California Lawmakers Pass Tax Increases to Fix Roads

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By Laura Mahoney

California lawmakers approved increases in taxes and fees on fuel and vehicles to raise $5 billion a year for transportation projects after Gov. Jerry Brown (D) sweetened the deal for some hesitant legislators.

Brown will sign S.B. 1, which contains the tax increases and plans for allocating the revenue between state and local projects. He also will sign A.C.A. 5, a constitutional amendment to block the Legislature from taking the funds for other uses. Voters will be asked to approve the constitutional amendment on a 2018 statewide ballot.

Democrats mustered the two-thirds majority required to pass the tax increases April 6 after Brown agreed to add funding for three specific transportation projects in Riverside County and the Central Valley. The last-minute additions won over two senators from swing districts—one Democrat and one Republican. The projects will be part of a separate state budget package.

Fuel Tax Increases

The plan will:

  • increase the diesel excise tax by 20 cents a gallon;
  • increase the diesel sales tax by 5.75 cents a gallon;
  • increase the gasoline excise tax by 12 cents a gallon;
  • levy a new, annual transportation improvement fee on all registered vehicles based on their value;
  • levy a new $100 annual zero emission vehicle fee starting in 2020; and
  • shift money that was moved to the state general fund back to its intended purpose of funding transportation projects.

State Sen. Jim Beall (D), author of S.B. 1, argued on the Senate floor before the vote that California’s gasoline tax hasn’t increased in 23 years and funding for transportation hasn’t kept pace with demand for repairs and new infrastructure. The average motorist pays $762 a year in unnecessary vehicle repairs because of poor road conditions, he said.

Republicans argued against the bill, saying that existing funds and not tax increases should pay for roads, bridges and transit projects. They also objected to the lack of an expiration date on the tax increases.

Few Sweeteners

S.B. 1 passed the Senate 27-11. State Sen. Steve Glazer (D) was the only Democrat who voted against it and Sen. Anthony Cannella (R) was the only Republican who voted for it. Cannella’s Central Valley district will receive $400 million to extend a commuter rail line from the Bay Area and $100 million for a road project.

“For over two years, I have fought for real solutions to California’s transportation problems,” Cannella said in an April 6 news release. “This will be transformative for commerce and commuter travel throughout the Central Valley.”

Sen. Richard Roth (D), whose support for the plan wasn’t certain, will see $427 million in funding for a transportation corridor in his Riverside, Calif., district. He voted for the bill.

The measure passed the Assembly 54-26 on a party-line vote, with one Democrat from Bakersfield, Calif., Assemblyman Rudy Salas, voting against it.

Constitutional Amendment

A,C.A. 5, the measure to lock in the funds for transportation projects passed 28-10 in the Senate and 56-24 in the Assembly, with Glazer and Salas both voting in favor. Assemblywoman Catharine Baker (R), voted against the tax increase measure and for the constitutional amendment.

Brown and Democratic leaders traveled throughout the state drumming up support in the week since announcing they had reached agreement on the transportation funding package.

They had support from local government officials, labor and business groups, including the California League of Cities, the California State Association of Counties and the California Alliance for Jobs, which itself is a coalition of labor unions, contractors and builders. The California Chamber of Commerce also supports the package.

To contact the reporter on this story: Laura Mahoney in Sacramento, Calif. at LMahoney@bna.com

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

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