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Taxes are on the table as push for California road funding intensifies

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Bystander Kevin Erwin caught the landslide above Highway 299 Monday on video. The road will remain closed until about Dec. 21, Caltrans said.
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Bystander Kevin Erwin caught the landslide above Highway 299 Monday on video. The road will remain closed until about Dec. 21, Caltrans said.

The way California raises money to maintain and repair state highways and local roads has largely been the same for more than two decades.

Gov. Jerry Brown and Democratic legislative leaders want to change that, and Californians would pay more as a result.

In what would be the biggest shakeup of state transportation funding since the early 1990s, they are trying to craft a package that would raise billions of dollars for road upkeep, goods movement and public transit, mostly through a mix of higher taxes and fees.

Depending on how much a person drives, their car’s mileage and other variables, the Democratic proposals would cost the typical motorist anywhere from roughly $9 a month extra to more than $13 above existing charges.

“I think it’s a matter of priorities and philosophies,” said Assemblyman Jim Frazier, D-Oakley, the author of one of the funding bills. “What we’ve tried to do was formulate something that would create balance for all the users in California, with the primary focus of maintaining our roads.”

Brown and Democratic leaders working to come up with an agreement recently set a deadline for April 6, when lawmakers leave for spring recess and before the annual budget process begins to dominate the Capitol. Officials point to tens of billions of dollars in road maintenance and repair backlogs, with this month’s crisis at Oroville Dam presenting a case study of what can happen as public works age.

Yet hopes for a transportation deal still could be optimistic. Brown called a transportation special session almost two years ago, and multiple hearings and lobbying by an influential coalition of cities, counties, businesses and labor groups have failed to produce agreement.

Officials have disagreed on the size of any funding package and what the additional money should pay for. The biggest stumbling block, though, has been the prospect of higher taxes.

Republicans have criticized the proposed tax increases, recommending that the state reallocate its existing money to pay for roads. They haven’t said which programs they would cut in exchange.

Assembly Republican leader Chad Mayes of Yucca Valley, said his members have been largely excluded from the talks.

“Either they’ve decided to go it alone, or they don’t want a transportation deal,” Mayes said.

Democrats achieved legislative super-majorities last November that allow them to raise taxes on their own, yet such votes historically are rare and politically perilous, particularly when they involve people’s cars. A restoration of higher vehicle license fees helped fuel the 2003 recall of Gov. Gray Davis.

You have to do it the right way. And I think our bill is the right way.

State Sen. Jim Beall, D-San Jose, the author of SB 1

State Sen. Jim Beall, D-San Jose, the author of another funding bill, SB 1, said the backlog of road projects and their cost will only increase unless lawmakers act now.

“I think the political reality is … we’ve had a series of governors who haven’t focused on the subject,” said Beall, chairman of the Senate transportation panel, one of three Senate policy committees assigned to review his bill. “The Legislature was turned into short-term legislatures, and the tendency was not to look long-term.

“And the political risk of raising any of these things is very difficult,” he said. “You have to do it the right way. And I think our bill is the right way.”

The similar bills by Beall and Frazier would generate almost $6 billion a year. They include a mix of higher taxes on gasoline and diesel fuel, raising vehicle registration fees by $38, imposing a new charge on zero-emission vehicles, and other revenue.

Brown, meanwhile, has put forward a plan that would generate an average of $4.2 billion annually over 10 years. It includes a smaller gas tax increase, while creating a new road-improvement charge of $65 on all vehicles.

Proponents of the Democratic bills conducted focus groups around the state to come up with the most palatable mix of new revenue.

“It’s trying to address a large problem, and it’s doing it in a way that tries to spread the revenue increases across several fronts,” said Mark Watts of Transportation California, who has been involved in crafting the Assembly and Senate bills.

The bulk of the billions raised would go to pay for state and local road maintenance and repairs. Public transit and goods movement projects also would receive several hundred million dollars. In addition, some money would go to the state program that pays for new roads and other expansion projects.

Any agreement would be the biggest transportation funding measure in more than a decade.

In 2006, voters approved Proposition 1B, a $19.9 billion borrowing measure to build new roads, improve goods movement and reduce congestion. Backed by then-Gov. Arnold Schwarzenegger and a bipartisan coalition, it received more than 61 percent of the vote and passed in all but two legislative districts.

Brian Kelly, Brown’s transportation secretary, helped negotiate the 2006 bond legislation. The latest talks are more difficult – “It’s easier to get a vote for a bond than a tax” – but more important to the state’s transportation system, he said.

“We’ve ignored some of the fundamentals for too long,” Kelly said.

Funding for California road and related projects once followed a fairly simple path.

Motorists paid the gas tax, and that revenue paid for new roads and to maintain existing ones. Lawmakers raised the gas tax in 1982, and in 1990, voters approved Proposition 111, which phased in four years of gas tax increases, up to the current base rate of 18 cents a gallon in 1994.

The flow of dollars became increasingly constrained and convoluted during the chronic budget shortfalls of the 2000s and the recession, as lawmakers looked for ways to prevent cuts to general fund programs.

Lawmakers repeatedly shifted money from transportation accounts. In addition, the Legislature approved complicated tax swaps in 2010 and 2011 to shift the cost of paying Proposition 1B debt service away from the general fund.

The shortage of road money meant that some counties with transportation sales taxes sometimes had to front the state’s share.

Meanwhile, the base gas tax’s real value declined over time. Today, it is worth less than two-thirds of what it was in 1994. In addition, low gas prices mean the tax created by the swap several years ago is about one-half its initial rate.

With Highway 41 still shut down after Tuesday's rock slide in Madera County, Caltrans is removing additional loose rocks to make the road safer for passing traffic, Wednesday, Jan. 20, 2016. Caltrans officials say the wet weather has increased the

Little new money is coming from Washington, where Congress has not increased the federal gas tax since 1993.

Cars also are getting better mileage because of federal fuel-economy rules and state regulations to reduce greenhouse gases. And more motorists are driving hybrids or no-gas electric vehicles. As of January, California had about 138,000 electric passenger cars on the roads, according to the Department of Motor Vehicles.

The money troubles leave the state falling short of its estimated $3.5 billion in annual maintenance and repair needs, on top of a $12 billion backlog, according to the nonpartisan Legislative Analyst’s Office. In addition, counties and cities have tallied a backlog of $40 billion, and a 2016 survey reported an average local pavement condition index of 65, on a scale of one to 100.

Through last week, this winter’s rains had caused nearly $600 million in damage to roads, culverts and bridges, officials said.

“A lot of repairs we do are Band-Aids half the time,” Frazier said. “Our revenue has dropped, and we need to recognize that and protect our investment.”

15.38 billion Estimated gallons of gasoline sold in California in 2017-18.

The Democratic approaches take similar paths to raising revenue but differ in key areas.

Brown’s package doesn’t raise the overall gas tax by as much as the Assembly and Senate bills, but includes a larger fee – $65 vs. $38 – on all vehicles.

Kelly said the governor’s plan recognizes the diminishing value of the gas tax. “When you project gas taxes going forward, you can project the decline” or flat growth in revenue, he said.

Beall, though, said gas-powered vehicles will still be the norm for many years. As of January, they represented 91 percent of all passenger cars on the road.

“What will happen is, the miles per gallon will continue to rise. That will continue to have a more significant impact on use of gasoline than electric vehicle purchases,” Beall said, adding, “Some of us buy a car and want to keep it for 15 years.”

How much would your costs increase?

Enter the number of miles you drive annually and your vehicle’s mpg to see how much you would pay per month under AB 1, one of the road-funding proposals.

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