, he said, only 20 cents makes it to road improvements.
The state’s failure to keep up with housing demand has forced state residents to commute long distances, he said, which puts more pressure on roads.
A significant percentage of his constituents are struggling financially and the senator said he does not want to make it harder for them to make ends meet.
He pointed to Newman’s recall.
“If you look at who voted to recall him, that wasn’t a Republican vote, it’s an across-the-board vote,” Moorlach said. “People get upset when you start messing with their finances.”
The June election provided a favorable sign for gas tax supporters as a lockbox on gas taxes produced through Senate Bill 1 received 80.8% of the vote to pass. The measure amends the state constitution to ensure that the anticipated revenues from the gas tax are dedicated to transportation spending.
“Transportation funding has not necessarily gone to what it’s earmarked for,” Mounce said. “Several years ago, money for roads and bridges was reallocated for high-speed rail and to projects mandated by Assembly Bill 32’s greenhouse gas reductions.”
Funding for transportation projects has just been spread too thin, she said.
The last state gas increase was approved in 1994 and it wasn’t pegged to the consumer price index, Weiss said.
“I am confident that when people start looking at the list of projects happening in their areas, they will see the benefit of those projects to them and why it is important to keep SB 1,” Weiss said. “No one likes paying taxes, but the bottom line is we need a transportation system that can move people and goods.”