BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 16|
|Office of Senate Floor Analyses | |
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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.
SB 16
Page 2
ANALYSIS: Existing law imposes state taxes and fees related to
transportation as follows:
Gasoline excise tax: $0.36/gallon;
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% goes 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.
SB 16
Page 3
5)Redirects truck weight fees from the General Fund to road
maintenance 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 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.
SB 16
Page 4
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, Chapter 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.
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
SB 16
Page 5
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.:YesLocal: 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).
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.
SB 16
Page 6
SUPPORT: (Verified5/29/15)
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
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
SB 16
Page 7
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
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
SB 16
Page 8
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
OPPOSITION: (Verified5/29/15)
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
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