BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1077
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          SENATE THIRD READING
          SB 1077 (DeSaulnier)
          As Amended  August 21, 2014
          Majority vote

           SENATE VOTE  :23-11  
           
           TRANSPORTATION      10-4        APPROPRIATIONS      12-5        
           
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          |Ayes:|Lowenthal, Achadjian,     |Ayes:|Gatto, Bocanegra,         |
          |     |Ammiano, Bloom, Bonta,    |     |Bradford,                 |
          |     |Buchanan, Daly, Gatto,    |     |Ian Calderon, Campos,     |
          |     |Holden, Nazarian          |     |Eggman, Gomez, Holden,    |
          |     |                          |     |Pan, Quirk,               |
          |     |                          |     |Ridley-Thomas, Weber      |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Linder, Patterson,        |Nays:|Bigelow, Donnelly, Jones, |
          |     |Quirk-Silva, Waldron      |     |Linder, Wagner            |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Creates a Road Usage Charge (RUC) Technical Advisory  
          Committee to guide development and implementation of a pilot  
          program to study the potential for RUC as an alternative to the  
          gas tax.  Specifically,  this bill  :  

          1)Makes legislative findings and declarations regarding the  
            inadequacy of the gas tax to meet California's long-term  
            revenue needs for transportation and the need to explore a RUC  
            program as an alternative to the antiquated gas tax system now  
            in place.  

          2)Creates a 15-member technical advisory committee to be  
            convened by the California Transportation Commission (CTC).  

          3)Directs the technical advisory committee to study RUC  
            alternatives to the gas tax and to guide development and  
            evaluation of a pilot program to test RUC approaches.

          4)Directs the California State Transportation Agency (CalSTA) to  
            implement, by January 1, 2017, a pilot program, based on  
            guidance from the technical advisory committee, to identify  
            and evaluate issues related to potential implementation of a  
            RUC program.  








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          5)Requires CalSTA to submit a report on the pilot program to the  
            technical advisory committee, CTC, and the Legislature, by  
            January 1, 2018.

          6)Sunsets and is repealed on January 1, 2019.  

           FISCAL EFFECT :  According to the Assembly Appropriations  
          Committee:

          1)One-time costs to support the technical advisory committee  
            would be about $350,000 for two positions. Additional costs to  
            hold some technical advisory committee meetings throughout the  
            state would depend on the number of meetings, but could total  
            in the low hundreds of thousands of dollars.  

          2)One-time costs for the pilot project would depend in part on  
            the number of vehicles and locations involved.  The California  
            Department of Transportation (Caltrans) estimates a cost of  
            anywhere from $1 million to $20 million. Given the significant  
            impact that changing to a RUC system would have on the state,  
            it is assumed the study should be as representative as  
            possible, which implies a cost at the higher end of Caltans'  
            range.  

           COMMENTS  :  Since 1923, California, and the rest of the nation,  
          has relied heavily on gas taxes to support its local streets and  
          roads and state highway system.  Gas taxes have the benefit of  
          being fairly inexpensive to administer.  Furthermore, until  
          recently, they have been a reasonably equitable means of  
          distributing the tax burden amongst drivers in rough proportion  
          to their use of the roadway system.  The gas tax is no longer a  
          viable, sustainable revenue source, however.  According to the  
          Institute on Taxation and Economic Policy, two important  
          developments have combined to greatly reduce the functionality  
          of the gas tax:

          1)The purchasing power of gas tax revenues has declined  
            significantly due to inflation.  If current tax rates, set in  
            1994, remain unchanged through 2035, real gas tax revenue will  
            have declined by over 40%; and,

          2)Improvements in vehicle fuel efficiency have cut directly into  
            gas tax revenues by allowing drivers to travel farther  
            distances while buying less gasoline.  From an environmental  








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            and energy policy standpoint, this is undeniably desirable.   
            Decreased fuel consumption reduces greenhouse gasses and our  
            dependence on foreign oil.  But with vehicle fuel efficiency  
            set to nearly double in the next 20 years, gas tax revenues  
            will be cut nearly in half.  

          In the face of rapidly declining gas tax revenues, many have  
          implored state legislatures and Congress to raise state and  
          federal gas tax rates.  However, raising the gas tax rate is not  
          a long-term viable funding solution nor does it support the  
          state's policies goals.  An alternative to the gas tax must be  
          found.  The alternative most often cited across the nation is  
          RUCs.  

          This bill provides for a rigorous, independent review of a  
          potential RUC system.  Although the technical advisory committee  
          and pilot program will likely consume substantial resources, the  
          significance of this effort should not be underestimated.   
          Billions of dollars of lost gas tax revenue are at stake.  For  
          more than a decade CTC has raised concerns with respect to the  
          decline and instability of gas tax revenues.  It has urged that  
          the Legislature and the Administration to consider  
          implementation of a RUC system to address California's  
          transportation needs.  This bill will finally begin to answer  
          that call.  

          Please see the policy committee analysis for a full discussion  
          of this bill.  
           

          Analysis Prepared by  :   Janet Dawson / TRANS. / (916) 319-2093 


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