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HomeMy WebLinkAbout09-18-2018 Item 12 Resolution Opposing State Prop 6 to Repeal the Gas Tax IncreaseMeeting Date: 9/18/2018 FROM: Daryl Grigsby, Public Works Director SUBJECT:RESOLUTION OPPOSING STATE PROPOSITION 6 TO REPEAL THE GAS TAX INCREASE, THE ROAD REPAIR AND ACCOUNTABILITY ACT OF 2017 AS APPROVED IN SB 1 BY THE STATE LEGISLATURE RECOMMENDATION Adopt a resolution opposing Proposition 6 (Attachment A) on the State of California November ballot (Attachment B) to support ongoing allocation of state funds to maintain and repair state, county, and city transportation infrastructure, and to include the City of San Luis Obispo as a listed member of the Coalition to Protect Local Transportation Improvements. DISCUSSION For many years, the League of California Cities, California Stat e Association of Counties and other state and regional governmental bodies documented the need for local investments in state, county and city roadways. This work culminated in the Local Roads Needs Assessment published by those organizations. After extensive discussion of the documented funding shortfall to address transportation needs, on April 6, 2017 the State Legislature approved the Road Repair and Accountability Act (SB 1). This legislation provided $5.2 billion per year for repair and maintenance of roads, freeways, bridges, and other transportation infrastructure in California. Specifically, SB 1 provides critical transportation funding to the State, counties and cities in the following categories. Also noted in the chart below are the specific benefits to the City of San Luis Obispo. Investment Category Benefits to the City of San Luis Obispo 1. Local and Regional Allocation (cities) $1.055 M annually beginning 2020, $318 K in Year 1 and $844 K in Year 2 2. Local and Regional Allocation (counties) SLO County $7.1 M annually, potentially impacting corridors connected to SLO or utilized by SLO city residents in the County 3. Transit and Intercity Rail Capital Program Regional annual allocations to SLO Transit $38 k 4. Bicycle and Pedestrian Access Improvements Competitive grants for which SLO could compete 5. Congested Corridors Program Competitive grants for which SLO could compete 6. SLOCOG Regional Highway Improvements $1.1 M for the SLOCOG region, primarily highway congestion and interchange projects 7. Caltrans Statewide System Maintenance District 5 receives allocations for maintenance projects on state roads and freeways in the region Packet Pg. 363 Item 12 In the 1st and 2nd Year of the SB 1 allocations to the City of San Luis Obispo, those funds have been programed to the following projects. Year 1 (Fiscal Year 2017-18), $318 K 1. Safe Routes to School - Foothill and Ferrini Signalized crossing 2. Broad Street Bike Boulevard safety improvements Year 2 (Fiscal Year 2018-19), $834 K 1. Concrete Paver Sidewalk repair in the Railroad District 2. El Capitan Bridge replacement 3. Broad Street Bike Boulevard safety improvements Annually thereafter, $1.055 M of SB 1 funding will be available to address ongoing needs such as: 1. Neighborhood street paving projects 2. Traffic Safety projects 3. Bridge maintenance projects 4. Complete Streets projects In addition, SLO Transit received $38,821 as reported in the last State Controller’s Office Report, for ongoing transit operations. A critical component of the SB 1 Funding are detailed accountability provisions. There are two primary components of accountability. First, funding must be programmed to eligible transportation projects. These projects must be submitted each year to the California Transportation Commission (CTC) for review. The project list submitted by each agency must include the following: x Project Description x Project Location x Proposed Schedule for Completion x Estimated Useful Life x Complete Streets and Climate Change considerations Packet Pg. 364 Item 12 The second accountability provision is the requirement that prohibits ‘supplanting’of funding. ‘Supplanting’is when an agency receives new revenue for a category of projects and then reduces their prior year local funding contributions to that category of projects by the approximate amount of the new revenue. The result of this practice results in no new net investment in that category of projects. SB 1 t herefore contains a ‘Maintenance of Effort’ (MOE) standard. The State Auditor established the City of San Luis Obispo’s MOE last year after reviewing prior year investments in transportation maintenance. The City, and all other agencies, cannot reduce the MOE threshold, i.e., our ongoing local contributions to transportation maintenance, as established by the State Auditor. Currently and projected into the future, the City will be meeting its current MOE as established by the State Auditor. Council opposition to the repeal of SB 1 is based on the following: 1. Fulfilling the Council and public priority on maintaining the existing transportation infrastructure. 2. Fulfilling #71 in the 2018 City Council Legislative Platform (Attachment C): ‘Supporting increased availability of grant funding to replacing aging infrastructure of all types, e.g., streets, bridges, water, sewer, parks and storm water systems, etc.’ 3. Supporting the City’s priority of completing critical projects in the City’s Annual Traffic Safety Report ENVIRONMENTAL REVIEW Passing a resolution in support of repealing the Gas Tax increase is not subject to the provisions of the California Environmental Quality Act (CEQA) because it is not a project as defined in CEQA Guidelines Section 15378 (Definitions –Project) FISCAL IMPACT Repeal of SB 1 as proposed by Proposition 6 would reduce annual revenue to the City to support transportation maintenance efforts by $1 million each year. It would also reduce revenue to SLO Transit and reduce funds available for state and regional transportation grants. ALTERNATIVE Council could determine to take no position of Proposition 6 or take a position to support Proposition 6.This action is not recommended since SB 1 funding helps fill a critical gap to both City and Regional funding to address transportation needs. Attachments: a - Proposition 6 language b - SB 1 resolution c - 2018 Legislative Platform Packet Pg. 365 Item 12 Proposition 6 Eliminates Recently Enacted Road Repair and Transportation Funding by Repealing Revenues Dedicated for Those Purposes. Requires Any Measure to Enact Certain Vehicle Fuel Taxes and Vehicle Fees Be Submitted to and Approved by the Electorate. Initiative Constitutional Amendment. Yes/No Statement A YES vote on this measure means: Fuel and vehicle taxes recently passed by the Legislature would be eliminated, which would reduce funding for highway and road maintenance and repairs, as well as transit programs. The Legislature would be required to get a majority of voters to approve new or increased state fuel and vehicle taxes in the future. A NO vote on this measure means: Fuel and vehicle taxes recently passed by the Legislature would continue to be in effect and pay for highway and road maintenance and repairs, as well as transit programs. The Legislature would continue not to need voter approval for new or increased state fuel and vehicle taxes in the future. Summary of Legislative Analyst’s Estimate of Net State and Local Government Fiscal Impact •Reduced ongoing state revenues of $5.1 billion from the elimination of fuel and vehicle taxes passed by the Legislature in 2017. These revenues mainly would have paid for highway and road maintenance and repairs, as well as transit programs. •The requirement that voters approve new or increased fuel and vehicle taxes passed by the Legislature in the future could result in lower revenues from such taxes than otherwise would have been available. Ballot Label Fiscal Impact: Reduced ongoing revenues of $5.1 billion from state fuel and vehicle taxes that mainly would have paid for highway and road maintenance and repairs, as well as transit programs. Packet Pg. 366 Item 12 BACKGROUND Approval of State Taxes Legislative Requirements. Under the State Constitution, the Legislature can only pass a new tax or increase an existing tax with a two-thirds vote. (The Legislature can pass most other types of laws with a simple majority.) Some state charges referred to as fees (such as vehicle license fees) fall under the constitutional definition of a tax. Voter Approval Requirements. The Legislature does not need to get voter approval for new or increased taxes that it passes. The voters—through the initiative process—can pass new taxes or increase existing taxes without the Legislature’s involvement. State Fuel and Vehicle Taxes Fuel Taxes. The state charges excise taxes on gasoline and diesel fuel. These taxes are set on a per-gallon basis. The state also charges sales taxes on gasoline and diesel fuel. These taxes are set as a percent of the price of the fuel. The State Constitution generally requires that the revenues from these fuel taxes be spent on highways, roads, and transit. Vehicle Taxes.State law requires vehicle owners to pay two specific taxes for the privilege of operating a vehicle on public highways. These are (1) vehicle license fees and (2) recently enacted transportation improvement fees, both of which are based on a vehicle’s value. The State Constitution requires that the transportation improvement fee revenues be spent on highways, roads, and transit. Transportation Funding in California Transportation funding in California currently is estimated to total $35 billion. Of this amount, $16 billion comes from local sources, $12 billion from state sources, and $7 billion from federal sources. Local funding mainly comes from sales taxes, transit fares, and city and county Packet Pg. 367 Item 12 general funds, while federal funding mainly comes from federal fuel taxes. State funding mainly comes from state fuel and vehicle taxes. State funding has increased by about three-quarters over the last two years mainly due to recent legislation. Recent State Transportation Funding Legislation. In 2017, the Legislature enacted Senate Bill (SB) 1 to increase annual state funding for transportation through various fuel and vehicle taxes (shown in Figure 1). Specifically, SB 1 increased the base gasoline excise tax (by 12 cents per gallon) and the diesel sales tax (by 4 percent). It also set fixed rates on a second (add-on) gasoline excise tax and the diesel excise tax, both of which previously could change each year based on fuel prices. Further, SB 1 created the transportation improvement fee (which ranges from $25 to $175 per year) and a fee specifically for zero-emission vehicles (set at $100 per year for model years 2020 and later). It also provides for inflation adjustments in the future. This fiscal year, the state expects the taxes to raise $4.4 billion. Two years from now, when all the taxes are in effect and the inflation adjustments have started, the state expects the taxes to raise $5.1 billion. The State Constitution requires that nearly all of these new revenues be spent on transportation purposes. Senate Bill 1 dedicates about two-thirds of the revenues to highway and road repairs, with the remainder going to other programs (such as for mass transit). Packet Pg. 368 Item 12 PROPOSAL Requires Legislature to Get Voter Approval for Fuel and Vehicle Taxes. Proposition 6 amends the State Constitution to require the Legislature to get voter approval for new or increased taxes on the sale, storage, use, or consumption of gasoline or diesel fuel, as well as for taxes paid for the privilege of operating a vehicle on public highways. Thus, the Legislature would need voter approval for such taxes as gasoline and diesel excise and sales taxes, vehicle license fees, and transportation improvement fees. Eliminates Recently Enacted Fuel and Vehicle Taxes. Proposition 6 also eliminates any such fuel and vehicle taxes passed by the Legislature after January 1, 2017 and up to the date that Proposition 6 takes effect in December. This would eliminate the increased fuel taxes and the transportation improvement fees enacted by SB 1. Packet Pg. 369 Item 12 Fiscal Effects Eliminates Tax Revenues From SB 1. In the current fiscal year, Proposition 6 would reduce SB 1 tax revenues from $4.4 billion to $2 billion—a $2.4 billion decrease. (The $2 billion in remaining revenues would be from taxes collected prior to Proposition 6 taking effect in December.) Two years from now, the revenue reduction would total $5.1 billion annually. The funding reductions would mainly affect highway and road maintenance and repair programs, as well as transit programs. Makes Passage of Specified Fuel and Vehicle Taxes More Difficult. Proposition 6 would make it more difficult to enact specified fuel and vehicle taxes because voters also would have to approve them. As a result, there could be less revenue than otherwise would be the case. Any reduction in revenues is unknown, as it would depend on future actions by the Legislature and voters. Packet Pg. 370 Item 12 R ______ RESOLUTION NO. _____ (2018 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, OPPOSING PROPOSITION 6 –SB 1 REPEAL 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 2016 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 at an increasing rate; and WHEREAS, cities and counties are facing a funding shortfall of $73 billion over the next 10-years to repair and maintain in a good condition the local streets and roads system and the State Highway System has $57 million worth of deferred maintenance; and WHEREAS, SB 1 –the Road Repair and Accountability Act of 2017 –will raise approximately $5.4 billion annually in long-term, dedicated transportation funding to rehabilitate and maintain local streets, roads, and highways, make critical, life-saving safety improvements, repair and replace aging bridges and culverts, reduce congestion and increase mobility options including bicycle and pedestrian facilities with the revenues split equally between state and local projects; and WHEREAS, SB 1 provides critically-needed funding in the City of San Luis Obispo that will be used for: x Traffic Safety Projects Paving projects in neighborhood streets; x Projects to enhance bicycle and pedestrian safety in City’s transportation network ; and x Bridge Repair projects. WHEREAS, SB 1 contains strong accountability and transparency provisions to ensure the public knows how their tax dollars are being invested and the corresponding benefits to their community including annual project lists that identify planned investments and annual expenditure reports that detail multi-year and completed projects; and WHEREAS, SB 1 requires the State to cut bureaucratic redundancies and red tape to ensure transportation funds are spent efficiently and effectively, and also establishes the independent office of Transportation Inspector General to perform audits, improve efficiency and increase transparency; and Packet Pg. 371 Item 12 Resolution No. _____ (2018 Series) Page 2 R ______ WHEREAS, there is a proposed ballot measure aimed for the November 2018 ballot (Attorney General #17-0033) that would repeal the new transportation revenues provided by SB 1 and make it more difficult to increase funding for state and local transportation improvements in the future; and WHEREAS, this proposed November proposition would eliminate $1.055 millio n annually dedicated to the City of San Luis Obispo, reduce funding for local transit operations, reduce the pool of state funding for competitive regional and Active Transportation projects, and halt critical investments in future transportation improvement projects in our community. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo that the City of San Luis Obispo hereby opposes the Proposition 6 (Attorney General #17-0033) that would repeal the new transportation funds and make it more difficult to raise state and local transportation funds in the future; and; that the City of San Luis Obispo supports and can be listed as a member of the Coalition to Protect Local Transportation Improvements, a diverse coalition of local government, business, labor, transportation and other organizations throughout the state, in opposition to the repeal of SB 1. Upon motion of _______________________, seconded by _______________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _____________________ 2018. ____________________________________ Mayor Heidi Harmon ATTEST: ____________________________________ Teresa Purrington City Clerk APPROVED AS TO FORM: Packet Pg. 372 Item 12 Resolution No. _____ (2018 Series) Page 3 R ______ _____________________________________ 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 ______________, _________. ____________________________________ Teresa Purrington City Clerk Packet Pg. 373 Item 12 Packet Pg. 374 Item 12 Packet Pg. 375 Item 12 Packet Pg. 376 Item 12 Packet Pg. 377 Item 12 Packet Pg. 378 Item 12 Packet Pg. 379 Item 12 Packet Pg. 380 Item 12 Packet Pg. 381 Item 12 Packet Pg. 382 Item 12 Packet Pg. 383 Item 12 Packet Pg. 384 Item 12 Packet Pg. 385 Item 12 Packet Pg. 386 Item 12 Council Decision on State Ballot Proposition 6 Background and Implications of Proposition 6 on November 2018 Ballot Background to Passage of SB 1 Local Roads Needs Assessment documented existing conditions and funding needs for state, city and county roads. Statewide $73 B shortfall over 10 years. Statewide Pavement Condition Index (PCI) 65 State legislature approved SB –1 ‘Road Repair and Accountability Act of 2017’ by required 2/3 vote $5.2 B funds per year for cities, counties, Cal Trans, and State and regional grant programs. 50/50 State/Local share SB 1 Sources of Funding; $5.2 B per year. 50/50 Local/State share Source Amount Gas Tax Increase of .12/gallon $2.4 B Diesel Excise Tax Increase of .20 $730 M Diesel Sales Tax to 5.75%$350 M Cal Trans Efficiencies $100 M General Fund Loan Repayments $706 M Other $1 B SB 1 Local Transportation Investments Program Annual Allocation Local Streets and Roads $1.5 B State Local Partnership $200 M State Transportation Improvement Program $82 M Planning Grants $45 M SB 1 State Transportation Investments Program Annual Allocation State Highway System Improvements ` $1.5 B Trade Corridors $ 300 M Congested Corridors $ 250 M Transit $ 700 M Active Transportation $ 100 M Local Transportation Needs San Luis Obispo Transportation Needs Pavement 70 PCI Traffic Safety Report 56 Bridges 72% Sidewalk Ramps Class 1 Bike Lanes –22% of BTP Goal Ongoing Transportation Needs Infrastructure and Need Local Funding SB 1 Pavement Management. $4 M $1.6 M Measure G, $600 K Gas Tax $1.06 M Annual allocation Traffic Safety. Traffic Safety Report needs $75,000 - Bicycle projects. Bike Transportation Plan, $47 M $100,000 Additional funding in State Active Transportation Accounts Transit Transit fares and grants $34,000 and additional funds in competitive grants Regional projects such as Prado Road, variable Impact Fees, developer contributions Additional funding in State and regional competitive grants Local Benefits of SB 1 to San Luis Obispo $1.06 M/Year for Street Maintenance, Traffic Safety, Complete Streets, Bridges Annual allocation to Transit County $7 M annual allocation Increased amounts for regional competitive grants and state grants such as Active Transportation Program Benefits to San Luis Obispo Accountability Provisions in SB 1 Accountability Project Criteria Project Descriptions and CTC approval Maintenance of Effort (MOE) established by State Auditor Annual Reporting of Expenditures and Project Progress What Proposition 6 does Repeals SB 1, and the $5.2 B per year in revenues for transportation infrastructure investment Requires Legislature to submit to the voters any prospective item enacting taxes or fees on gas, diesel, or on the privilege of operating a vehicle on the public highways, to the electorate for approval Questions? Recommendation Adopt a Resolution of the City Council opposing Proposition 6 –SB 1 Repeal to support ongoing allocation of funds to maintain and repair state, county and city transportation infrastructure.