BILL ANALYSIS �
AB 2653
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Date of Hearing: April 28, 2014
ASSEMBLY COMMITTEE ON BUDGET
Skinner, Nancy, Chair
AB 2653 (Linder) - As Amended: March 28, 2014
SUBJECT : Transportation Funding
SUMMARY : > Specifically, this bill :
1)Repeals the transfer of non-Article XIX revenue from the State
Highway Account (SHA) to General Fund debt relief.
2)Instead, apportions these funds (about $140 million annually)
as follows:
i) 44% to the State Transportation Improvement Program
(STIP);
ii) 12% to the State Highway Operation and Protection
Program (SHOPP); and
iii) 44% to local streets and roads.
4)Repeals provisions that transfer revenue from the priced-based
excise tax to backfill the SHA for transfers made from the SHA
to General Fund relief (about $945 million annually).
1)Repeals provisions that apportion the remaining priced-base
excise tax revenue (about $1.5 billion annually) as follows:
a) 44% to the STIP;
b) 44% for local streets and roads; and
c) 12% for the SHOPP.
2)Instead, directs all revenue derived from imposition of a
priced-based excise tax on gasoline (about $2.5 billion
annually) to local streets and roads, as follows:
a) 50% to cities based on population;
b) 50% to counties as follows:
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i) 75% based on the number of vehicles in a county; and
ii) 25% based on the number of miles of maintained
county roads.
EXISTING LAW
1)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 21.5[ per gallon until July
1, 2014, when it will drop to 18[ per gallon.
b) The traditional excise tax of 18[ per gallon.
2)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; 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).
FISCAL EFFECT : This bill would have a General Fund cost of
approximately $1.1 billion annually. In addition, this bill
would redirect $840 million of state transportation funding to
local projects, thus sizably reducing the amount of funding
available for state transportation projects.
COMMENTS : This bill would redirect one of the state's largest
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funding sources for state highway projects and maintenance to
local streets and roads. As a result, about 90 percent of
current dedicated funding for the STIP and SHOPP would be
eliminated. In addition, this bill would eliminate shift of
weight fee revenues to pay debt service, resulting in an annual
cost of $958 million.
The 2010-11 budget package included a complicated fuel swap that
allowed the State to use taxes on fuels to achieve about a $1
billion annual General Fund savings by paying General Obligation
Bond debts with weight fees instead of General Fund. As part of
this swap, the State replaced the State sales tax on gasoline
with an excise tax that contained a true-up mechanism to mimic
the revenue growth of a sales tax over time.
Prior to the fuel tax swap, cities and counties received 40
percent of the Proposition 42 portion of the sales tax on
gasoline. In May of 2013, DOF estimated that in 2014-15,
Proposition 42 revenues would be $1.57 billion if the state
still charged a sales tax on gasoline. Based on DOF's estimate,
the cities and counties share of Proposition 42 revenues would
be about $628 million in 2014-15, assuming fuel tax law prior to
the swap.
Under the swap, the state expects to collect about $2.5 billion
in swap excise tax revenues in 2014-15. The first $958 million
of these funds will essentially be used to help the General Fund
by backfilling weight fees used to pay GO debt service. The
remaining roughly $1.5 billion is then divided by a formula,
with 44 percent of the funds going to cities and counties. For
2014-15, the swap excise tax revenue that replaced the
Proposition 42 transfer to cities and counties is projected to
be about $680 million, or roughly $50 million more than locals
would have received if the swap had not been enacted.
This bill would dedicate the $2.5 billion in gasoline excise
taxes to local streets and roads instead of the state uses
articulated in the tax swap. The Controller would allocate the
funding to cities and counties based upon a formula stipulated
in the bill. By making this redirection, the bill would
eliminate the weight fee transfer and backfill, thus losing the
$958 million in annual projected General Funds savings assumed
in the 2014-15 Budget. In addition, the remaining $1.5 billion
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in revenue would not be available for statewide uses, resulting
the loss of in approximately $840 million annually from the 56
percent of the residual gas tax swap funding that is currently
allocated to State programs, both the STIP (44 percent) and the
SHOPP (12 percent). This would effectively eliminate all
existing dedicated revenue for these programs,
The bill also redirects approximately $140 million of gas tax
swap funds that are eligible for statewide uses and are
currently being transferred to the General Fund for debt service
related to transportation uses. The bill would allocate this
funding to state and local uses using the 44-44-12 formula from
the 2009 Gas Tax swap, which would then provide about $78.4
million for SHOPP and STIP.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Christian Griffith / BUDGET / (916)
319-2099