BILL ANALYSIS Ó SENATE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE DEVELOPMENT Senator Jim Beall, Chair 2015 - 2016 First Extraordinary Bill No: SCAX1 1 Hearing Date: 8/19/2015 ----------------------------------------------------------------- |Author: |Huff | |----------+------------------------------------------------------| |Version: |6/19/2015 Vote: | | | 2/3 Required | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Eric Thronson/Randy Chinn | |: | | ----------------------------------------------------------------- SUBJECT: Motor vehicle fees and taxes: restriction on expenditures DIGEST: This Constitutional Amendment proposes to amend the constitution to: 1)Prohibit the Legislature from borrowing revenues from fees and taxes imposed on vehicles or their use or operation, and from using those revenues other than as specifically permitted in the constitution. 2)Require that revenues derived from the portion of the vehicle license fee that exceeds the current rate of 0.65% to be used solely for street and highway purposes. ANALYSIS: The California Constitution: 1)Restricts the use of fuel excise tax revenues (from vehicles used on public streets and highways) and vehicle registration fee revenues to transportation purposes. 2)Restricts the Legislature from borrowing revenues from the Highway Users Tax Account (HUTA). SCAX1 1 (Huff) Page 2 of ? 3)Restricts fuel excise tax revenues to development and construction of roads and highways, unless a majority of voters in an election throughout a county or counties approves the use of the revenues for fixed-guideway mass transit. 4)Allows the Legislature to pledge fuel excise tax revenues for payment of bonds to fund voter-approved fixed-guideway mass-transit projects. 5)Allows the Legislature to use up to 25% of the state's share of fuel excise tax revenues for payment of state-issued, voter-approved bonds for transportation purposes issued after November 2010. 6)Allows a city or county to use up to 25% of its share of fuel excise tax revenues for payment of locally issued, voter-approved bonds for transportation purposes. 7)Specifies that the restrictions on fuel excise tax and vehicle registration fee revenues do not apply to revenues derived from sales taxes or vehicle license fees. This constitutional amendment: 1)Restricts the Legislature from borrowing revenues from any of the following taxes: a) Fuel excise (from both on and off public roads and highways) b) Vehicle fees and taxes (such as vehicle registration fees and weight fees) c) Vehicle license fees above the existing rate of 0.65% of the market value of the vehicle 1)Eliminates the authority for the Legislature to pledge fuel excise tax revenues for payment of bonds to fund voter-approved fixed-guideway mass-transit projects. 2)Restricts the use of revenues from any fuel excise tax, vehicle fee or tax, or vehicle license fee above the existing rate for the payment of bond indebtedness, except as provided in existing law. 3)Dedicates any revenues from increases in the vehicle license fee above the existing rate to transportation purposes. SCAX1 1 (Huff) Page 3 of ? 4)Dedicates all revenues from fuel excise taxes not used on public roads and highways (such as off-road and agricultural, aviation, and boating fuels) to transportation purposes, to the extent that those revenues result from increases in tax rates above the effective rate on or after July 1, 2010. COMMENTS: 1)Purpose. Since 2010, the Legislature has diverted over $5 billion from the State Highway Account to the General Fund to pay debt service on General Obligation Bonds. Additionally, since 2012, $100 million per year in gas taxes has been deposited into the General Fund rather than being used for transportation purposes. This Constitutional Amendment asks the voters to protect transportation taxes by requiring that they be used only for transportation purposes. 2)Current restrictions. Most transportation revenues, including gasoline and diesel excise taxes and vehicle registration fees, are constitutionally protected from being borrowed or used for purposes other than transportation. This protection does not apply to vehicle license fees and fuel excise taxes for usage outside of public roads. While the Constitution is currently silent on the use of weight fees, there are different opinions on whether those are currently protected. The practice is that weight fees are used by the General Fund to pay for the interest on transportation bonds. 3)Additional restrictions. This Constitutional Amendment proposes a comprehensive set of constitutional protections against borrowing taxes and fees raised from fuel excise taxes, vehicle fees and taxes, and vehicle license fees above the existing rate of 0.65%. It also proposes to dedicate any revenues from increases in the vehicle license fee above the existing rate and any fuel excise taxes on fuel not used on public roads and highways to transportation purposes. With these additional restrictions, virtually all transportation taxes and fees raised from the use of vehicles will be dedicated to transportation purposes. 4)General Fund impact. If approved by the voters, this Constitutional Amendment will eliminate weight fees as a source of general fund revenues, which contribute about $1 billion annually to the General Fund. Potential additional SCAX1 1 (Huff) Page 4 of ? revenue from increases in fuel taxes for non-public highway use and from increases in the vehicle license fee will not go to the General Fund, but are instead required to be spent only for transportation purposes. 5)SBX1 1. The revenue increases proposed in SBX1 1 are protected under current Constitutional provisions. Related Legislation: SCA 7 (Huff) - prohibits the borrowing of transportation fees and taxes and requires those funds to be used for transportation purposes. This bill is pending in the Senate Transportation and Housing Committee. FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No POSITIONS: (Communicated to the committee before noon on Thursday, August 13, 2015.) SUPPORT: Alameda Corridor-East Construction Authority Howard Jarvis Taxpayers Association San Joaquin Valley Regional Transportation Planning Agencies Transportation Agency for Monterey County OPPOSITION: Sierra Club of California -- END --