PHOENIX – An effort is underway to repeal the gasoline taxes approved in California’s transportation funding bill earlier this year, potentially erasing much of the revenue the state and localities hope will help address a multi-billion dollar infrastructure funding need.

The initiative is spearheaded by Assemblyman Travis Allen, a Huntington Beach Republican and 2018 gubernatorial candidate, and would essentially undo a major revenue provision of SB1, the transportation funding law that Democrats as well as state and local groups spent months fighting to pass.

Initially filed in May, the initiative was cleared for circulation earlier this month and backers must collect 365,880 signatures by January to qualify for the ballot. But the language of the initiative itself has already led to litigation.

SB1, the Road Repair and Accountability Act of 2017, won legislative approval in the spring after a virtually identical proposal failed to pass in the previous legislative session in which Democrats did not enjoy their current supermajorities- a necessity to pass bills levying tax hikes.

The law raises the per-gallon gas tax by 12 cents in phases over three years along with hiking the diesel excise tax, imposing a fee on zero emission vehicles and increasing registration fees.

The package was opposed by most legislative Republicans but championed by Democratic Gov. Jerry Brown and a coalition of state and local groups and interests.

Expected to raise some $5 billion annually, the revenues and some accompanying Constitutional protections directing that revenue to be spent on transportation are to be the state’s biggest response to an infrastructure funding crisis that led Brown to call a lengthy special session to address exclusively transportation funding.

Allen’s proposal would undo those revenues, which isn’t sitting well with the stakeholders that pushed for SB1’s passage.

“Passing the transportation funding and accountability package was an example of addressing the important issues Californians care deeply about," the Fix Our Roads coalition said in a statement. “Californians are tired of driving on potholed, unsafe roads, stuck in traffic. Voters strongly support additional funding to fix our state and local transportation infrastructure. And California voters will have the opportunity to pass a constitutional amendment to ensure these funds are spent only on transportation improvements. It’s hard to view this Initiative as anything more than the same old obstructionist politics that Californians are tired of.”

Kiana Valentine, legislative representative for housing, land use and transportation issues at the California State Association of Counties, said that while CSAC has yet to take its own official stand on the initiative it has no reservations about backing the gas tax Brown signed into law in April.

“CSAC fought long and hard to help pass SB1 because we believe it is a needed and measured approach to funding road repairs and critical safety work that has been ignored for too long. While we have not yet taken an official position on the possible repeal, we remain committed to our belief that SB1 was the right approach to solve a difficult issue.”

Cities and counties are major stakeholders in the possible repeal, because SB1 was structured to evenly divide new transportation revenues evenly between the state and localities and localities were already incorporating the new revenue stream into their plans going forward. Los Angeles officials, for example, said new money would be dedicated to a special gas tax improvement fund and appropriated from there. Other counties told The Bond Buyer that they planned to utilize the new SB1 money in coming years to improve the safety of their roads and intersections.

Travis Allen, a Republican California state Assemblymember, has a announced a 2018 run for governor.
Assemblyman Travis Allen, R-Huntington Beach, is spearheading the initiative.

“Cities will benefit tremendously from the increased transportation funding through SB 1 as it helps to close billions of dollars of unmet funding needs for both the state and local transportation network, said League of California Cities spokeswoman Eva Spiegel. “The League is committed to the success and long-term benefits of SB1 on California’s state highways, transit systems, trade corridors, active transportation programs, and local streets and roads.”

But despite the gas tax’s support from a legislative supermajority and from local leaders, voters may not share the enthusiasm. A poll conducted by the University of California, Berkeley Institute of Governmental Studiesin June showed little widespread support for the increased taxes. Only 35% of registered voters read a summary of the new law said they supported it, and only 14% said they strongly supported it. By contrast, 58% said they opposed the funding measure, and 39% said they strongly opposed it.

“Opposition is broad-based and includes large majorities of Republicans and no party preference voters, political conservatives and moderates, voters in all major regions of the state other than the Bay Area, all major races and ethnic subgroups, men and women, and all age categories over 30,” wrote Berkeley IGS Poll director Mark DiCamillo. “Strongly liberal voters are the only segment in which a large majority backs the law.”

The Allen initiative isn't the only GOP effort to capitalize on anti-tax sentiment. A recall effort is underway targeting state Sen. Josh Newman , a freshman Democrat who voted for the transportation package.

Allen filed a lawsuit in Sacramento Superior Court last week asking the court to alter the title of the initiative as written by the state Attorney General’s office. The title approved for circulation says that the initiative “Eliminates recently enacted road repair and transportation funding by repealing revenues dedicated for those purposes."

Allen claims the title is a partisan attempt on the part of Attorney General Xavier Becerra, a Democrat, to mislead potential backers of the repeal initiative. Allen said that the title should make clear that his measure would be a repeal of a tax.

Backers have until Jan. 8 to get all the signatures necessary to qualify for the ballot.

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Kyle Glazier

Kyle Glazier

Kyle Glazier is a reporter covering market trends, infrastructure, and the Far West region for The Bond Buyer.