California Legislature—2015–16 First Extraordinary Session

Senate Constitutional Amendment No. 1

Introduced by Senator Huff

(Coauthors: Senators Anderson, Bates, Berryhill, Cannella, Fuller, Gaines, Moorlach, Morrell, Nguyen, Nielsen, Runner, Stone, and Vidak)

(Coauthors: Assembly Members Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Beth Gaines, Gallagher, Hadley, Jones, Kim, Lackey, Linder, Mayes, Olsen, Steinorth, Wagner, Waldron, and Wilk)

June 19, 2015

Senate Constitutional Amendment No. 1—A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by amending Sections 1, 5, 6, and 8 of, and adding Sections 11 and 12 to, Article XIX thereof, relating to transportation.

LEGISLATIVE COUNSEL’S DIGEST

SCA 1, as introduced, Huff. Motor vehicle fees and taxes: restriction on expenditures.

(1) Article XIX of the California Constitution restricts the expenditure of revenues from taxes imposed by the state on fuels used in motor vehicles upon public streets and highways to street and highway and certain mass transit purposes, and restricts the expenditure of revenues from fees and taxes imposed by the state upon vehicles or their use or operation to state administration and enforcement of laws regulating the use, operation, or registration of vehicles used upon the public streets and highways, as well as to street and highway and certain mass transit purposes. These restrictions do not apply to revenues from taxes or fees imposed under the Sales and Use Tax Law or the Vehicle License Fee Law.

Article XIX prohibits the Legislature from borrowing revenues from taxes imposed by the state on fuels used in motor vehicles, and from using those revenues other than as specifically permitted by Article XIX. Article XIX provides that up to 25% of fuel tax revenues allocated to the state may be pledged or used for the payment of principal and interest on voter-approved transportation bonds issued for street and highway purposes on and after November 2, 2010, upon voter approval and appropriation by the Legislature. Article XIX provides that up to 25% of fuel tax revenues allocated to cities and counties may be pledged or used for the payment of principal and interest on voter-approved transportation bonds issued for street and highway purposes. However, in counties where voters have approved the use of fuel tax revenues for certain mass transit purposes, Article XIX provides that the Legislature may authorize any fuel tax revenues allocated to mass transit purposes to be pledged or used for payment of principal and interest on voter-approved bonds issued for those mass transit purposes.

This measure would prohibit the Legislature from borrowing revenues from fees and taxes imposed by the state on vehicles or their use or operation, and from using those revenues other than as specifically permitted by Article XIX. The measure would also prohibit those revenues from being pledged or used for the payment of principal and interest on bonds or other indebtedness. The measure would delete the provision that provides for use of any fuel tax revenues allocated to mass transit purposes to be pledged or used for payment of principal and interest on voter-approved bonds issued for those mass transit purposes, and would instead subject those expenditures to the existing 25% limitation applicable to the use of fuel tax revenues for street and highway bond purposes.

This measure would also restrict the expenditure of revenues from taxes imposed by the state on motor vehicle fuels used other than in motor vehicles upon public streets and highways, by requiring the use of those revenues for street and highway purposes, but only with respect to the portion of the affected revenues attributable to increases in tax rates that are effective on or after July 1, 2010. This restriction on expenditures would not apply if federal law requires another use of any portion of those revenues. The measure would also prohibit the Legislature from borrowing those revenues or pledging those revenues for debt service.

(2) Article XI of the California Constitution requires the revenues derived under the Vehicle License Fee Law from a rate that does not exceed 0.65% of the market value of a vehicle to be allocated to cities and counties, and does not restrict expenditure of those revenues for a particular purpose.

This measure would require revenues derived from that portion of the vehicle license fee rate that exceeds 0.65% of the market value of a vehicle to be used solely for street and highway purposes and would prohibit the Legislature from borrowing those revenues. The measure would also prohibit those revenues from being pledged or used for the payment of principal and interest on bonds or other indebtedness.

(3) This measure would make other conforming changes.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

WHEREAS, Transportation infrastructure is vital to a growing
and robust California economy; and

WHEREAS, In order to continue growing and remain a national
economic leader, California must prioritize transportation funding;
and

WHEREAS, California has 175,499 miles of public roads; and

WHEREAS, California roadways have $59 billion in
accumulated deferred maintenance, and 87 percent of county roads
have an average pavement rating of “at risk” or “poor”; and

WHEREAS, The average California driver pays $832 annually
for the increased cost of vehicle maintenance, tire wear, and
increased gas costs because California streets and roads are in such
disrepair; and

WHEREAS, In 2002, the voters passed Proposition 42, with 69
percent of the vote, which purported to guarantee transportation
taxes and fees would only be used for transportation purposes; and

WHEREAS, During the fiscal crisis beginning in 2009, taxes
and fees being paid by California’s drivers were diverted to the
state General Fund and not used to repair or maintain California
streets and roads; and

WHEREAS, The state fiscal crisis has abated but the diversion
of transportation taxes and fees continues; and

WHEREAS, Unmet needs caused by the diversion of certain
transportation taxes and fees have created an environment of
crumbling infrastructure and increased costs to repair the state’s
street and highway system; and

WHEREAS, To keep the Proposition 42 promise to the voters
that transportation taxes and fees shall only be used for
transportation purposes and not diverted to the General Fund to
pay the cost of general obligation bonds, and to ensure that any
future transportation fees or taxes are used only for transportation
purposes, the voters should be given an opportunity to close the
Proposition 42 loophole; now, therefore, be it

Resolved by the Senate, the Assembly concurring, That the
Legislature of the State of California at its 2015-16 First
Extraordinary Session commencing on the nineteenth day of June
2015, two-thirds of the membership of each house concurring,
hereby proposes to the people of the State of California that the
Constitution of the State be amended as follows:

First--  

That Section 1 of Article XIX thereof is amended to
read:

SECTION 1.  

The Legislature shall not borrow begin delete revenue from
the Highway Users Tax Account, or its successor, end delete begin insert revenues subject
to Section 2, 3, 11, or 12 end insert and shall not use these revenues for
purposes, or in ways, other than those specifically permitted by
this article.

Second--  

That Section 5 of Article XIX thereof is amended
to read:

SEC. 5.  

Revenues begin delete allocated pursuant end delete begin insert subject end insert to Section begin delete 4 end delete begin insert 2 end insert
may not be expended for the purposes specified in subdivision (b)
of Section 2, except for research and planning, until begin delete such end delete begin insert that end insert use
is approved by a majority of the votes cast on the proposition
authorizing begin delete such end delete begin insert that end insert use of begin delete such end delete begin insert those end insert revenues in an election
held throughout the county or counties, or a specified area of a
county or counties, within which the revenues are to be expended.
begin delete The Legislature may authorize the revenues approved for allocation
or expenditure under this section to be pledged or used for the
payment of principal and interest on voter-approved bonds issued
for the purposes specified in subdivision (b) of Section 2. end delete

Third--  

That Section 6 of Article XIX thereof is amended to
read:

SEC. 6.  

(a) Up to 25 percent of the revenues begin insert subject to Section
2 that are end insert allocated to the State begin delete pursuant to Section 4 for the
purposes specified in subdivision (a) of Section 2 of this article end delete
may be pledged or used by the State begin delete , upon approval by the voters
and appropriation by the Legislature, end delete for the payment of principal
and interest on voter-approved bonds begin insert issued by the State on or
after November 2, 2010, end insert for begin delete such end delete begin insert the end insert purposes begin delete issued by the State
on and after November 2, 2010. end delete begin insert specified in Section 2, upon
approval by the voters of this use of the revenues and appropriation
of the revenues by the Legislature. end insert

(b) Up to 25 percent of the revenues begin insert subject to Section 2 that
are end insert allocated to any city or county begin delete pursuant to Section 4 for the
purposes specified in subdivision (a) of Section 2 of this article end delete
may be pledged or used begin delete only end delete by begin delete any end delete begin insert that end insert city or county for the
payment of principal and interest on voter-approved bonds issued
by that city or county for begin delete such end delete begin insert the end insert purposes begin insert specified in Section 2,
upon approval by the voters of this use of the revenues end insert .

begin insert

(c) Revenues subject to Section 2, 3, 11, or 12 shall not be
pledged or used for the payment of principal and interest on bonds
or other indebtedness, except as specifically provided in this
section.

end insert

Fourth--  

That Section 8 of Article XIX thereof is amended to
read:

SEC. 8.  

This article shall not affect or apply to begin delete fees or end delete taxes
imposed pursuant to the Sales and Use Tax begin delete Law end delete begin insert Law, end insert or the
Vehicle License Fee Law, and all amendments and additions now
or hereafter made to begin delete such end delete begin insert those end insert statutes begin insert , except as provided in
Section 11 end insert .

Fifth--  

That Section 11 is added to Article XIX thereof, to
read:

SEC. 11.  

From the revenues derived from taxes imposed
pursuant to the Vehicle License Fee Law, and all amendments and
additions now or hereafter made to that statute, other than fees on
trailer coaches and mobilehomes, over and above the costs of
collection and any refunds authorized by law, those revenues
derived from that portion of the vehicle license fee rate that exceeds
0.65 percent of the market value of the vehicle shall be used solely
for the purposes specified in subdivision (a) of Section 2.

Sixth--  

That Section 12 is added to Article XIX thereof, to
read:

SEC. 12.  

(a) Revenues from taxes imposed by the State on
motor vehicle fuels for use other than in motor vehicles upon the
public streets and highways, over and above the costs of collection
and any refunds authorized by law, shall be used solely for the
purposes described in subdivision (a) of Section 2.

(b) Subdivision (a) applies only to the portion of the affected
revenues attributable to increases in tax rates that are effective on
or after July 1, 2010, and shall not apply if the applicable tax rates
are reduced to be equal to or less than the rates in effect on June
30, 2010. In addition, subdivision (a) does not apply to any portion
of the affected revenues that are required to be used for another
purpose by federal law.