Road to Success – A Plan To Reinvest In California’s Transportation System

August 25, 2016

SACRAMENTO -- Crumbling asphalt. Bone-jarring potholes. The mounting damage from years of deferred maintenance totaling $137 billion for state and local roads, bridges, and trade corridors threatens California’s prosperity.

To begin the task of restoring a vast crumbling transportation system, Senator Jim Beall introduced legislation today to adjust the state’s obsolete funding streams to meet California’s 21st century demands. His proposal ensures every driver who uses the road contributes their fair share toward maintenance; increases funding for mass transit; and shifts existing weight fees back to their original purpose for road upkeep. 

The legislation – which would raise $7.3 billion -- is reflected in new amendments to SBX 1 1, which Beall, the chairman of the Senate Transportation and Housing Committee, introduced in June 2015. 
Beall has worked with Assemblymember Jim Frazier, chairman of the Assembly Committee on Transportation, to produce identical bills for their respective houses. The amended version of SBX1 1 and its Assembly counterpart, ABX1 26, were scheduled to be in print today.

“We have to take action now,’’ Beall said. “Delaying road maintenance results in more damage and higher repair costs with grave consequences for the state economy. We can’t allow our roads to become job killers.

“Working families and employers rely on good roads. If commute times grow and housing costs rise, sooner or later, we’ll see businesses either leave the state or stop investing in their operations here simply because the highly educated and skilled workforce they need will find it too challenging to live here. And this will mean less revenue to finance our schools, universities and other public services. ‘’

Assemblymember Frazier, D-Oakley, author of ABX1 26, urged legislators to engage in a meaningful dialogue to reach a solution.

“California is facing an impending transportation funding crisis that cannot be ignored,’’ Frazier said. “It is time for the Legislature to come together and have a real, adult conversation about finding a comprehensive solution before it is too late. If we fail to act now, these necessary improvements will cost us exponentially more in the long run.  This is bigger than just filling in potholes; this is vital for California’s economic health and our resident’s overall quality of life.”

The $7.3 billion would be divided between the state and local governments for road maintenance and rehabilitation. In addition, $200 million annually will be set as matching funds for “self-help’’ counties that pass local sales tax measures to improve transportation. 

The transportation bills package requires projects receiving funding to engage in job training and pre-apprentice programs. 

The bills also include reforms sought by Republican legislators, including the establishment of the Office of the Transportation Inspector general to monitor the efficiency and effectiveness of the state agencies that are spending transportation-related funding.

The joint proposal by Beall and Frazier calls for:

•    $6.1 Billion Annually In Revenue Adjustments -- Ends the Board of Equalization’s annual adjustment of the gas excise tax, restores the price-based gas excise tax rate to 17.3 cents. Enhances and indexes the base gas excise tax by an additional 17 cents to raise approximately $3.6 billion annually.

Adjusts the diesel excise tax by 30 cents and sales tax by 3.5 percent to generate an estimated $1.2 billion annually.  The transportation bills package allocates 30 cents of the diesel excise tax, amounting to about $900 million annually, to improve the movement of goods through critically important trade corridors.

Includes additional revenue enhancement: an annual $165 fee for zero-emission vehicles, and a vehicle registration adjustment of $38 per vehicle.

•    $1 Billion in Restoration of Weight Fees -- Progressively shifts revenues to transportation by annually redirecting a portion of weight fee revenues in gradual amounts of $200 million over a five-year period until all weight fees are restored and used for transportation purposes. The fees are currently being used to pay transportation debt service.

•    $300 Million in Increase Cap And Trade Allocation for Transit -- Increases the existing percentage of funding for Cap and Trade’s  Transit and Intercity Rail Capital Program from the current 10 percent allocation to 20 percent and the Low Carbon Transit Operations Program from the current 5 percent to 10 percent to increase transit services that reduce greenhouse gas emissions.

•    Projected $70 Million in Caltrans Reforms And Efficiency Improvements -- Directs Caltrans to generate up to $70 million in department efficiencies.  The revenue generated through the efficiencies will be allocated to the Active Transportation Program.   

•    One-Time Revenue of  $706 Mllion in Accelerated General Fund Loan Repayment Obligations --Provides that approximately $1 billion in outstanding loans made to the General Fund from the State Highway Account, the Motor Vehicle Fuel Account, the Highway Users Tax Account, and the Motor Vehicle Account will be repaid over a two-year period. 

Under the $7.3 billion proposal, the city of Los Angeles is projected to receive $153.3 million; the city and county of San Francisco, $18.4 million; San Jose. $39.3 million; the city of San Diego, $53 million; Sacramento, $18.6 million; Anaheim, $13.6 million; and the city of Fresno, $20.1 million..

Leaders up and down the state support increasing California’s funding sources for road maintenance. Here is what they have to say:

•    Gary Toebben, President and CEO, Los Angeles Area Chamber of Commerce:
“The business community of Los Angeles County is well aware of the need to improve the transportation system in California. The growth of our companies and the quality of life are both at risk if our state does not act soon. We applaud the Chairs of the Senate and Assembly Transportation Committees for combining their initiatives in one bill.’’

•    Jim Wunderman, President and CEO, Bay Area Council:
“To keep California competitive in this global economy, we must repair and improve the state’s crumbling and congested highways and roads. We are just flat out underinvesting in transportation and need to increase revenues, but we must also ensure that those dollars are actually used to fix roads and improve trade corridors. I believe the proposals by Sen. Beall and Assemblymember Frazier will help us achieve those goals and they deserve serious consideration by all legislators.’’ 

•    Hilda Solis, Los Angeles County Supervisor; former U.S. Secretary of Labor:
“This legislation provides much-needed new revenue to fix the streets roads and bridges here in Los Angeles County and across the state. The bill also includes constitutional guarantees that these transportation funds will be spent fixing our roads before they get even worse. Putting Californians to work fixing the infrastructure we all rely on just makes sense.”

•    Rob Lapsley, President, California Business Roundtable:
“Our entire economy depends on our transportation infrastructure. Senator Beall and Assemblymember Frazier are doing the hard work to ensure that we can succeed in the global economy while improving our quality of life for all Californians.”

•    Carl Guardino, President and CEO, Silicon Valley Leadership Group; Member, California Transportation Commission:
"Here's the dirty little secret: The average California motorist pays a hidden tax of $844 every year because of the crumbling conditions of our roads. 

“Bad roads mean bad gas mileage, excessive wear and tear on our cars, and the occasional blow-out.  Instead of wasting our money, let's invest in better roads -- which is precisely what Senator Beall's legislation can help accomplish."

•    Tom Holsman, CEO, Associated General Contractors of California:
“Agreement on a permanent stable funding source for repair and maintenance of California’s streets, roads and highways must be a top priority for the Legislature during the final days of the 2016 legislative session. 
“The Associated General Contractors commend Senator Jim Beall and Assemblyman Jim Frazier for introducing legislation that addresses this issue. AGC pledges to work with the Legislature and the Governor to arrive at a workable agreement that builds a stable, sustainable revenue stream to fund California's transportation infrastructure.’’

•    Kish Rajan, President, Southern California Leadership Council:
“The health, vibrancy and competitiveness of the Southern California economy depends upon a renewed commitment to our transportation system. This cannot wait. The quality of life in our part of the state is at stake and demands action from Sacramento.’’

•    Will Kempton, Executive Director, Transportation California:
“Enough talk, it’s time for action. Let’s move a package forward.’’