BILL ANALYSIS Ó
AB 227
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Date of Hearing: April 13, 2015
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jim Frazier, Chair
AB 227
(Alejo) - As Introduced February 3, 2015
SUBJECT: Transportation funding
SUMMARY: Repeals provisions related to the gas tax swap that
direct weight fee revenue to be transferred from the State
Highway Account (SHA) to the General Fund to pay debt service on
transportation bonds; extends the sunset date on provisions that
authorize public-private partnership (P3) agreements for
transportation projects. Specifically, this bill:
1)Requires, by December 31, 2018, the repayment of loans
previously made to the General Fund from ten specified
transportation-related accounts.
2)Repeals provisions that provide for the transfer of weight fee
revenue to the Transportation Debt Service Fund for the
purpose of directly paying debt service on certain
transportation bonds.
3)Repeals provisions that designate all transportation loan
repayments as weight fee revenue and direct the repaid funds
to be transferred to the Transportation Debt Service Fund.
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4)Extends the sunset date, to an unspecified date, on provisions
that authorize P3 agreements for transportation projects.
Note: The author has indicated that he intends to take
amendments in committee to strike provisions of AB 227 related
to P3 agreements. Consequently, those provisions will not be
discussed further in this analysis.
5)Strikes provisions that transfer miscellaneous revenue [for
example, from the sale of documents by the California
Department of Transportation (Caltrans), miscellaneous
services to the public, and rental of state property] from the
SHA to the Transportation Debt Service Fund.
6)Repeals provisions that direct revenue from the price-based
gas tax to be used to backfill the State Highway Account for
weight fee revenue that is diverted for debt service on
transportation bonds.
EXISTING LAW:
1)Imposes weight fees on commercial trucks and directs the
revenue to be deposited into the SHA and then transferred to
the Transportation Debt Service Fund and the Transportation
Bond Direct Payment Account to pay for debt service on
transportation bonds.
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2)Imposes an excise tax on gasoline, comprised of two parts:
a) A price-based excise tax the rate of which is calculated
to generate revenue equal to what would have been generated
had sales and use tax been collected on gasoline. The
current rate is 18[ per gallon until July 1, 2015, when it
will drop to 12[ per gallon; and,
b) The traditional excise tax of 18[ per gallon.
3)Directs revenue from the price-based excise tax to be used
first to backfill the SHA for weight fees that are diverted
for debt service and directs the remaining revenue to be used
as follows:
a) 44% for local streets and roads;
b) 44% for transportation construction projects identified
in the State Transportation Improvement Program (STIP);
and,
c) 12% for highway maintenance and operations projects, as
identified in the State Highway Operations and Protections
Program (SHOPP).
4)Until January 1, 2017, grants Caltrans and regional
transportation agencies authority to enter into P3 agreements.
FISCAL EFFECT: Weight fees generate nearly $1 billion annually.
Under this bill, this money would be directed to transportation
uses rather than to the General Fund to pay for transportation
bond debt service. Additional provisions that require loans
from the General Fund be repaid to transportation accounts could
result in additional revenue for transportation.
COMMENTS: The use of weight fees to pay for debt service is
part of a larger budgetary and statutory arrangement referred to
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as the "gas tax swap." ABX8 6 (Committee on Budget), Chapter
11, Statutes of 2010, enacted the original gas tax swap. That
bill eliminated the sales tax on gasoline and replaced it with
an increase in gasoline excise tax designed to generate an
equivalent amount of revenue. Among its many provisions, the
original gas tax swap created a new, non-General Fund revenue
stream of about $1 billion annually from the new price-based
excise tax. That money was originally used to repay the General
Fund's cost of debt service on transportation bonds.
Later in 2010, voters approved Proposition 22 that prohibits
excise tax revenues from being used to pay debt service on
transportation bonds. As a result of this restriction, excise
tax revenue could no longer be used for General Fund relief. In
response, the Legislature passed and the Governor signed a
reconstituted gas tax swap, AB 105 (Committee on Budget),
Chapter 6, Statutes of 2012. Under the reenacted gas tax swap,
weight fee revenue, rather than excise tax revenue, is used to
provide General Fund relief for debt service on transportation
bonds.
AB 227 will repeal provisions of the gas tax swap related to the
transfer of funds from the SHA to pay for debt service and to
the backfill of the SHA with revenue generated by the
price-based excise tax. As a result, an additional nearly $1
billion in weight fee revenue will be available for distribution
using the same formula that revenue from the rest of the
price-based excise tax is distributed - that is, 44% for local
streets and roads, 44% for STIP projects, and 12% for SHOPP
projects.
Funding to pay for maintenance and repair on the state highway
system comes primarily from taxes on gasoline and diesel fuel.
This revenue source is rapidly declining because of reduced fuel
consumption and because of funding shortfalls in the Federal
Highway Trust Fund. The estimated funding available from these
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sources for state highway preservation is less than $2
billion annually; however, the estimated need for rehabilitation
and reconstruction of the state highway system is close to $8
billion annually. Funding for local streets and roads is in
equally desperate straits. Moreover, these costs estimates are
for preservation only. Estimated costs for needed improvements
are greater still.
The Governor, in his 2015-16 proposed budget, acknowledged this
transportation funding crisis, specifically noting a nearly $59
billion backlog in needed transportation upkeep and repair. In
response, his budget proposes an early repayment $351 million of
General Fund loans and calls upon both parties of the
Legislature to craft a transportation funding solution.
AB 227 is intended, at least in part, to address this mounting
backlog in unmet transportation needs by:
a) Ensuring previous loans from transportation accounts to
the General Fund are repaid within the next few years;
b) Redirecting weight fee revenue to transportation
purposes instead of to the General Fund for debt service;
and
c) Directing revenue from miscellaneous sources be used for
transportation, not General Fund relief.
According to the author, "By diverting these funds back to their
original purpose?we move a long way toward rebuilding our
deteriorating infrastructure without imposing more debt on our
grandchildren." Over two dozen engineering firms and
transportation agencies that applaud the redirection of
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transportation money to transportation purposes support AB 227.
Writing in opposition of the bill, the Professional Engineers
California Government (PECG) argues that AB 227 lacks clarity
regarding the P3 agreement provisions (which are expected to be
stricken from the bill).
Related legislation: AB 4 (Linder) stops the transfer of weight
fee revenues to the General Fund to pay debt service on
transportation bonds, until January 1, 2020. AB 4 was referred
to this committee but is not scheduled to be heard this year.
Previous legislation: AB 2651 (Linder) of 2014 would have
prohibited weight fee revenue from being transferred from the
SHA to the Transportation Debt Service Fund or to the
Transportation Bond Direct Payment Account and from being used
to pay the debt service on transportation general obligation
bonds. AB 2651 was referred to the committee but was not heard
at the request of the author.
AB 2652 (Linder) of 2014, among other provisions, would have
repaid transportation loans from the General Fund. AB 2652 died
in the Assembly Budget Committee.
AB 2653 (Linder) of 2014, would have repealed specific
provisions that enacted the weight fee revenue transfer and the
SHA backfill. AB 2653 died in the Assembly Budget Committee.
AB 2728 (Perea) of 2014, would have prohibited the use of truck
weight fee revenue to pay debt service on transportation-related
general obligation bonds, until January 1, 2019. AB 2728 was
held in Assembly Appropriations Committee on the suspense file.
SB 1418 (DeSaulnier) of 2014, repealed specific provisions that
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enacted the weight fee revenue transfer and the SHA backfill.
SB 1418 was held in the Senate Appropriations Committee on the
suspense file.
Double referral: This bill will be referred to the Assembly
Budget Committee should it pass out of this committee.
REGISTERED SUPPORT / OPPOSITION:
Note: Many of the letters in support and opposition
specifically cited provisions in the bill related to P3
agreements. It is unclear if any of these positions will change
once the P3 provisions are deleted from the bill.
Support
ACS Infrastructure Development
American Council of Engineering Companies
Associated General Contractors
Blackburn Consulting
California Alliance for Jobs
California Asphalt Pavement Association
California State Council of Laborers
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City/County Association of Governments of San Mateo County
Dimensions 4 Engineering, Inc.
EFS Engineering, Inc.
Fluor
Granite Construction Incorporated
HMH Engineers
Holdrege & Kull
Kennedy & Associates
Kimley Horn
Lane Engineers, Inc.
Lee & Pierce, Inc. Consulting Engineers
Leighton Consulting, Inc.
Leptien, Cronin, Cooper, Morris & Poore, Inc.
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Los Angeles County Metropolitan Transportation Authority
Michael Baker International
Mortonpitalo
Orange County Transportation Authority
Rick Engineering Company
Robert L. DeWitt and Associates, Inc.
Shannon & Wilson, Inc.
Skanska
Stantec Consulting Services
The Covello Group
Towill, Inc.
Transportation California
Yeh and Associates, Inc.
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Opposition
Professional Engineers in California Government
Analysis Prepared by:Janet Dawson / TRANS. / (916) 319-2093