BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1418 (DeSaulnier) - Vehicle weight fees: transportation bond
debt service.
Amended: May 1, 2014 Policy Vote: T&H 11-0
Urgency: Yes Mandate: No
Hearing Date: May 12, 2014 Consultant: Mark McKenzie
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1418, an urgency measure, would repeal
statutory provisions that transfer vehicle weight fees from the
State Highway Account to the Transportation Debt Service Fund,
which is used to reimburse the General Fund for payment of debt
service on transportation-related general obligation bonds. As
such, the weight fees would be directed to the State Highway
Account for specified transportation purposes rather than
offsetting General Fund debt service expenditures.
Fiscal Impact:
Loss of General Fund relief, approximately $1 billion
annually beginning in 2014-15, by redirecting vehicle weight
fees from the Transportation Debt Service Fund to the State
Highway Account.
Revenue gains of a similar magnitude to fund transportation
programs pursuant to the following formula:
o 56% to the State Highway Account (approximately $560
million annually), of which at least 21.43%
(approximately $120 million) must be used to fund
projects in the State Highway Operation and Protection
Program (SHOPP)
o 44% (approximately $440 million) for local streets
and roads (Highway Users Tax Account)
Background: As part of the 2010-11 budget, ABx8 6 (Committee on
Budget), Chap 11/2009-10 8th Ex. Session, enacted the original
gas tax swap, which eliminated the sales tax on gasoline and
replaced it with an increase in excise taxes on gasoline.
Although the mechanism was revenue neutral, a portion of
"swapped" gas tax revenues was redirected to pay
transportation-related general obligation debt service, and
SB 1418 (DeSaulnier)
Page 1
resulted in a reduction of revenues deposited into the State
Highway Account. Subsequently, Proposition 22 was passed by the
voters in 2010, a part of which prohibited excise tax revenues
from being used to pay debt service on general obligation bonds.
As a result, a reconstituted gas tax swap was enacted as part
of the 2011-12 budget, AB 105 (Committee on Budget), Chap.
6/2011, directing vehicle weight fee revenues to the
Transportation Debt Service Fund, which is used to reimburse the
General Fund for payment of transportation-related general
obligation debt.
Existing law, SB 85 (Committee on Budget and Fiscal Review),
Chap. 35/2013, authorizes the issuance of "designated bonds,"
which are general obligation bonds secured by vehicle weight
fees transferred to the Transportation Debt Service Fund. If
revenues in this Fund are insufficient to meet the debt service
requirements, the General Fund would make up the shortfall. To
date, the authority to issue designated bonds has not been
exercised.
Proposed Law: SB 1418 would do the following:
Delete provisions that direct vehicle weight fees to the
Transportation Debt Service Fund to pay for
transportation-related general obligation bond debt.
Require those revenues to instead be redirected as follows:
o 56% to the State Highway Account for eligible
transportation-related expenditures, of which a minimum
of 21.43% must be used to fund projects in the SHOPP.
o 44% to local streets and road purposes.
Delete the provisions that authorize the issuance of
"designated bonds" secured by vehicle weight fees, as
specified.
Specify that the bill is an urgency measure, and that
certain provisions would take effect on July 1, 2014, should
it be enacted on or before that date.
Related Legislation: AB 2728 (Perea/Linder), which is currently
on the Appropriations Committee Suspense File, would prohibit
vehicle weight fee revenue from being used to pay debt service
on transportation-related general obligation bonds until January
1, 2019.
Staff Comments: By the end of the 2013-14 fiscal year,
approximately $3.9 billion in weight fees will have been
SB 1418 (DeSaulnier)
Page 2
transferred for transportation-related debt service and General
Fund relief. An additional $957.5 million is projected to be
transferred in 2014-15. This bill would prevent that transfer
and result in a corresponding increase in General Fund
expenditures. Staff notes, that the mechanism for transferring
weight fees enacted by AB 105 has resulted in an accumulation of
"prepaid" weight fees (amounts not needed for immediate debt
service payments) of approximately $1.3 billion. This bill
would not affect those prepayments, which could be used for
General Fund debt service relief until they are exhausted.
However, absent this bill, the prepayments are projected to be
exhausted by 2017-18.