California’s State and local transportation infrastructure is a complex system of interstate and intrastate highways, freeways, and city and county-maintained streets and roads. California’s rural transportation system serves to connect rural and remote communities to employment and population centers, health care and social services, and educational opportunities, and provides the general public access to many of California’s recreational opportunities and tourist attractions - two key economic drivers for rural counties.
The state and local transportation systems remain woefully underfunded. State and federal transportation funding has been in a steady decline, while basic maintenance needs of state and local transportation systems continue to increase.
In general, the excise taxes and fees on gasoline and diesel fuel serve as the foundation for funding road maintenance and construction at the state and local levels. Also, fees derived from vehicle registrations are placed in the Motor Vehicle Account and help fund the activities of the Department of Motor Vehicles and the California Highway Patrol. Finally, truck weight fees are currently used to satisfy General Fund debt associated with Proposition 1B, the transportation bond proposal enacted in 2006.
In March 2017, the Legislature and Governor Jerry Brown enacted a transportation financial package (Senate Bill 1) to provide the resources for helping maintain the existing road and highway infrastructure. The package is based largely on increasing taxes on motor fuels (gasoline and diesel) and indexing them in future years. In addition, additional levies are made at the time of a vehicle’s annual registration as well as a new levy on electric vehicles.
More than 60 percent of the proceeds raised directly from SB 1 are to be split evenly between the state and local governments. The anticipated $1.5 billion annual local government share will be divided equally between cities and counties for maintain the existing local streets and roads under existing distribution formulas. The California Transportation Commission shall annually evaluate each agency receiving funds to ensure that the funds are spent appropriately.
The anticipated $1.5 billion annual state share of the revenues would be directed to the State Highway Operation and Protection Program. Proceeds would be available for addressing deferred maintenance on the existing state highways.
One of the most discussed aspects of the SB 1 conversation was the redirection of truck weight fees from bond-debt service to direct funding of transportation projects. Governor Brown was firm in his belief that this not occur due to its impact on the General Fund. As such, truck weight fees continue to be used for debt service.
In November 2018, California voters rejected Proposition 6, the Voter Approval for Future Gas and Vehicle Taxes and 2017 Tax Repeal Initiative, which would have repealed SB 1. The RCRC Board of Directors adopted an “Oppose” position on Proposition 6 - Proposition 6 was rejected statewide with 56.8 percent of the vote.
RCRC works closely with other local government organizations and transportation stakeholder groups, including state agencies, commissions, and the Legislature, to advocate for transportation programs that support the rural transportation system, and that strengthen our economic competitiveness. RCRC supports transportation funding formulas that maintain current state and local transportation funding distributions and provide funding protections for California’s rural transportation system. Additionally, RCRC encourages the Legislature to recognize that rural counties have no realistic means – sales tax measures, public-private partnerships, etc. – to generate adequate funding for larger projects that deliver a statewide benefit as they consider policy proposals that direct statewide transportation investments.
Staff: Paul A. Smith