California's Transportation Funding Does Need Reform

The Gas Tax Repeal Proposition 6 on the November 2018 ballot has been in the news for a while. Now, from the same supporter of Proposition 6 is a proposal aimed at the 2020 ballot to provide the road repair funds that California Senate Bill 1 – implementer of the gas tax – promised.

On September 25, 2018, Carl DeMaio, Chairman of Reform California, filed with the Initiatives Coordinator at the California Attorney General's Office a Request for Title and Summary for Initiative Constitutional Amendment Citizens’ Lockbox for Road Repairs and Infrastructure Improvements.

The initiative communicates to the public the reason for the proposal: California’s taxpayers already pay some of the highest gas taxes in the country, infrastructure projects cost far more in California than projects implemented in other states, and therefore the people need to impose accountability on the allocation and use of tax funds for road repairs and infrastructure improvements.

Carl DeMaio says on gastaxrepeal.org that the Citizens’ Lockbox for Road Repairs and Infrastructure Improvements is the “third and final phase of fixing California’s roads without raising taxes on struggling working families of our state.” He cites the recall of State Senator Josh Newman and placing the Proposition 6 on the November 2018 ballot as the two previous phases. DeMaio plans to submit signatures for the Citizens Lockbox tax replacement measure by May 15, 2019.

By way of clarification we should emphasize that the proposal by Reform California more specifically indicates where vehicle taxes and fees must go. In contrast, California Proposition 69 the Transportation Taxes and Fees Lockbox and Appropriations Limit Exemption Amendment, approved by voters June 2018, requires that revenue from the diesel sales tax and Transportation Improvement Fee enacted by SB 1 be used for “transportation purposes, including public transportation.” Also, Proposition 69 exempts SB 1 revenue from California’s Gann Limit, which prohibits the state and local governments from spending revenue in excess of per-person government spending in fiscal year 1978-1979, with an adjustment allowed for changes in the cost-of-living and population.

Closer to User Fees than SB 1

As is the case with Proposition 6, reform – not just doing away with taxes – is the real goal of the new proposal by Reform California. The road repair and infrastructure improvement constitutional amendment ballot initiative is intended to do more than create a road maintenance lockbox and replace transportation funds repealed by Proposition 6. Starting with vehicle taxes and fees collected on or after January 1, 2021, the amendment allocates funds in a more equitable manner, closer to the idea of user fees than SB 1 prescribes. Also, the amendment addresses California’s high costs of construction.

Here are the highlights of Reform California’s proposal:

* Taxes on vehicle fuels would go to streets and highways.

* Existing sales taxes on the purchase of vehicles would support traffic research and mitigation measures, non-motorized traffic, public mass transit guideways and their fixed facilities, payment for property taken or damaged, and state administration and enforcement. (Note: The peripheral expenditures nowadays associated with transportation perhaps needed to be addressed; but they are restricted to revenue generated by sales taxes on the purchase of vehicles.)

* Fines and penalties imposed for violation of traffic and vehicle laws and from vehicle fees, including license fees, would go to state administration and enforcement of laws regulating the use, operation and registration of vehicles.

Addressing Costs

As the Citizens’ Lockbox initiative states, California infrastructure projects cost far more in California than projects implemented in other states. Costs are a factor in decisions regarding the scope of a project, whether to start a project at all, and how structurally sound a completed project will be. A major part of this cost challenge is labor. Therefore, the Citizens’ Lockbox initiative attempts to address labor costs in transportation projects by requiring the following:

* State or local funds will not be used in transportation projects that limit contractors or workers from participating because of their union or non-union status.

* State or local governments will not impose pay or benefit requirements regarding employees working on transportation projects, beyond requirements expressly mandated or required by federal law or regulation.

* The legislature shall not enact a law, and stat government agencies shall not take any action, to prohibit or limit the ability of a local government to use competitive bidding or outsourcing as a means of carrying out work on a transportation project.

Declaring California High-Speed Rail Not Ready for Prime Time

High-Speed Rail is popular in many countries, notably China, Germany, Japan and Taiwan. But in California, the HSR project is vilified for being $13 billion over original budget, engulfed in litigation, and abysmally slow. Thirty seven years after California planners first worked with Japanese partners to consider a southern California high speed rail corridor, and ten years after voter approval of the high-speed rail project, the first phase – service between San Jose and Bakersfield – is expected to start in 2025.

Reform California feels that the high-speed rail project needs to end and resources need to be allocated to more realistic and immediate transportation needs. The Citizens’ Lockbox initiative proposes that,

* the governor and legislature end public funding of HSR, except for minimal funds as necessary to effect the orderly and complete termination of the project no later than June 30, 2021.

* unspent High-Speed Rail proceeds received from outstanding bonds issued and sold be redirected to retiring the debt incurred from the issuance and sale of those outstanding bonds.

Bottom Line: Cars or Transit?

high-speed rail

Advocates for each side have been stating their case for quite a while, and each side has good and bad points. Taking a fast, clean and reliable train to work might be more convenient than driving. But not so for the many parents who need to drop off their toddlers in daycare before starting work at 8:00 am, or for those who have difficulty walking or biking to a sometimes not so close transit stop.

Forcing a lower-income family whose most realistic means of transportation is a car to pay for transit the family does not use is as inequitable as Cap-and-Trade money being used to subsidize high-cost electric vehicles.