How to fund infrastructure fixes: Tax hikes or rearranging spending priorities?

Gov. Jerry Brown and Democratic legislators are pitching a transportation-tax proposal they depict as the only means to fix California’s crumbling roads, freeways and bridges. One would be hard pressed to find any policy maker in California who doesn’t bemoan the state of the state’s infrastructure, but the question always revolves around how to pay for it, and Republicans complain there are other ways to fix the current mess.

The Democratic plan, which received its first committee approval on a party-line vote Monday, would raise $52.4 billion over 10 years through a variety of tax proposals. It would hike gasoline taxes by 12 cents a gallon and diesel taxes by 20 cents a gallon, plus it would increase the vehicle-license fee from $25 to $175 a year, depending on the value of the vehicle. The average fee boost would be $48 a year. Furthermore, the plan would impose a $100 a year fee on electric vehicles because their drivers don’t pay gas taxes.

“This is mostly about fixing what we already have,” the governor said at a Capitol press conference last week. “If for some reason people try to fight this, and God help us if they were successful, they won’t defeat this, they’ll just delay it and make the expenses go up.” But Republicans focused on the economic impact of the plan on middle-class Californians. They also complain that the state’s cap-and-trade system, designed to battle climate change, will soon drive fuel prices up even further.

“For many households, the total tax hike will easily surpass $300 each year,” said Sens. Pat Bates, R-Laguna Niguel, and Jim Nielsen, R-Tehama, in a statement on Monday. “When combined with the 20 cent diesel excise tax hike and the 4 percent increase on the sales tax on diesel, it is clear that this tax proposal will negatively impact the California economy.”

The crux of the GOP argument: California doesn’t spend its current gas-tax revenue effectively, and it should reform its spending habits before calling on Californians to pay more at the pump – and when they register their cars and trucks. In fact, Republican legislators have proposed a bill that would raise the money without raising taxes. Assembly Bill 496, by Assemblyman Vince Fong, R-Bakersfield, would re-prioritize billions of dollars in general-fund spending toward transportation projects without requiring any type of tax increase.

For instance, the bill would divert $3 billion in sales tax revenue that comes from the sale of vehicles toward infrastructure-maintenance projects, and would move funds collected from truck-weight fees toward transportation-bond payments. The measure has the support of the Howard Jarvis Taxpayers Association, which recently expressed “frustration” the governor and Legislature have proposed tax increases without first considering other solutions.

The group noted that polls show strong support for returning the $68 billion high-speed rail project to a vote, which would allow some of these funds to be used for bread-and-butter infrastructure projects. “AB496 answers a question that too few in the legislature even bother to ask: how should legislators prioritize a record $120 billion general fund budget? California has seen a $36 billion general fund increase over the last six years, with not one dime of this new revenue spent on transportation projects,” wrote the group’s legislative director, David Wolfe, in a March 27 letter of support to Assemblyman Fong.

The tax-hike proposal doesn’t need to go to the voters for approval, but does need a two-thirds majority vote in both houses of the Legislature because it involves a tax increase. Democrats have supermajorities in both houses, but the governor still needs to woo some moderate Democrats who might be on the fence about such a large increase.

Gov. Brown compared the matter to a leaky roof. There’s no doubt that problems will keep expanding if a homeowner neglects such a problem – and the state’s infrastructure backlog is estimated at $130 billion.

A group of business officials and labor unions applauded the effort: “We are fully committed to supporting the road repair plan and intend to get it and the companion constitutional protection through the Legislature by April 6,” said Michael Quigley, of the California Alliance for Jobs, in a statement. “We need new revenue coupled with accountability provisions to begin to make a dent in the multi-billion dollar backlog of needed repairs to state highways and local roads.”

But critics point to a 2014 analysis of the California Department of Transportation to bolster their view that the state misspends so much of its current transportation revenue. The nonpartisan Legislative Analyst’s Office “recommends that the Legislature reduce the budget and staffing levels of the program starting with the 2014-15 budget, improve its staffing projects and data quality, and provide the California Transportation Commission with specific oversight and project approval functions that have limited external oversight.”

The analyst pointed to overstaffing by about 3,500 full-time jobs at Caltrans, which amounts to an unnecessary cost of around $500 million a year. Critics also complain about the above-mentioned rail project and the state’s inordinately high administrative costs on transportation projects. These, they say, are examples of misspending. Why should the state’s taxpayers spend more money when there’s little effort to reform current spending?

Wolfe’s letter points to another Republican complaint: The state’s general-fund budget continues to grow each year and has soared to record levels. Yet new transportation projects are, essentially, held hostage to the budget process. Democratic leaders spend money on other priorities, then complain there’s not enough money to deal with the transportation backlog – unless, of course, they are able to raise gas, diesel and registration fees.

Indeed, the governor last year called a transportation special session to come up with new infrastructure revenues, but he has thus far been unable to secure the additional dollars. The tax-hike plan is more likely than ever given increased Democratic numbers in the Capitol. The debate is the same as usual – new taxes vs. reforming how the state spends its current dollars – but the outcome may be different this time around.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at [email protected]

25 comments

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  1. bob
    bob 4 April, 2017, 17:33

    Steven,

    They are also raising another tax on diesel by 4% in addition to the 20 cent a gallon increase.

    I also heard Brown wants a new tax on vehicles that are sold.

    Steven, what are the odds the Demorats get this through? I believe they tried a couple years ago and failed.

    Reply this comment
    • valrab
      valrab 4 April, 2017, 21:42

      I am not Steven but I think Swartznegger raised taxes to fix the roads when he was in office.

      Reply this comment
    • Richard Rider
      Richard Rider 5 April, 2017, 06:02

      They failed before doubtless because they had less than the needed 2/3 Democrat majority to steamroll (sorry) such tax increases into law without a vote of the electorate. Today, if the Dems stick together, they can impose unlimited tax increases on the hapless folks of the “Golden State.”

      BTW, there are a number of ADDITIONAL tax increases in the legislative hopper this session. While most likely will not pass (and override a Brown veto), they all COULD become law legally.

      Always remember the primary role of any California state or local government: To provide uber-high paying jobs for union members. All other government functions are secondary. And LEAST important are the rubes paying the bills.

      Reply this comment
    • guest100
      guest100 7 April, 2017, 14:44

      There are elections coming up in CA. VOTE AGAINST ALL DEMS and RINOS!!!

      Reply this comment
  2. valrab
    valrab 4 April, 2017, 21:40

    We the people should be given the option of deciding what the politicians should approve instead of raising taxes that would put more money in their pocket.

    Reply this comment
  3. Richard Rider
    Richard Rider 5 April, 2017, 06:04

    California is virtually tied with Pennsylvania for the highest total state taxes (including our cap and trade tax) in the nation on a gallon of gasoline. Yet we have the 9th worst state highway system.

    Sacramento first needs to explain why — per mile — California state highways cost 4.7 times more than the national average. Or why — with the nation’s highest gas taxes — we can’t build the roads that the other states do with their lower revenues.

    Instead, what’s the Sacramento solution to our very real road problems? Raise gas taxes MUCH higher. Raise fees on car owners. And this time they PROMISE to spend the money on — ya know — roads and stuff. Especially STUFF.

    Meanwhile the runaway train to nowhere — CA HSR — continues to barrel down the track to its inevitable train wreck. At our expense.

    Should we reward such incompetence with “mo’ money”? Should we believe politicians who — over and over — have lied to us to get tax increases passed? Should we allow them to keep taking our money without first instituting the reforms that work so well in the other states?

    I think not.

    Reply this comment
  4. Spurwing Plover
    Spurwing Plover 5 April, 2017, 07:39

    Lets put a Hot Air Tax on Moonbeam Brown and his fellow demac-RATS Gore is the #1 producer of hot air

    Reply this comment
  5. michael
    michael 5 April, 2017, 08:24

    It will be interesting to watch the resultant carnage of an increased fuel tax.

    Not only will consumers have to contend with higher costs for the commute to work but all consumer goods prices will increase as these costs are past on by the trucking companies and retailers. This will have a direct impact on consumer spending and state taxes. The consumer will offset the taxes with reduced spending.

    At some point, even the sheep that vote for these thieves are going to get tired of the what seems to be endless demand to raise taxes.

    The clock is ticking on the recovery. It will not be too long before Sacramento is issuing IOU’s again.

    Reply this comment
    • Queeg
      Queeg 5 April, 2017, 16:27

      Comrades

      Rhode Island, Chicago, Conneticut, NewJersey, Detroit, Baltimore, are far worse off than California but somehow function still enriching the Publicans, Plutocrats and the globalist Masters.

      You have a long way to go till your cleaned out through taxation and mayhem from local thugging!

      Reply this comment
  6. bob
    bob 6 April, 2017, 17:59

    Well, the Demonrats have done it. Looks like they got the votes to jack up fuel taxes and more.

    And you can thank traitor RepuBlowClown Anthony Cannella.

    After agreeing with Demonrats to jack up taxes he said he was going to stay off social media. Check it out.

    https://twitter.com/AnthonyCannella/status/850103566056468480

    Call up Clownella’s offices and give that rat [email protected]@rd a piece of your mind.

    http://district12.cssrc.us/content/my-offices

    Reply this comment
  7. Colonel Bill Killgore
    Colonel Bill Killgore 7 April, 2017, 06:32

    This is a PERPETUAL TAX increase. These tax increases are indexed to inflation so these taxes will go up EVERY YEAR.

    Assume gas is $3 a gasoline and inflation is two percent a year (and those are low assumptions). That means the tax on gas will go up six cents every year.

    So….tax’em good and hard then tax’em again. Tax the shiite outta ’em.

    Tax’em to the stone age, son!

    I love the smell of tax increases in the morning!

    Reply this comment
    • Sean
      Sean 7 April, 2017, 07:59

      The average gas price in the US is near $2.25 a gallon, not $3. So Californians are already paying a $0.75 premium. The new taxes add at least a dime, and then you’ll add additional taxes through indexing plus to cost of Cap and Trade (which just survived a legal challenge) is set to steadily rise on top of all that. I suspect within a year, Californians will be paying a least a $1 premium on transportation fuels. So the “$12-15 per month” that the new bill (which passed in the legislature last night) will be on top of the $45 extra per month already being paid. And most households have more than one (it’s actually 2.3 vehicles per household in the state) and premium for fuel alone in California per household vs. the rest of the country is nearly $150 per month. And with rent consuming between 30 and 50% of peoples income already in the golden state I suspect the number of low to moderate income families will decide it’s time to pack their bags and move on.

      Reply this comment
      • bob
        bob 7 April, 2017, 10:27

        Tell me where in Commiefornia you can get gas for 2.25 a gallon. Where I live the cheapest is already 2.75 and I no nowhere else in the state where it’s cheaper.

        Reply this comment
        • Sean
          Sean 7 April, 2017, 13:09

          $2.25 is close to the average price in the US, not California. Go to gasbuddy.com and look up gas prices by state to see what the rest of the country is paying. The west coast if paying much more than the rest of the country and it looks to get worse.

          Reply this comment
  8. NTHEOC
    NTHEOC 7 April, 2017, 14:15

    You DOOMERS are something else. Adding a dime tax to your gas is not asking much to bring our streets and infrastructure up to date. You got to pay a little more to live in the Golden State! And nobody will be leaving, but I bet large trucks,large suv’s, and high end vehicles will still be selling like hotcakes. So pay up cheap asses…

    Reply this comment
    • Guest100
      Guest100 7 April, 2017, 14:28

      You are ignorant of what you are already paying. The politicians will put the money into the general fund to pay for everything else.
      Americans are financially enslaved (thanks to the commie Dems who voted for it) and forced to pay the illegals bills in addition to our own. Even our disabled are taxed to support the able-bodied leeches. Illegals DO get welfare and receive free food, free housing (BofA and Citibank even give home loans to illegals with less documentation required than from citizens, LA Times, Aug 2005), free education (colleges give PREFERENCE to illegals over our own kids), $750/month play money for doing nothing but breed like rabbits for “Reconquista,” and free medical at every ER, hospital, and so-called ‘free clinic’ (all paid for by taxpayers). The U.S. govt reimburses every ER, hospital and clinic that treats illegals which affects quality of care, length of stay, meds given, physical therapy (or NOT if you are not an illegal), and any transfer to a convalescent center after surgery (or NOT). I have seen discrimination against our disabled to give PREFERENCE to able-bodied illegals for the last 26 years and will testify in court any time.

      And for those morons who say that we can’t afford to deport them, we can’t afford NOT to deport them. Since Obama is already flying illegals around the country and dumping them into our cities with TAXPAYER dollars, it would be cheaper to fly them across the border and dump them at one point there. Better yet, the illegals pay a “coyote” $5,000/head to smuggle in more like them so let the illegals pay for their own deportation or bill Mexico!
      Illegals hiked in; they can hike home to their third world toilet and work, fight, and sacrifice to better their own country instead of sponging off us! THEY made their country what it is today.

      Reply this comment
    • bob
      bob 7 April, 2017, 16:34

      Anything to support your bloated 6 figure pension. Thanks buddy!

      Reply this comment
      • NTHEOC
        NTHEOC 7 April, 2017, 20:09

        bob, of course you would bring up pensions when pensions have nothing to do with this! In fact there are strict measures in place that this money is used only for road and transportation repair. We have plenty of Californians willing to pay to have nice roads in the greatest State!

        Reply this comment
  9. Guest100
    Guest100 7 April, 2017, 14:21

    Get an AZ P.O. Box and register your car and address there! Buy an electric car and STIFF the PARASITE POLITICIANS!

    Reply this comment
  10. Guest100
    Guest100 7 April, 2017, 14:42

    Seems we constantly hear about how the politicians are going to run out of money. How come we never hear about illegals’ benefits and welfare running out of money? Pay for the infrastructure repairs by DENYING social services to illegals!

    Reply this comment
    • NTHEOC
      NTHEOC 7 April, 2017, 20:20

      Guest100, Please stop playing the racial-blame-game! Please stop blaming the people who have no control over the system and start looking at people who really do. You are blaming them for using benefits that come out of our tax dollars (even if social programs are only a tiny budgetary sliver, and even if the majority of them pay into social security for benefits they will never be able to collect AND pay more in payroll taxes than Donald Trump has in the last twenty years)!! Here’s an idea,Imprison the employers who import, hire and exploit these workers, and all of it would end. Lock a handful of employers up, and all the rest would fall in line. Oh but we nothing about these employers!

      Reply this comment
  11. Ulysses Uhaul
    Ulysses Uhaul 7 April, 2017, 16:42

    Doomers you got whacked today…..living in the far away suburbs ain’t working out well……for info……this is gonna hurt real bad being indexed to inflation like that very very popular mini wage increase.

    Your gastro burger just went up 75cents!

    Reply this comment

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Steven Greenhut

Steven Greenhut

Steven Greenhut is CalWatchdog’s contributing editor. Greenhut was deputy editor and columnist for The Orange County Register for 11 years. He is author of the new book, “Plunder! How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation.”

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