BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: SB 16 Hearing Date: 4/28/2015
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|Author: |Beall |
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|Version: |4/15/2015 |
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|Urgency: |Yes |Fiscal: |Yes |
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|Consultant|Randy Chinn |
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SUBJECT: Transportation funding
DIGEST: This bill increases several taxes and fees to raise
roughly $3.5 billion in new transportation revenues annually for
five years with the funding primarily used to address deferred
maintenance on the state highways and local streets and roads.
ANALYSIS:
1)The need
The Governor, in his 2015 inaugural address, noted that the
state faces a
$59 billion shortfall over the next 10 years to adequately
maintain the existing state highway system. Local governments
have estimated the funding shortfall for maintaining existing
local streets, highways and bridges is $78 billion over the
same time period.
2)Current taxes and fees
Existing law imposes state taxes and fees related to
transportation as follows:
Gasoline excise tax: $0.36/gallon
Diesel excise tax: $0.11/gallon
Diesel sales tax: $0.27/gallon
Vehicle license fee (VLF): 0.65% of market value
Vehicle registration fee (VRF): $43 per vehicle
Weight fees, for commercial vehicles only, up to a
maximum amount of $2,271
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1)How current taxes and fees are spent
The details of how transportation taxes and fees are spent are
complicated and confusing. In general, the gasoline and
diesel excise taxes are spent exclusively on road maintenance
and construction as provided for in the Constitution<1>,
vehicle license fees are spent on general fund obligations,
vehicle registration fees are spent on Department of Motor
Vehicles and California Highway Patrol operations, and weight
fees are spent on paying the debt service on transportation
bonds.
2)Taxes and fees under this bill
This bill increases taxes and fees, and creates new fees, over
time as follows:
Gasoline excise tax: $0.10/gallon
Diesel excise tax: $0.12/gallon
Vehicle license fee: for non-commercial vehicles, 0.07%
each year so that the VLF is 1.00% by July 1, 2019
Vehicle registration fee: $35 per vehicle plus an
additional $100 for zero-emission vehicles
The table below summarizes where the new funding comes from
and how much is forecast to be raised:
------------------------------------------------------------------------
| | RATE |PHASE | ADDITIONAL REVENUE BY YEAR (in |
| | | | millions) |
------------------------------------------------------------------------
|------------+------------+------------+------------+------------+------------+------------+------------|
| | INCREASE | IN (YRS) | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 |
|------------+------------+------------+------------+------------+------------+------------+------------|
|Excise on | 10| 1 | $ 1,600 | $ 1,460 | $ 1,460 | $ 1,460 | $ 1,460 |
|Gasoline | | | | | | | |
|(in cents) | | | | | | | |
|------------+------------+------------+------------+------------+------------+------------+------------|
|VLF (in | 35%| 5 | $ | $ 448 | $ | $ 896 | $ 1,120 |
|percent) | | |224 | |672 | | |
|------------+------------+------------+------------+------------+------------+------------+------------|
|VRF (in | 35| 1 | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 |
|dollars) | | | | | | | |
---------------------------
<1> The Constitution also permits these taxes to be spent on the
construction and improvement of mass transit guideway systems.
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|------------+------------+------------+------------+------------+------------+------------+------------|
|Weight Fees | 0| 5 | $ | $ | $ | $ - | $ - |
|(in | | | - | - | - | | |
|millions) | | | | | | | |
|------------+------------+------------+------------+------------+------------+------------+------------|
|Annual ZEV | 100| 1 | $ | $ | $ | $ 20 | $ 25 |
|Fees (in | | |10 |12 |15 | | |
|dollars) | | | | | | | |
|------------+------------+------------+------------+------------+------------+------------+------------|
|Excise on | 10| 1 | $ | $ 260 | $ | $ 260 | $ 260 |
|Diesel (in | | |260 | |260 | | |
|cents) | | | | | | | |
|------------+------------+------------+------------+------------+------------+------------+------------|
|GF Loan | | 3 | $ | $ 330 | $ | $ | $ |
|Paybacks | | |330 | |340 |- | - |
|------------+------------+------------+------------+------------+------------+------------+------------|
|Diesel | 2| 1 |$ |$ 52 |$ 52 |$ 52 |$ 52 |
|Excise for | | |52 | | | | |
|Freight | | | | | | | |
|------------+------------+------------+------------+------------+------------+------------+------------|
| | | | | | | | |
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| | Total New | $ 3,476 | $ 3,562 | $ 3,799 | $ 3,688 | $ 3,917 |
| | Revenue | | | | | |
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1)Where taxes and fees under this bill are spent
No effect on current taxes and fees. This bill does not
affect how existing gasoline excise taxes, diesel excise
taxes, VLF, and VRF are spent. It only affects how the new
revenues raised by this bill are spent, with the exception
of the weight fees, as described below.
Most new funds spent on maintenance. This bill creates
the Road Maintenance and Rehabilitation Program, which is
authorized for five years. All funds raised by the tax and
fee increases in this bill are deposited into the Road
Maintenance and Rehabilitation Account (RMRA), which is
created within the State Transportation Fund, with the
exception of $0.02/gallon from the diesel excise tax
increase, as described below. The RMRA funds shall be
spent on basic road maintenance and rehabilitation and
critical safety projects.
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Weight fees spent on transportation purposes. Since
2010 truck weight fees, which are intended to compensate
for the damage done to the roads by heavier vehicles,
support the General Fund by paying the debt service costs
of transportation bonds. This bill redirects the truck
weight fees to the RMRA and is phased in over 5 years. The
loss to the General Fund is backfilled by the VLF increase.
Accelerated loan repayment. This bill provides that
loans made by the General Fund to the State Highway
Account, the Motor Vehicle Fuel Account, the Highway Users
Tax Account and the Motor Vehicle Account shall be repaid
over three years, one third per year. The outstanding loan
amounts are estimated at about $1 billion. These funds
will also be used to fund the road maintenance backlog as
they are deposited in the RMRA. Funding to backfill the
loss to the General Fund from the loan repayments will come
from the Budget Stabilization Account (BSA), which was
revised in Proposition 2 of 2014 to focus on paying down
state debts and unfunded mandates. The BSA balance at the
beginning of FY2015-16 is estimated to be $1.6 billion.
State and local split. These new funds raised by this
bill are formulaically allocated to both state and local
projects. Five percent is set aside for counties which
pass local sales and use taxes for transportation purposes,
and which have not previously passed such taxes. The
remainder is split 50/50 between state and local projects.
The local project funding is allocated pursuant to an
existing statutory formula where 50% goes to cities based
on population and 50% goes to counties based on a
combination of the number of registered vehicles and the
miles of county roads. In order to receive these funds,
the city and county must maintain their historic commitment
to funding street and highway purposes by annually
expending not less than the average of its expenditures for
the 2009-10, 2010-11 and 2011-12 fiscal years. The
California Transportation Commission (CTC) shall annually
evaluate each agency receiving funds to ensure that the
funds are spent appropriately.
Transportation corridors. Two cents of the diesel fuel
tax increase, resulting in about $50 million annually,
shall be deposited in the Trade Corridors Improvement Fund.
These funds are allocated by the CTC for infrastructure
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improvements on corridors that have a high volume of
freight movement.
1)Caltrans efficiency
This bill requires Caltrans, by March 1, 2016, to provide the
CTC with a plan to increase the department's efficiency by 30%
over the prior three years. The savings shall increase the
funding for the road maintenance and repair work.
2)Urgency
This is an urgency statute.
COMMENTS:
1)Purpose of bill. According to the author, this bill solves a
crisis that threatens our deteriorating streets and highways.
California faces a $59 billion backlog in deferred maintenance
that will grow by billions every year. The state
transportation system is critical to California's economic
well-being, as it enables us to move goods, people, and ideas
around the state. SB 16 creates a much-needed, temporary
funding plan to address the maintenance backlog of our aging
systems. Under this bill, everyone who uses the roads will
share in paying for the cost of these essential repairs.
SB 16 will provide more resources for the state to repair the
infrastructure under its jurisdiction and it also distributes
billions to the local level. The author notes that the state
has failed to keep pace with repairs due to several factors,
including the diversion of road maintenance revenues for other
uses and the decline of the gas tax revenue.
This bill is the result of four Transportation Committee
hearings that were held across the state that received
testimony from local government officials, transportation
experts, businesses, and the public. The author believes that
all agree that this is a problem that needs to be fixed now.
2)What will this cost me? For an average driver, using a
typical vehicle value, average fuel efficiency, and driving
12,000 miles per year, the extra fees and taxes will result in
direct cost increases of about $180/yr or $0.50/day.
Individuals with more expensive cars or who use more gas or
diesel will pay more. By way of comparison, the slump in
gasoline prices from their high of $4.25 in the middle of 2014
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to about $3.00 per gallon today will reduce gas costs for the
average driver by over $600/yr if prices stay at current
levels.
3)Pay now or pay more later. Engineers have observed that the
cost of fixing roads is relatively low initially, but at some
point the road wear starts to accelerate, greatly increasing
the cost of repair. A study commissioned by the League of
California Cities and the California State Association of
Counties notes that many California streets are at the point
of accelerating road wear. Without additional funding, the
percentage of roads in failed condition will increase from 6%
to 25% by 2024, greatly increasing the cost of repair.
Inaction is costly.
4)A good start, not a final solution. As vehicle fuel
efficiency rises and fossil fuel alternatives become
available, gasoline and diesel taxes become less reliable and
less fair mechanisms to pay for the cost of roads. SB 1077
(DeSaulnier, Chapter 835, Statutes of 2014) required the CTC
to study alternatives to fuel taxes, such as a road usage
charge. That effort is underway, but new mechanisms for
paying for roads aren't expected for several years;
legislation will be required. The author's expectation is
that whatever mechanisms Caltrans develops will be ready to be
implemented statewide in time to take effect as this bill
sunsets. In the meantime, the funding deficit for repairing
and maintaining existing roads and bridges continues to grow.
This bill is an effort to stop the deterioration and start
improving the overall condition of state and local roads.
This bill will not raise sufficient funds to bridge the entire
combined $137 billion gap in state and local transportation
maintenance needs.
5)Sunset. The road maintenance program established in this bill
sunsets at the end of the 2019-20 fiscal year. If the
Legislature does not reauthorize the program beyond that
fiscal year, then the increases in the gasoline and diesel
fuel taxes and the $35 increase in the vehicle registration
fee terminate.
6)Other states. California's transportation funding shortfalls
are shared by other states. According to the American
Association of State Highway Transportation Officials
database, 14 states have increased taxes and fees and
dedicated that funding to transportation projects, including
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Georgia, Iowa, Pennsylvania, Utah and Wyoming. Congress is
also considering the issue.
7)Another idea. In February, the Speaker of the Assembly
announced her plan to increase transportation funding by $2
billion annually by establishing a road user charge or a flat
annual fee for access to the road system, returning weight
fees to transportation purposes, and accelerating the
repayment of transportation loans. A bill to enact that
proposal has not yet been introduced.
8)Helping themselves. As previously noted, the bill allocates
5% of revenues to counties whose voters approve a sales tax
for transportation purposes, and who have not approved such a
tax before. Each fiscal year, unallocated funds revert back
and are split 50/50 between the state and local governments.
This provision may need further work on its mechanisms and
definitions.
9)Double referral. This bill should be referred to the Rules
Committee, which will consider whether the bill should also be
heard by the Governance and Finance Committee.
Related Legislation:
SCA 7 (Huff) - prohibits borrowing of taxes or fees paid for the
use of vehicles. This measure is scheduled to be heard on May 5
in the Senate Transportation and Housing Committee.
FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
April 22, 2015.)
SUPPORT:
Associated General Contractors
California Alliance for Jobs
California Infill Builders Federation
California State Association of Counties
California State Council of Laborers
Cities of:
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Brisbane
Cathedral City
Danville
Gilroy
Hercules
Hughson
Lafayette
Lakewood
Montclair
Napa
Santa Maria
Thousand Oaks
DeSilva Gates Construction
Granite Construction Company
League of California Cities
Northern California Carpenters Regional Council
Transportation California
United Contractors
OPPOSITION:
None received
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