BILL ANALYSIS �
AB 2728
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Date of Hearing: May 7, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2728 (Perea and Linder) - As Amended: April 24, 2014
Policy Committee:
TransportationVote:15-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill, until January 1, 2019, prohibits the use of truck
weight fee revenues to pay debt service on transportation
general obligation bonds.
FISCAL EFFECT
The Governor's budget estimates that $1.062 billion would be
transferred from truck weight fee revenues in 2014-15 to cover
debt service on transportation bonds. Enactment of this bill,
which would become effective January 1, 2015, would instead
require the General Fund to cover approximately one-half this
amount in 2014-15. Future General Fund debt service costs would
depend on debt service schedules for previously issued
transportation bonds and newly issued bonds, but will likely
exceed $1 billion for 2015-16, 2016-17, 2017-18, and will exceed
$500 million from July 1, 2019 through December 31, 2019, after
which the provisions of this bill would sunset.
In contrast to this General Fund impact, a like amount of
additional revenue will be made available from truck weight fees
to fund transportation programs pursuant to current funding
formulas.
COMMENTS
1)Background . 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)/Statutes
of 2010 enacted the original gas tax swap, which eliminated
the sales tax on gasoline and replaced it with an increase in
AB 2728
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gasoline excise tax designed to generate an equivalent amount
of revenue. Later in 2010, voters approved Proposition 22,
which prohibits excise tax revenues from being used to pay
debt service on transportation bonds. Subsequently, a
reconstituted gas tax swap, AB 105 (Committee on
Budget)/Statutes of 2012, directed weight fee revenue rather
than excise tax revenue to provide General Fund relief for
debt service on transportation bonds.
2)Purpose . According to the author, in the three years since the
gas tax swap was enacted, the economy has improved and voters
approved Proposition 30 (2012) which temporarily increased
sales and income taxes thereby boosting General Fund revenues.
The author believes it is now appropriate 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 of Proposition 30.
Funding for maintenance and repair of the state highway system
comes from federal and state taxes on gasoline and diesel
fuel. Revenue from these sources is declining because of
reduced fuel consumption and funding shortfalls in the Federal
Highway Trust Fund. The estimated funding available for state
highway preservation is $1.8 billion annually, while the
estimated need for rehabilitation and reconstruction of the
state highway system is about $7 billion annually. Additional
funding is needed for state highway improvements and local
streets and roads.
3)Budget Issue . Notwithstanding the significant need for
additional transportation funding and the merits of this bill,
this issue should be considered in the budget process, where
competing needs for the General Fund can be weighed against
each other to establish the Legislature's funding priorities.
Also, it should be noted that the financing of transportation
programs with bonds allows for a significant, though
temporary, expansion of those program through debt issuance,
thus it is not inappropriate to use ongoing
transportation-derived revenues to retire that debt.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081
AB 2728
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