By Dan Carson
Eight days before the Legislature is scheduled to adjourn for the year, Gov. Jerry Brown’s administration has briefed state legislators on a proposal for $3.6 billion in new funding to address a backlog of state and local transportation projects. But passage of his package, much smaller than one the Legislature had been considering, remains in doubt.
Lobbyists and legislative staff were optimistic in early August that, after decades of inaction, a bipartisan consensus was forming to address a shortfall of tens of billions of dollars for maintenance and repair of state and local roads. A proposal backed by a coalition of business, labor, and local government organizations would have provided $6 billion a year for this purpose for a decade, split between the state and local governments. The League of California Cities estimated that the package could have bolstered funding the City of Davis could use for road maintenance by $3 million annually.
But the chances of that much aid coming our way took a tumble this week as the Governor proposed a smaller compromise package that was quickly endorsed by the League of California Cities, the California State Association of Counties, and other organizations that had originally lobbied for a bigger effort.
The League estimates that the city would get about $1.1 million annually for ten years if the Governor’s scaled-down proposal were passed. That would surely help city efforts to catch up on a backlog of road and bike path maintenance projects. But a reduced level of assistance would also make it more likely that additional local funding, such as from a proposed utility users tax measure, will be sought by city leaders in a June 2016 ballot measure for transportation and other infrastructure projects.
Passage of any measure in the state Capitol at all this session is now very much in doubt. Legislative Republican leadership welcomed the start of negotiations over the Governor’s proposal and praised some of its specific provisions, such as one to use $500 million in “cap-and-trade” revenues for roads or to reduce excess Caltrans staffing and shift the monies to highway projects. But Republicans rejected the administration’s proposal to provide part of the funding with a new $65 a year “highway user fee” and a 6 cents per gallon gas tax increase, contending no new tax revenues are needed by the state.
A series of events that have unfolded since August have turned efforts to bolster roadway funding into an uphill fight. Legislative staff cite the sudden announcement of Republican leadership changes in both houses, the reluctance by the Governor until now to offer specific funding proposals, and a battle over hotly contested climate change legislation as major factors that have hindered legislative action.
In August, advocates believed that they would be able to peel off a handful of Republican votes for higher gas taxes and vehicle registration fees in trade for concessions sought by Republican members – such as extension of authority for toll roads or legislation to streamline environmental reviews of transportation projects.
But after word of a possible deal leaked out of the Capitol, that consensus appears to have disintegrated. Sen. Robert Huff was suddenly, and unexpectedly, sacked by his caucus from his position as Senate minority leader months ahead of the announced date for a transition, despite his last-minute pledge not to accede to a transportation tax increase.
In quick succession, Assembly Republicans lined up to announce that they had picked a successor for termed-out Assembly Minority Leader Kristin Olsen. While Assemblyman Chad Mayes won’t take the helm until January, one Capitol insider viewed the choice of Mayes, a staunch anti-tax conservative, as a strong signal that the caucus won’t stomach a deal that increases transportation taxes. After an anti-tax party activist began a public campaign targeting a San Diego Republican assemblyman for being open to such a tax measure, Assemblyman Brian Maienschein promptly announced his opposition.
But other factors are also hurting the chances of a deal.
Brown’s specific proposal for funding transportation emerged 80 days after he called a legislative special session to address the problem, and only eight days before members were scheduled to adjourn for the year. At one notable press conference on August 19 to promote actions on the issue, the Governor declined to endorse any specific tax or fee proposals to raise additional monies, declaring himself “above the fray.” That posture has now changed, but it may now be too late for such complex negotiations to succeed before adjournment.
A recently released UC Berkeley Institute of Governmental Affairs polls helps to explain the Governor’s cautious public stance on the tax issue. The survey of more than 1,000 Californians (voters and nonvoters) in August found that 62 percent of Californians polled oppose a gas tax increase and that 74 percent oppose a vehicle registration increase to pay for road repairs.
The transportation package has also become entangled in an all-out legislative fight over SB 350, legislation carried by Senate President Pro Tem Kevin de Leon to enact the Governor’s next wave of policies to address concerns over climate change. One component of SB 350 directs the state Air Resources Board to use its regulatory authority to implement a 50 percent reduction in the use of petroleum by cars and trucks by 2030.
The fight over SB 350 has become a typical end-of-session donnybrook, with Republicans and oil companies pushing back with warnings about how cutting petroleum use by half in 15 years would harm the economy and drivers. Some moderate Democratic members are nervous and on the fence, and the bill is being amended to try to bring them on board. One legislative insider told me that the battle over SB 350 has become such a huge focus that it has pushed aside other legislative priorities, including the transportation funding package. “It has sucked all the air out of the room,” he said.
As things stand, the Legislature may well leave town September 11 without approving new funding for transportation but with the passage of legislation, requiring only a majority vote, inadvertently worsening the transportation funding shortfalls. If petroleum use is reduced dramatically as a result of SB 350 and prior actions to reduce greenhouse gas emissions, the current transportation finance system, which is heavily reliant on taxes on gasoline and diesel taxes, would suffer a major hit. Depending upon how these mandates were implemented, traditional funding from fuel-based taxes could decline by $2 billion annually by 2030, by my rough estimate, as a result of SB 350 and prior legislative and regulatory actions. Of course, the Legislature has plenty of time to transition the state to a new approach toward funding the state’s road needs. But there’s little evidence in this legislative session so far that they have the bipartisan will to fix such problems.
Dan Carson worked for 17 years in the Legislative Analyst’s Office, a nonpartisan fiscal and policy adviser to the California Legislature, retiring in 2012 as deputy legislative analyst. He now serves as vice chair of the city’s Finance and Budget Commission. This commentary reflects his views only and does not represent the position of the commission on this issue.