BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 1299
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: lowenthal
VERSION: 2/19/10
Analysis by: Jennifer Gress FISCAL: yes
Hearing date: April 13, 2010
SUBJECT:
Vehicle miles traveled (VMT) fee
DESCRIPTION:
This bill requires the Department of Motor Vehicles (DMV) to
develop and implement, by January 1, 2012, a pilot program
designed to assess various issues associated with implementing a
VMT fee. The bill also requires DMV to report its findings and
recommendations to the Legislature no later than June 30, 2012.
ANALYSIS:
The primary source of funding for transportation is derived from
a variety of excise and sales taxes on gasoline and diesel fuel,
collected by either local, state, or the federal government.
Specifically, the following taxes are collected:
18 cents for a state excise tax on gasoline and diesel fuel.
18.4 cents for a federal excise tax on gasoline.
24.4 cents for a federal excise tax on diesel fuel.
5 percent state sales tax on gasoline.
4.75 percent state sales tax on diesel fuel.
As part of the ongoing budget negotiations this year, the
Legislature passed a measure to eliminate the state sales tax on
gasoline and raise the state excise tax by an amount that would
result in equivalent revenue to the state as did the sales tax.
These changes will go into effect July 1, 2010.
Existing law also authorizes local jurisdictions to place before
voters special sales tax measures, the revenues from which may
be used for transportation purposes. Under current law, these
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local initiatives require a 2/3-vote of the people in the county
to pass. To date, nineteen counties have adopted transportation
sales tax measures. Most of these measures add a -cent to the
total sales tax collected from the sale of goods in the county
that adopted the tax.
Finally, the state also collects weight fees on commercial
vehicles based on either the truck's unladen weight (for trucks
lighter than 10,000 pounds) or its gross weight (for trucks
heavier than 10,000 pounds).
This bill requires DMV to develop and implement, by January 1,
2012, a pilot program designed to assess issues associated with
implementing a VMT fee. Some of these issues include:
Different methods for calculating mileage,
Processes for transmitting data to protect the integrity of
the data and assure drivers' privacy, and
Types of equipment that may be required of the state and of
drivers in order to implement a VMT fee, including a
discussion of the advantages and disadvantages of the
equipment and contingencies in the event of equipment failure.
This bill also requires DMV to prepare a report of its findings
and submit it to the Legislature no later than June 30, 2012.
COMMENTS:
1.Purpose . According to the author, there has been much
discussion within the transportation community regarding the
creation of supplements to or alternatives for the fuel tax as
a source of revenue for transportation. The search for an
alternative is driven by a combination of factors, including
the diminishing value of the fuel tax, declining supplies of
conventional petroleum-based fuels, and increasingly
fuel-efficient vehicles. These factors contribute to a
growing disparity in the revenue needed to fund the
transportation system with the revenue available.
VMT fees have received increasing attention in recent years as
a potential alternative to the fuel tax. In fact, the federal
transportation act, the Safe, Accountable, Flexible, Efficient
Transportation Equity Act - A Legacy for Users (SAFETEA-LU),
established the National Surface Transportation Policy and
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Revenue Study Commission (Commission) to examine the condition
and future needs of the nation's surface transportation
system, as well as short- and long-term alternatives to the
fuel tax. After months of study, the Commission issued its
report in December 2007. Among its recommendations was
consideration of a VMT fee.
Implementing a VMT fee, however, involves a number of
operational, technological, and institutional challenges,
including determining the method for calculating the mileage
driven, the process by which mileage data is transmitted to a
tax collection agency, contingencies to address potential
equipment failures, adequate privacy protections, and a
strategy for transitioning from the fuel tax to this new
method of fee payment. Before assessing whether or not a VMT
fee is a feasible source of revenue, the author contends that
careful consideration must be given to catalog and understand
these varied issues.
The purpose of this bill, therefore, is to provide an
assessment of these and other issues related to instituting a
vehicle miles traveled (VMT) fee. The author notes that the
bill does not represent an endorsement of a VMT fee; instead,
by requiring the DMV to develop and implement a pilot program,
this bill represents a modest, but necessary first step
towards understanding whether a VMT fee is or is not a
feasible alternative to the fuel tax.
2.History of the gas tax . The excise tax on gasoline (the gas
tax) is not indexed to inflation or any other factor so its
value erodes with inflation over time. As demand for
transportation continues to grow, the value of the tax
diminishes and becomes an increasingly inadequate source of
revenue for transportation purposes. The gas tax has been
raised periodically over the years, but in recent years, the
political support has not existed to increase the gas tax to
the level necessary to address the needs of the state's
transportation system today. In 2007, the Governor's
Strategic Growth Plan called for $107 billion in
transportation infrastructure investments over 10 years but
noted that funding from existing sources of revenue would
total only about $47 billion.
The last time a gas tax increase was approved occurred in 1990
when the voters passed Proposition 111. Proposition 111
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established, among other things, a schedule for increasing the
gas tax by a total of 9 cents to today's 18-cent rate. Under
that measure, the tax increased by 5 cents in August 1990,
then 1 cent a year in 1991, 1992, 1993, and 1994 to a total
tax of 18 cents per gallon. Accounting for inflation, the
18-cent per gallon tax has lost 30 percent of its purchasing
power since the last increase in 1994.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
April 7, 2010)
SUPPORT: Professional Engineers of California Government
Transportation California
OPPOSED: California Taxpayers' Association