BILL ANALYSIS Ó SB 1077 Page 1 SENATE THIRD READING SB 1077 (DeSaulnier) As Amended August 21, 2014 Majority vote SENATE VOTE :23-11 TRANSPORTATION 10-4 APPROPRIATIONS 12-5 ----------------------------------------------------------------- |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. SB 1077 Page 2 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the pilot program to the technical advisory committee, CTC, and the Legislature, by January 1, 2018. 6)Sunsets and is repealed on January 1, 2019.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 SB 1077 Page 3 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 FN: 0005128