HomeMy WebLinkAbout08-18-2015 Item 12 Sustainable Transportation Funding
Meeting Date: 8/18/2015
FROM: Daryl Grigsby, Director of Public Works
Prepared By: Timothy Scott Bochum, Deputy Director of Public Works
SUBJECT: SUPPORT NEW SUSTAINABLE TRANSPORTATION FUNDING FOR ALL
TRANSPORTATION MODES BY SUPPORTING EFFORTS OF THE FIX
OUR ROAD COALITION AND SB-16 (BEALL).
RECOMMENDATION
Adopt a Resolution entitled “A Resolution of the City Council of the City of San Luis Obispo,
California, urging the State to provide new sustainable funding for state and local transportation
infrastructure, participation in a statewide - Fix Our Roads Coalition, and endorsing SB-16 (Beall).”
DISCUSSION
In June 2015 Governor Brown called a special session of the State Legislature to discuss the
issues of sustainable transportation funding. Specifically, the session was to consider and act
upon legislation necessary to enact pay-as-you-go, permanent and sustainable funding to:
a. Adequately and responsibly maintain and repair the state's transportation and
other critical infrastructure; and
b. Improve the state's key trade corridors; and
c. Complement local efforts for repair and improvements of local transportation
infrastructure.
Following Governor Jerry Brown’s proclamation calling for a special session on transportation and
infrastructure, both the Senate and Assembly have held hearings to discuss the current conditions of
highways, streets, and roads as well as the current funding structure. Local streets and roads received
significant attention at both hearings.
In response to Governor Brown’s proclamation, the League of California Cities (League) Board of
Directors formally adopted a resolution urging the Governor and the State Legislature to provide
new sustainable funding for State and local transportation infrastructure. The League has been
actively lobbying this year for a significant investment in transportation infrastructure. The
League feels it is time for the Legislature to act and is asking cities to engage in the process by
supporting its recently adopted Transportation Funding Principles and by joining the Fix Our Roads
coalition.
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Background
The Governor’s June proclamation for an Extraordinary Session on Transportation and
Infrastructure called on the Legislature to consider “…permanent and stable funding to
adequately and responsibly maintain and repair the state’s transportation and infrastructure.”
Unfortunately, the Governor made no mention of priorities for local streets and roads or other
important transportation assets such as transit buses or service. Ultimately any transportation
funding proposal will be decided by the Governor and 2/3 vote of the Legislature, requiring a bi-
partisan agreement. Many legislators have indicated their support for funding local streets and
roads in any transportation package. While several funding proposals have been introduced,
including League-supported SB 16, it is likely that a final funding package will be the result of
negotiations between the Governor and legislators from both sides of the aisle.
The League wants to ensure that all discussions on transportation funding include provisions of
maintenance and sustainability of our local streets, roads, and other transportation infrastructure.
The League’s Board of Directors adopted the following Transportation Funding Principles to
help guide the legislative special session. The basics (details discussed in Attachment 2) of these
principles are:
1. Make a significant investment in transportation infrastructure.
2. Focus on maintaining and rehabilitating the current system.
3. Invest a portion of diesel tax and/or cap & trade revenue to high-priority goods
movement projects.
4. Raise revenues across a broad range of options.
5. Equal split between state and local projects.
6. Strong accountability requirements to protect the taxpayers’ investment.
7. Provide consistent annual funding levels.
Additionally, the League has joined a coalition with the California Association of Counties and
the California Alliance for Jobs called “Fix Our Roads.” The League is asking its member cities
to pass a resolution urging for sustainable funding and to join the “Fix our Roads Coalition” as
soon as possible so that Legislators will have listed support from their districts when they return
from their summer recess on August 17th.
According to the coalition, California has the second-highest share of roads in “poor-condition”
in the nation. Some 58% of state roads need rehabilitation or pavement maintenance. In
addition, the state has 6 of the 10 cities with the worst road conditions in the nation.
With ongoing congestion in nearly 70% of California’s urban roads and highways, without
additional funding, ¼ of local streets and roads will be in failed condition by 2024. Lastly, the
State lacks adequate funding to address deficiencies in local streets and roads and face an
estimated annual shortfall of 7.8 billion in deferred maintenance.
The City of San Luis Obispo has roadway conditions that are in a state of good repair, however,
annually we struggle to provide sufficient funding for deferred maintenance and other basic
infrastructure needs. Measure G will help in this endeavor but funding for these critical services
continues to be below that needed to meet our adopted goals for roadway conditions particularly
for large scale pavement rehabilitation and overlay projects. Issues beyond the control of the City
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will also affect our long term revenue stream for streets and road purposes.
The primary sources of revenue to maintain, repair and rehabilitate roads are State and Federal
gas taxes. However, increasing fuel efficiency has resulted in vehicles that are traveling more
miles on less gas thus generating far fewer gas tax dollars to repair roads. The sales and excise
tax on fuels has not been adjusted to reflect increased costs for capital or maintenance needs. In
addition, positive growth in electric and hybrid vehicles benefits clean air objectives but
negatively effects transportation funding. This is because even though the impact of vehicle
usage on roadways continues, the payment of gas tax or license fees for these types of vehicles
is substantially lower than convention motor vehicles. If we meet our GHG and clean air
objective the forecast is that California will be facing a significant deficiency in funding if not
addressed.
Staff has reviewed the League’s Transportation Funding Principles and concludes they are an
appropriate framework for the State Legislature to consider as they discuss long term
transportation funding strategies for California. Adjusting taxes is never easy. However, public
and private stakeholders across all facets of California have identified the need to work towards
a modified sustainable, long term solution to transportation funding strategy for our state if we
are to accomplish our air quality goals and address the needs of aging infrastructure.
In addition, staff is recommending that the City join the Fix Our Roads coalition as an additional
stakeholder group to represent the City’s interests in transportation funding. The coalition not
only looks to advance issues of local roads infrastructure but also promotes enhanced bicycle and
pedestrian improvements as part of a balanced approach to infrastructure maintenance needs.
SB 16 (Beall)
Attempts to address the transportation funding shortfall are already working their way through
the Legislature. One such bill is SB 16 (Beall) which proposes to modify fuel taxes and vehicle
license (VLF) and registration (VRF) fees to address the immediate needs in streets and roads
maintenance needs. The bill would increase the gasoline excise tax by $.10 a gallon, $.12 for
diesel and adjust the VLF and VRF to stay current with price increases. It proposes a standard
$100 VRF for zero emission vehicles.
The bill proposes to split revenue 50/50 between the state and local projects with the local
project funding being allocated pursuant to an existing statutory formula where 50% goes to
cities based upon population.
Finally, the Bill has two accountability provisions. First, the bill requires cities and counties, to
maintain their historic commitment to funding street and highway purposes by annually
expending no less than the average of its expenditures for the 2009-10 through 2011-12 fiscal
years. Additionally, it requires the California Transportation Commission to annually evaluate
each agency receiving funds to ensure that funds are spent accordingly. The bill has a sunset
provision of five years unless the Legislature reauthorizes the program in FY 2019-20.
Staff has reviewed SB 16 and believes it provides a balanced approach at beginning to address
the long term needs of a sustainable transportation funding. It follows many of the provisions in
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the principles outlined by the League. As such, staff recommends that the city support SB 16
when the Legislature meets in special session in August. Attachment 3 is a summary of SB 16 in
its current form.
FISCAL IMPACT
If SB 16 is passed in its current form it would result in substantial increases in funding to the
City for streets and roads funding. Current estimates (if existing statutory formulas are used)
would result in approximately $2,080,000 in additional funding to the City for use in maintaining
infrastructure.
The Bill does not include specific language regarding supplanting existing funding but solves
that issue in two ways. First, since all new funding is specifically tied to being “above” the
existing tax basis, trying to supplant existing funding would be highly problematic for the State
if they tried to do that in future years. Secondly, due to the requirement that jurisdictions
guarantee to keep spending an streets and roads average the average amount from FY 20010-
FY 2012, if existing funding were diverted, jurisdictions would not be able to meet this
provision and the new funding would become moot. The potential for this to happen is non-
existent because it would likely result in the discontinuation of the law and render any additional
tax unusable by the same jurisdictions it targets to help.
ALTERNATIVES
Support for the League of California Cities transportation funding principles, support for the Fix
our Roads Coalition and support for SB 16 are discretionary decisions for the Council. As such,
the Council may choose to endorse all, part or none of the recommendations of this report.
Attachments:
1 - Resolution
2 - Fix Our Roads Fact Sheet One Page
3 - SB 16 Senate Floor Analyses
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R ______
RESOLUTION NO. _____ (2015 Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO URGING THE STATE TO PROVIDE NEW SUSTAINABLE
FUNDING FOR STATE AND LOCAL TRANSPORTATION
INFRASTRUCTURE, PARTICIPATION IN A STATEWIDE - FIX OUR
ROADS COALITION, AND ENDORSING SB-16 (BEALL)
WHEREAS, Governor Edmund G. Brown, Jr. has called an extraordinary session to address the
immense underfunding of California’s transportation infrastructure; and
WHEREAS, cities and counties own and operate more than 81 percent of streets and roads in
California, and from the moment we open our front door to drive to work, bike to school, or walk to the
bus station, people are dependent upon a safe, reliable local transportation network; and
WHEREAS, the City of San Luis Obispo has participated in efforts with the League of
California Cities, San Luis Obispo Council of Governments and California’s Regional Transportation
Planning Agencies to study unmet funding needs for local roads and bridges, including sidewalks and
other essential components; and
WHEREAS, the resulting 2014 California Statewide Local Streets and Roads Needs Assessment,
which provides critical analysis and information on the local transportation network’s condition and
funding needs, indicates that the condition of the local transportation network is deteriorating as predicted
in the initial 2008 study; and
WHEREAS, the results show that California’s local streets and roads are on a path of significant
decline. On a scale of 0 (failed) to 100 (excellent), the statewide average pavement condition index (PCI)
is 66, placing it in the “at risk” category where pavements will begin to deteriorate much more rapidly
and require rehabilitation or rebuilding rather than more cost-effective preventative maintenance if
funding is not increased; and
WHEREAS, the results show that the City of San Luis Obispo’s streets range from 66% in a
“Good” condition for local street category to only 54% for Arterial; and
WHEREAS, if funding remains at the current levels, in 10 years, 25 percent of local streets and
roads in California will be in “failed” condition; and
WHEREAS, cities and counties need an additional $1.7 billion just to maintain a status quo
pavement condition of 66, and much more revenue to operate the system with Best Management
Practices, which would reduce the total amount of funding needed for maintenance in the future; and
WHEREAS, models show that an additional $3 billion annual investment in the local streets and
roads system is expected to improve pavement conditions statewide from an average “at risk” condition to
an average “good” condition; and
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Resolution No. _____ (2015 Series) Page 2
WHEREAS, if additional funding isn’t secured now, it will cost taxpayers twice as much to fix
the local system in the future, as failure to act this year will increase unmet funding needs for local
transportation facilities by $11 billion in five years and $21 billion in ten years; and
WHEREAS, modernizing the local street and road system provides well-paying construction
jobs and boosts local economies; and
WHEREAS, the local street and road system is also critical for farm to market needs,
interconnectivity, multimodal needs including bicycle, transit and pedestrian amenities, and commerce;
and
WHEREAS, police, fire, and emergency medical services all need safe reliable roads to react
quickly to emergency calls and a few minutes of delay can be a matter of life and death; and
WHEREAS, maintaining and preserving the local street and road system in good condition will
reduce drive times and traffic congestion, improve bicycle safety, and make the pedestrian experience
safer and more appealing, which leads to reduce vehicle emissions helping the State achieve its air quality
and greenhouse gas emissions reductions goals; and
WHEREAS, restoring roads before they fail also reduces construction time which results in less
air pollution from heavy equipment and less water pollution from site run-off; and
WHEREAS, in addition to the local system, the state highway system needs an additional $5.7
billion annually to address the state’s deferred maintenance; and
WHEREAS, in order to bring the local system back into a cost-effective condition, at least $7.3
billion annually in new money going directly to cities and counties; and
WHEREAS, SB-16 (BEALL), Transportation Funding, as Amended on June 1, 2015, proposes
to address the crisis of insufficient transportation infrastructure maintenance funding by modifying
existing fuels taxes and vehicle registration and licensing fees to make it fairer to all users of the
transportation system; and
WHEREAS, State Legislators will return to the Capitol in August 2015 to discuss, in special
session, sustainable transportation funding initiatives including SB-16.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Luis Obispo
as follows:
Section 1. The City strongly urges the Governor and Legislature to identity a sufficient and stable
funding source for Local Street and road and state highway maintenance and rehabilitation to ensure the
safe and efficient mobility of the traveling public and the economic vitality of California.
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Resolution No. _____ (2015 Series) Page 3
Section 2. The City strongly urges the Governor and Legislature to adopt the following priorities
for funding California’s streets and roads:
1. Make a significant investment in transportation infrastructure. Any package
should seek to raise at least $6 billion annually and should remain in place for at least
10 years or until an alternative method of funding our transportation system is agreed
upon.
2. Focus on maintaining and rehabilitating the current system. Repairing
California’s streets and highways involves much more than fixing potholes. It
requires major road pavement overlays, fixing unsafe bridges, providing safe access
for bicyclists and pedestrians, replacing storm water culverts, as well as operational
improvements that necessitate the construction of auxiliary lanes to relieve traffic
congestion choke points and fixing design deficiencies that have created unsafe
merging and other traffic hazards. Efforts to supply funding for transit in addition to
funding for roads should also focus on fixing the system first.
3. Equal split between state and local projects. We support sharing revenue for
roadway maintenance equally (50/50) between the state and cities and counties, given
the equally-pressing funding needs of both systems, as well as the longstanding
historical precedent for collecting transportation user fees through a centralized
system and sharing the revenues across the entire network through direct
subventions. Ensuring that funding to local governments is provided directly, without
intermediaries, will accelerate project delivery and ensure maximum accountability.
4. Raise revenues across a broad range of options. Research by the California
Alliance for Jobs and Transportation California shows that voters strongly support
increased funding for transportation improvements. They are much more open to a
package that spreads potential tax or fee increases across a broad range of options,
including fuel taxes, license fees, and registration fees, rather than just one source.
Additionally, any package should move California toward an all-users pay structure,
in which everyone who benefits from the system contributes to maintaining it – from
traditional gasoline-fueled vehicles, to new hybrids or electric vehicles, to
commercial vehicles.
5. Invest a portion of diesel tax and/or cap & trade revenue to high-priority goods
movement projects. While the focus of a transportation funding package should be
on maintaining and rehabilitating the existing system, California has a critical need to
upgrade the goods movement infrastructure that is essential to our economic well-
being. Establishing a framework to make appropriate investments in major goods
movement arteries can lay the groundwork for greater investments in the future that
will also improve air quality and reduce greenhouse gas emissions.
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Resolution No. _____ (2015 Series) Page 4
6. Strong accountability requirements to protect the taxpayers’ investment. Voters
and taxpayers must be assured that all transportation revenues are spent responsibly.
Local governments are accustomed to employing transparent processes for selecting
road maintenance projects aided by pavement management systems, as well as
reporting on the expenditure of transportation funds through the State Controller’s
Local Streets and Roads Annual Report.
7. Provide Consistent Annual Funding Levels. Under current statute, the annual gas
tax adjustment by the Board of Equalization is creating extreme fluctuations in
funding levels – a $900 million drop in this budget year alone. A transportation
funding package should contain legislation that will create more consistent revenue
projections and allow Caltrans and transportation agencies the certainty they need for
longer term planning.
Section 3. That the City Council of the City of San Luis Obispo hereby:
1. Authorizes the Mayor to sign a letter (Exhibit A) indicating the City’s support for the
Fix Our Roads Coalition and League of California Cities’ Principles for New
Transportation Funding: and,
2. Authorizes the City Manager or her designee(s) to participate in the Fix Our Roads
Coalition in order to promote the City’s interests in local transportation funding and
multimodal investment needs.
3. Supports SB-16 (Beall), as amended June 1, 2015, and recommends the Legislature
discuss the Bill and its funding provisions at the Special Session to be held in August
2015.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 20xx.
____________________________________
Mayor Jan Marx
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Resolution No. _____ (2015 Series) Page 5
ATTEST:
____________________________________
Anthony Mejia
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this ______ day of ______________, _________.
______________________________
Anthony J. Mejia
City Clerk
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We Support the Fix Our Roads Coalition Principles for New Transportation Funding in
the Legislative Special Session
Yes, I/my organization support(s) efforts to secure new sources of
stable, accountable funding to fix California’s highways and road infrastructure.
I/we sign-on to join the “Fix our Roads” coalition and in support of the following
principles that should guide the legislative special session on transportation.
1. Make a significant investment in transportation infrastructure.
2. Focus on maintaining and rehabilitating the current system.
3. Invest a portion of diesel tax and/or cap & trade revenue to high-priority
goods movement projects.
4. Raise revenues across a broad range of options.
5. Equal split between state and local projects.
6. Strong accountability requirements to protect the taxpayers’ investment.
7. Provide consistent annual funding levels.
Please select a category: Organization Company Elected official
City of San Luis Obispo
Company or Organization Name
Jan Howell Marx Mayor
Name Title/Occupation
990 Palm Street
Street address
San Luis Obispo, California 93401
City State Zip County
(805) 781- 7120
Phone number Fax number
jmarx@slocity.org
E-mail Address
08/18/2015
Signature (Required) Date
Email or fax this form to: acelesius@bcfpublicaffairs.com or 916-442-3510 (fax)
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Problem: California lacks adequate funding to fix
crumbling roads, highways, bridges and transportation
infrastructure.
California’s network of roads and highways are critical to our quality of life and
economy. Yet the condition of our deteriorating network of roads is staggering:
Our crumbling roads cost motorists nearly $600 a year per driver for
vehicle maintenance.
California has the second highest share of roads in “poor condition” in the
nation.
58% of state roads need rehabilitation or pavement maintenance.
California has 6 of 10 cities with the worst road conditions in the nation.
55% of local bridges require rehabilitation or replacement.
Nearly 70% of California’s urban roads and highways are congested.
Without additional funding, 1/4 of local streets and roads will be in failed condition by 2024.
Our state lacks adequate funding to address these critical deficiencies:
Local streets and roads face an estimated shortfall of $78 billion in deferred maintenance and an annual
shortfall of $7.8 billion.
CalTrans faces a $59 billion backlog in deferred maintenance and an annual shortfall in the State
Highway Operation and Protection Program (SHOPP) of $5.7 billion.
Solution: A responsible, accountable solution to fix our roads.
A broad coalition of cities, counties, labor, business, public safety and transportation advocates has formed to
meet the Governor’s call to address California’s chronic transportation infrastructure funding shortfall. During
the 2015 special session on transportation, we support the following priorities:
1. Make a significant investment in transportation infrastructure.
If we are to make a meaningful dent that demonstrates tangible benefits to taxpayers and drivers, any
package should seek to raise at least $6 billion annually and should remain in place for at least 10 years
or until an alternative method of funding our transportation system is agreed upon.
2. Focus on maintaining and rehabilitating the current system.
Repairing California’s streets and highways involves much more than fixing potholes. It requires major
road pavement overlays, fixing unsafe bridges, providing safe access for bicyclists and pedestrians,
replacing storm water culverts, as well as operational improvements that necessitate, among other
things, the construction of auxiliary lanes to relieve traffic congestion choke points and fixing design
deficiencies that have created unsafe merging and other traffic hazards.
Efforts to supply funding for transit in addition to funding for roads should also focus on fixing the
system first.
3. Invest a portion of diesel tax and/or cap & trade revenue to high-priority goods
movement projects.
While the focus of a transportation funding package should be on maintaining and rehabilitating the
existing system, California has a critical need to upgrade the goods movement infrastructure that is
essential to our economic well-being. Establishing a framework to make appropriate investments in
major goods movement arteries can lay the groundwork for greater investments in the future that will
also improve air quality and reduce greenhouse gas emissions.
4. Raise revenues across a broad range of options.
Research by the California Alliance for Jobs and Transportation California shows that voters strongly
support increased funding for transportation improvements. They are much more open to a package
that spreads potential tax or fee increases across a broad range of options rather than just one source.
Additionally, any package should move California toward an all-users pay structure in which everyone
who benefits from the system contributes to maintaining it - from traditional gasoline-fueled vehicles,
to hybrids, alternative fuel and or electric vehicles, to commercial vehicles. Our coalition supports:
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Reasonable increases in:
o Gasoline and diesel excise taxes.
o Vehicle registration and vehicle license fees.
Dedicating a portion of the cap and trade revenue paid by motorists at the pump to
transportation projects that reduce greenhouse emissions.
Ensuring existing transportation revenues are invested in transportation-related purposes (i.e.
truck weight fees and fuel taxes for off-road vehicles that are currently being diverted into the
general fund).
User charge for electric and other non-fossil fuel powered vehicles that currently do not
contribute to road upkeep.
5. Equal split between state and local projects.
We support sharing revenue for roadway maintenance equally (50/50) between the state and cities and
counties. Funding to local governments should be provided directly (no intermediaries) to accelerate
projects and ensure maximum accountability.
6. Strong accountability requirements to protect the taxpayers’ investment.
Voters and taxpayers must be assured that all transportation revenues are spent responsibly.
Authorizing legislation should:
Constitutionally protect transportation revenues for transportation infrastructure only. Time
and again (Prop 42, 2002; Prop 1A, 2006; Prop 22, 2010), voters have overwhelmingly
supported dedicating and constitutionally protecting transportation dollars for those purposes.
We strongly support protections that prohibit using transportation dollars for other purposes.
Repay existing transportation loans and end ongoing diversions of transportation revenues,
including approximately $850 million in loans to the general fund and the annual loss of
approximately $140 million in off-highway vehicle fuel taxes.
Establish performance and accountability criteria to ensure efficient and effective use of all
funding. All tax dollars should be spent properly, and recipients of new revenues should be held
accountable to the taxpayers, whether at the state or local level. Counties and cities should
adopt project lists at public hearings and report annually to the State Controller’s Office
regarding all transportation revenues and expenditures. Local governments should also
commit to ensuring any new revenues supplement revenues currently invested in
transportation projects. Both Caltrans and local governments can demonstrate and publicize
the benefits associated with new transportation investments.
Caltrans reform and oversight. To increase Caltrans effectiveness, provide stronger oversight by
the state transportation commission of the programs funded by new revenues and establish an
Inspector General office to provide accountability. Reduce Caltrans administrative budgets
through efficiency reviews with all savings to be spent on road improvements.
Expedite project delivery. More should be done to streamline project delivery, including but not
limited to:
o Establishing timelines for actions required by state agencies and eliminating other
permit delays.
o Increased implementation of alternative delivery systems that encourage more
investment from the private sector.
o Reforms to speed project completion.
7. Provide Consistent Annual Funding Levels.
Under current statute, the annual gas tax adjustment by the Board of Equalization is creating extreme
fluctuations in funding levels -- a $900 million drop in this budget year alone. A transportation funding
package should contain legislation that will create more consistent revenue projections and allow
Caltrans and transportation agencies the certainty they need for longer term planning. While this
change would not provide any new revenue to transportation, it would provide greater certainty for
planning and project delivery purposes.
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SENATE RULES COMMITTEE
Office of Senate Floor Analyses
(916) 651-1520 Fax: (916) 327-4478
SB 16
THIRD READING
Bill No: SB 16
Author: Beall (D)
Amended: 6/1/15
Vote: 27 - Urgency
SENATE TRANS. & HOUSING COMMITTEE: 6-1, 4/28/15
AYES: Beall, Allen, Leyva, McGuire, Mendoza, Wieckowski
NOES: Gaines
NO VOTE RECORDED: Cannella, Bates, Galgiani, Roth
SENATE GOVERNANCE & FIN. COMMITTEE: 5-1, 5/6/15
AYES: Hertzberg, Beall, Hernandez, Lara, Pavley
NOES: Moorlach
NO VOTE RECORDED: Nguyen
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SUBJECT: Transportation funding
SOURCE: Author
DIGEST: This bill increases several taxes and fees to raise roughly $3.5 billion
in new transportation revenues annually for five years with the funding used to
address deferred maintenance on the state highways and local streets and roads.
Specifically, this bill imposes (1) a $0.10 per gallon excise tax on gasoline, (2) a
$0.12 per gallon excise tax on diesel fuel, and (3) increased vehicle license fees
and registration fees for five years.
ANALYSIS: Existing law imposes state taxes and fees related to transportation
as follows:
Gasoline excise tax: $0.36/gallon;
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SB 16
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Diesel excise tax: $0.11/gallon;
Diesel sales tax: $0.27/gallon;
Vehicle license fee (VLF): 0.65% of market value;
Vehicle registration fee (VRF): $43 per vehicle; and
Weight fees, for commercial vehicles only, up to a maximum amount of $2,271.
This bill:
1) Increases taxes and fees, and creates new fees, over time as follows:
Gasoline excise tax: $0.10/gallon;
Diesel excise tax: $0.12/gallon;
VLF: for non-commercial vehicles, 0.07% each year so that the VLF is
1.00% by July 1, 2019; and
VRF: $35 per vehicle plus an additional $100 for zero-emission vehicles.
2) Allocates the new funds formulaically to both state and local projects. Five
percent is set aside for counties which pass local sales and use taxes for
transportation purposes, and which have not previously passed such taxes. The
remainder is split 50/50 between state and local projects. The local project
funding is allocated pursuant to an existing statutory formula where 50% goe s
to cities based on population and 50% goes to counties based on a combination
of the number of registered vehicles and the miles of county roads.
3) Requires the city and county, in order to receive these funds, to maintain their
historic commitment to funding street and highway purposes by annually
expending not less than the average of its expenditures for the 2009-10, 2010-
11 and 2011-12 fiscal years.
4) Requires the California Transportation Commission (CTC) to annually evaluate
each agency receiving funds to ensure that the funds are spent appropriately.
5) Redirects truck weight fees from the General Fund to road maintenanc e
purposes, phased in over five years. The loss to the General Fund is backfilled
by the VLF increase.
Comments
The Governor, in his 2015 inaugural address, noted that the state faces a $59
billion shortfall over the next 10 years to adequately maintain the existing state
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SB 16
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highway system. Local governments have estimated the funding shortfall for
maintaining existing local streets, highways and bridges is $78 billion over the
same time period.
Purpose of bill. According to the author, this bill solves a crisis that threatens our
deteriorating streets and highways. California faces a $59 billion backlog in
deferred maintenance that will grow by billions every year. The state
transportation system is critical to California's economic well-being, as it enables
us to move goods, people, and ideas around the state. SB 16 creates a much-
needed, temporary funding plan to address the maintenance backlog of our aging
systems. Under this bill, everyone who uses the roads will share in paying for the
cost of these essential repairs.
What will this cost me? For an average driver, using a typical vehicle value,
average fuel efficiency, and driving 12,000 miles per year, the extra fees and taxes
will result in direct cost increases of about $120/year or $0.33/day. Individuals
with more expensive cars or who use more gas or diesel will pay more.
Pay now or pay more later. Engineers have observed that the cost of fixing roads
is relatively low initially, but at some point the road wear starts to accelerate,
greatly increasing the cost of repair. A study commissioned by the League of
California Cities and the California State Association of Counties notes that many
California streets are at the point of accelerating road wear. Without additional
funding, the percentage of roads in failed condition will increase from 6% to 25%
by 2024, greatly increasing the cost of repair. Inaction is costly.
A good start, not a final solution. As vehicle fuel efficiency rises and fossil fuel
alternatives become available, gasoline and diesel taxes become less reliable and
less fair mechanisms to pay for the cost of roads. SB 1077 (DeSaulnier, Chapte r
835, Statutes of 2014) required the CTC to study alternatives to fuel taxes, such as
a road usage charge. That effort is underway, but new mechanisms for paying for
roads aren’t expected for several years; legislation will be required. The author’s
expectation is that whatever mechanisms the California Department of
Transportation (Caltrans) develops will be ready to be implemented statewide in
time to take effect as this bill sunsets. In the meantime, the funding deficit for
repairing and maintaining existing roads and bridges continues to grow. This bill
is an effort to stop the deterioration and start improving the overall condition of
state and local roads. This bill will not raise sufficient funds to bridge the entire
combined $137 billion gap in state and local transportation maintenance needs.
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SB 16
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Sunset. The road maintenance program established in this bill sunsets at the end of
the 2019-20 fiscal year. If the Legislature does not reauthorize the program
beyond that fiscal year, then the increases in the gasoline and diesel fuel taxes and
the $35 increase in the vehicle registration fee terminate.
Other states. California’s transportation funding shortfalls are shared by other
states. According to the American Association of State Highway Transportation
Officials database, 14 states have increased taxes and fees and dedicated that
funding to transportation projects, including Georgia, Iowa, Pennsylvania, Utah
and Wyoming. Congress is also considering the issue.
Another idea. In February, the Speaker of the Assembly announced her plan to
increase transportation funding by $2 billion annually by establishing a road user
charge or a flat annual fee for access to the road system, returning weight fees to
transportation purposes, and accelerating the repayment of transportation loans. A
bill to enact that proposal has not yet been introduced.
Helping themselves. As previously noted, this bill allocates 5% of revenues to
counties whose voters approve a sales tax for transportation purposes, and who
have not approved such a tax before. Each fiscal year, unallocated funds revert
back and are split 50/50 between the state and local governments. This provision
may need further work on its mechanisms and definitions.
FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: No
According to the Senate Appropriations Committee:
The Board of Equalization (BOE) estimates that total revenues (excise and sales
tax) from the gasoline and diesel tax rate increases would lead to revenue gains
of $1.048 billion in 2015-16 and $1.863 billion in 2016-17 (General Fund and
special funds).
The proposed $100 fee on zero emission vehicles would generate $10.8 million
annually (special funds).
The proposed $35 increase in the vehicle registration fee would generate $1.085
billion annually (special funds).
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SB 16
Page 5
Assuming no other changes beyond the increased VLF rate itself, the rate
increase to 1.0% would generate $1.216 billion annually when fully phased-in
(General Fund).
BOE would incur one-time and ongoing administration costs to implement this
bill, at a minimum in the hundreds of thousands of dollars annually (special
funds).
The Department of Motor Vehicles would incur one-time programming costs of
$350,000, and ongoing costs of under $25,000 with each change in the VLF
(special funds).
This bill results in $577,000 (special funds) ongoing in new administration
costs to the CTC.
Caltrans would incur one-time administration costs that are unknown, but likely
to be in the tens of thousands of dollars minimally.
The costs of administering the provisions of this bill are paid out of the new
revenues raised by the bill.
SUPPORT: (Verified 5/29/15)
American Society of Civil Engineers
Associated General Contractors
California Alliance for Jobs
California Association of Councils of Governments
California Contract Cities Association
California State Association of Counties
California Infill Federation
City/County Association of Governments of San Mateo County
City of Calexico
City of Cathedral City
City of Claremont
City of Bellflower
City of Brisbane
City of Burbank
City of Capitola
City of Clearlake
City of Cloverdale
City of Daly City
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City of Downey
City of Fountain Valley
City of Fowler
City of Gilroy
City of Hanford
City of Hayward
City of Hercules
City of Hughson
City of Huntington Park
City of Indian Wells
City of Lafayette
City of Lake Elsinore
City of Lakeport
City of Lakewood
City of Los Altos
City of Los Altos Hills
City of Livermore
City of Martinez
City of Mill Valley
City of Modesto
City of Montclair
City of Montebello
City of Monterey Park
City of Morgan Hill
City of Napa
City of Novato
City of Pacifica
City of Palos Verdes Estates
City of Pico Rivera
City of Pleasant Hill
City of Rancho Cucamonga
City of Rancho Mirage
City of Rosemead
City of Sacramento
City of San Jose
City of Santa Ana
City of Santa Clara
City of Santa Maria
City of San Gabriel
City of Sanger
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City of San Mateo
City of Santa Barbara
City of Santa Rosa
City of Seaside
City of Shasta Lake
City of Soledad
City of South El Monte
City of Temecula
City of Thousand Oaks
City of Turlock
City of Ventura
City of Watsonville
City of West Sacramento
City of Whittier
County of Humboldt
CTM Construction
Glendale City Employees Association
Laborers’ International Union of North America
Laborers ’ International Union of North America Locals 777 & 792
League of California Cities
Los Angeles County Division of the League of Cities
Marin County Board of Supervisors
Marin County Council of Mayors and Council Members
Mendocino County Board of Supervisors
Monterey County Board of Supervisors
Northern California Carpenters Regional Council
Organization of SMUD Employees
Professional Engineers in California Government
Riverside County Board of Supervisors
San Benito County Board of Supervisors
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
San Joaquin Valley Regional Transportation Authority
San Diego County Court Employees Association
Santa Clara County Board of Supervisors
Santa Clara Open Space Authority
Silicon Valley Leadership Group
Town of Colma
Town of Danville
Town of Moraga
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SB 16
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OPPOSITION: (Verified 5/29/15)
Association of California Car Clubs
Howard Jarvis Taxpayers Association
Six individuals
Prepared by: Randy Chinn / T. & H. / (916) 651-4121
6/1/15 18:52:14
**** END ****
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