BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 1418
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: desaulnier
VERSION: 3/27/14
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: April 29, 2014
URGENCY: YES
SUBJECT:
Vehicle weight fees: transportation bond debt service
DESCRIPTION:
This bill redirects vehicle weight fee revenues from paying debt
service on transportation-related, general obligation bonds to
repairing and maintaining streets and highways.
ANALYSIS:
Periodically, the state issues general obligation bonds to
finance transportation-related infrastructure development and
repair. For example, the Legislature placed Proposition 1B, the
Highway Safety, Traffic Reduction, Air Quality, and Port
Security Bond Act, on the November 7, 2006 ballot, through which
voters authorized the issuance of $19.925 billion in general
obligation bonds. Typically, the state pays the debt service on
general obligation bonds from the General Fund, including on
transportation-related bonds until 2010.
In March 2010, the Legislature passed and Governor
Schwarzenegger signed ABX8 6, Chapter 11, Statutes of 2009-10,
commonly known as the gas tax swap, to help the state address
its then-massive General Fund deficit. The gas tax swap
provided approximately $1 billion annually in General Fund
relief by funding debt service on transportation-related,
general obligation bonds from new gas tax revenues. These new
gas tax revenues came about when, effective July 1, 2010, ABX8 6
eliminated the sales tax on gasoline and replaced it with an
increase in the gasoline excise tax designed to generate an
equivalent amount of revenue. While no additional revenue was
created, less money went to current transportation spending
through the State Highway Account and instead went to the
General Fund to pay debt service on transportation bonds.
SB 1418 (DESAULNIER) Page 2
Later in 2010, the people passed on the November ballot
Proposition 22, which, among other things, effectively precludes
the Legislature from directing gas excise tax funds to pay debt
service on previously issued bonds, thus undoing the General
Fund-savings provision of the 2010 gas tax swap.
In response, the Legislature again passed and the governor again
signed the gas tax swap as
AB 105, Chapter 6, Statutes of 2011. Instead of new gas tax
revenues, AB 105 directs vehicle weight fee revenues, which are
imposed on commercial vehicles and total nearly a billion
dollars a year, to paying transportation-related, general
obligation bond debt service. AB 105 directed revenue from the
new gas tax to backfill the State Highway Account for the lost
vehicle weight fee revenues and then provides the remaining
revenue to local street and road projects and to state highway
projects.
Last year's transportation budget trailer bill, SB 85, Chapter
35, Statutes of 2013, created authority for a new class of
transportation general obligation bonds known as designated
bonds, which are secured by a transfer of vehicle weight fee
revenue to the Transportation Debt Service Fund for the purpose
of directly paying the debt service on the designated bonds,
rather than paying debt service indirectly through reimbursement
to the General Fund. To the extent the transferred vehicle
weight fees are insufficient to meet the debt service
requirement, the General Fund would make up the shortfall. The
state has never issued designated bonds under this authority.
This bill :
1.Directs vehicle weight fees into the State Highway Account,
rather than the Transportation Debt Service Fund, thereby
providing an additional $1 billion annually to local streets
and roads and to the state highway system. Thus, General Fund
revenues must service the transportation-related, general
obligation bond debt of the state.
2.Deletes the provisions of last year's transportation budget
trailer bill that created authority to issue designated bonds
secured by weight fees.
3.Is an urgency measure that takes effect on July 1, 2014,
should it be enacted on or before that date.
SB 1418 (DESAULNIER) Page 3
COMMENTS:
1.Purpose . The author notes that during the prolonged state
budget crisis, the state used vehicle weight fee money to help
offset its General Fund obligations by paying for debt service
on transportation-related, general obligation bonds. Now that
the state budget is recovering, he states that it is time to
put this funding back to work on our transportation system
where it is badly needed.
Speaking to that need, proponents cite recent assessments of
the need for repair and maintenance of state and local roads.
For example, the League of California Cities and the
California State Association of Counties have commissioned
periodic assessments of local streets and roads repair needs.
Their most recent assessment found that the pavement condition
on the local transportation network is deteriorating at an
accelerating rate such that without reinvestment in that
system, 25 percent of local roads will be in a failed
condition by 2022. This needs assessment shows that local
governments in California are short about $8 billion a year
for the next decade to maintain the local road system.
Similarly, the California Transportation Commission's
statewide transportation needs assessment shows that each
year, the state is short several billion dollars necessary to
maintain and rehabilitate the state highway system.
The author introduced this bill to put nearly $1 billion each
year back into the repair and maintenance of our state's road
system. This amount is clearly far short of the need, but can
provide some relief without raising taxes.
2.Technical amendment . On page 12, line 19, correct an
outdated reference to a provision of the California
Constitution by deleting "Section 1" and inserting "Section
2".
RELATED LEGISLATION:
AB 2651 (Linder) prohibits vehicle weight fee revenue from being
used to pay the debt service on transportation-related, general
obligation bonds. Held in the Assembly Transportation
Committee.
AB 2728 (Perea and Linder) prohibits the use of vehicle weight
fee revenue to pay debt service on transportation-related,
SB 1418 (DESAULNIER) Page 4
general obligation bonds until January 1, 2019. Passed the
Assembly Transportation Committee on April 21 by a 15-0 vote.
Currently awaiting hearing in the Assembly Appropriations
Committee.
POSITIONS: (Communicated to the committee before noon on
Wednesday, April 23,
2014.)
SUPPORT: Transportation California (sponsor)
Automobile Club of Southern California
California Alliance for Jobs
League of California Cities
Northern California Carpenters Regional Council
Southern California Contractors Association
United Contractors
Vulcan Materials Company
OPPOSED: None received.