Falling gas revenue sharpens CA infrastructure fight

31 Jan, 2016 by James Poulos

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As revenues from the statewide gasoline tax tanked amid low prices, lawmakers in Sacramento faced a fiercer debate over how to fund California’s much-needed infrastructure improvements.

In the meanwhile, Gov. Jerry Brown’s administration went ahead with huge cuts to the infrastructure budget. According to the Los Angeles Times, “state transportation officials have announced plans to cut funding for road and transit projects by $754 million over the next five years, the greatest reduction in two decades.” The drop, cutting more than a third into last year’s sum, cleared the California Transportation Commission as Brown “used his State of the State address to call on the Legislature to end the gridlock in negotiations over new taxes and fees for transportation projects,” the Times noted.

While gas taxes raked in 18 cents on the gallon in the recent past, the Times added, last year receipts plunged to 12 cents a gallon — with analysts predicting another drop this summer to just 10 cents:

“Each penny reduction in the gas tax decreases funding for state transportation projects by some $140 million a year. Because of the funding cut, the state for the first time in a decade was asking counties to terminate some of the 200-plus projects previously offered funding, according to Susan Bransen, chief deputy director for the commission.”

Skittish Dems

Election-year politics, however, have cast serious doubt on prospects for a new deal that would somehow replace the disappearing outlays. “In fact,” the Sacramento Bee noted, relative to last year, “the timing appears less favorable. Enacting a tax increase would require the support of at least some legislative Republicans, always difficult but likely more so amid the rancor of an election year. Nor is it clear that every Democrat in the Legislature will vote for a tax.” Since breaking the Democrats’ supermajority in Sacramento, Republicans have gained the ability to block legislative tax increases. “Although Democrats control both houses of the Legislature, Republican votes are needed to enact any tax measures, giving them leverage on the issue. If all Democrats were supportive” of an infrastructure hike, “a deal would need two Republican votes in the Assembly and one in the Senate,” according to the Associated Press.

While some Democrats fear they’ll be thrown out in a populist election season if they make the wrong move on taxes, Republicans have reiterated their concern that largesse elsewhere in the budget has put Californians in an untenable situation when it comes to government’s basic roads-and-repairs function. State Sen. Bob Huff, R-San Dimas, said Brown “did nothing except create an extraordinary session where he says you’ve got to raise taxes” last year, as the AP reported. “Here we are again with another $10-plus billion of revenue and once again, it’s ‘We need to bite the bullet and raise taxes to cover this,'” Huff said.

Shifting realities

Yet infrastructure policy analysts have raised the concern that Republicans have little choice but to find an alternative tax scheme and implement it fast. “For one, the gas tax isn’t a viable funding source any more,” Hoover Institution fellow Carson Bruno recently argued. “And secondly, a mileage tax, even with its downsides, presents a more efficient and effective alternative, especially with the rise of electric vehicles.”

Analysts noted that California has found itself in its current position because of failed efforts to raise cash for infrastructure spending in the past. “The state’s gas tax last went up in 1994, and more recent efforts to increase transportation funding have faltered,” the Bee recalled. “In 2014, transportation advocates proposed — then abandoned — a ballot initiative to more than double the vehicle license fee for road improvements. The last statewide transportation bond was approved during Gov. Arnold Schwarzenegger’s administration, in 2006.”