BILL ANALYSIS �
AB 2728
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Date of Hearing: April 21, 2014
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 2728 (Perea) - As Amended: April 24, 2014
SUBJECT : Truck weight fees: General Fund debt service
SUMMARY : Prohibits the use of truck weight fee revenue to pay
debt service on transportation-related general obligation bonds
(transportation bonds), until January 1, 2019. Specifically,
this bill:
1)Prohibits, notwithstanding any other provision of law, weight
fee revenue from being transferred from the State Highway
Account (SHA) to the Transportation Debt Service Fund or to
the Transportation Bond Direct Payment Account, or to any
other fund or account.
2)Explicitly prohibits weight fee revenue from being used to pay
debt service on transportation bonds or from being loaned to
the General Fund.
3)Provides that these provisions sunset on January 1, 2019.
EXISTING LAW :
1)Imposes weight fees on commercial trucks and directs the
revenue to be deposited into the SHA and then transferred to
the Transportation Debt Service Fund and the Transportation
Bond Direct Payment Account to pay for debt service on
transportation bonds.
2)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; and,
b) The traditional excise tax of 18[ per gallon.
3)Directs revenue from the price-based excise tax to be used
first to backfill the SHA for weight fees that are diverted
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for debt service and 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).
4)Directs revenue from the traditional excise tax to be used as
follows:
a) 36% to cities and counties for local streets and roads;
and,
b) 64% to the SHA for use as follows:
i) Support of the California Department of
Transportation;
ii) Maintenance and operation of the state highway
system;
iii) The SHOPP; and,
iv) Local Assistance.
Any remaining funds are split 75% to regional
transportation improvement program and 25% to the STIP.
FISCAL EFFECT : Weight fees generate over $900,000 annually.
This bill stops the use of this revenue for General Fund relief
for four years. Consequently, there will undoubtedly need to be
a reconciliation with the budget process should this bill be
approved.
COMMENTS : The use of weight fees to pay for debt service is
part of a larger budgetary and statutory arrangement referred to
as the gas tax swap. ABX8 6 (Committee on Budget), Chapter 11,
Statutes of 2010 enacted the original gas tax swap. That bill
eliminated the sales tax on gasoline and replaced it with an
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increase in gasoline excise tax designed to generate an
equivalent amount of revenue. Among its many provisions, the
original gas tax swap created a new, non-General Fund revenue
stream of about $1 billion annually from the new price-based
excise tax. That money was originally used to repay the General
Fund's cost of debt service on transportation bonds.
Later in 2010, voters approved Proposition 22 which prohibits
excise tax revenues from being used to pay debt service on
transportation bonds. As a result of this restriction, excise
tax revenue could no longer be used for General Fund relief. In
response, the Legislature passed and the Governor signed a
reconstituted gas tax swap, AB 105 (Committee on Budget),
Chapter 6, Statutes of 2012. Under the reenacted gas tax swap,
weight fee revenue rather than excise tax revenue is used to
provide General Fund relief for debt service on transportation
bonds.
For 2014-15, debt service on transportation bonds that are
eligible for the weight fee offset is expected to exceed $1.1
billion and the Governor's budget proposes to use all $958
million in weight fees to reimburse the General Fund for these
costs.
AB 2728 will stop the transfer of funds from the SHA to pay for
debt service. Consequently, it will also stop the need to
backfill the SHA with revenue generated by the price-based
excise tax. As a result, over $900 million in weight fees will
be distributed using the same formula that revenue that the rest
of the price-based excise tax is distributed-that is, a
44%/44%/12% split.
According to the author, in the three years since the gas tax
swap was enacted, the economy improved and voters approved
Proposition 30 (2012) which increased sales and income taxes
thereby boosting General Fund coffers. The author believes it
is appropriate now to recapture truck weight fee revenue and use
it to fix the state's roadway system. The bill has a 2019
sunset date, which coincides with the sunset date in Proposition
30.
Funding to pay for maintenance and repair on the state highway
system comes from taxes on gasoline and diesel fuel. Revenue
from these taxes is declining because of reduced fuel
consumption and because of funding shortfalls in the Federal
Highway Trust Fund. The estimated funding available for state
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highway preservation is $1.8 billion annually; however, the
estimated need for rehabilitation and reconstruction of the
state highway system is about $7 billion annually. Funding for
local streets and roads is in equally desperate straits.
Moreover, these costs estimates are for preservation only.
Estimated costs for needed improvements are greater still.
AB 2728 will not cure these funding ills. It will, however,
slow the bleeding.
Related legislation : AB 2652 (Linder), among other provisions,
repays transportation loans from the General Fund. AB 2652 is
in the Assembly Budget Committee.
AB 2653 (Linder) repeals specific provisions that enacted the
weight fee revenue transfer and the SHA backfill. AB 2653 is in
the Assembly Budget Committee.
AB 2651(Linder) is nearly identical to this bill except that it
becomes operational January 1, 2016 and continues indefinitely.
AB 2651 was set to be heard in this committee but was pulled
from the hearing at the request of the author who will be added
as the joint author to AB 2728.
SB 1418 (DeSaulnier) effectively accomplishes the same thing
that AB 2651 and AB 2728 do but does it by repealing specific
provisions that enacted the weight fee revenue transfer and the
SHA backfill. SB 1418 is scheduled to be heard in Senate
Transportation and Housing Committee on April 29, 2014.
REGISTERED SUPPORT / OPPOSITION :
Support
Automobile Club of Southern California
California Alliance for Jobs
California Trucking Association
Transportation California
United Contractors
Opposition
None on file
AB 2728
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Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093