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Wednesday, Aug 17, 2022

State Leaders Unveil Transportation Package with Hikes in Diesel, Gas Taxes

Gov. Jerry Brown and legislative leaders on Wednesday unveiled a $5 billion-a- year plan for road and highway projects, to be funded chiefly by steep hikes in taxes for diesel fuel and gasoline, and a new tax on vehicle registrations.

The plan, announced at a news conference at the state Capitol, would raise $52 billion over the next decade to fund transportation improvements, split evenly between local streets and state highways. Roughly $30 billion would go towards repair of roads and highways, with the rest for projects to relieve congestion and improve public transit.

To fund this package, Brown and legislative leaders are calling for an increase in both excise and sales taxes on diesel fuel and an increase in the gasoline excise tax. The excise tax on diesel fuel would increase by 20 cents to 36 cents a gallon, raising an estimated $730 million a year. The sales tax on diesel fuel would also increase, generating another $350 million a year.

The funding package also calls for a hike of 12 cents in the excise tax for gasoline to 39.5 cents a gallon, raising roughly $2.4 billion a year, and $1.6 billion a year would be raised through a new “transportation improvement fee” apparently tied to annual vehicle registrations.

“California has a massive backlog of broken infrastructure that has been neglected far too long,” Brown said in a statement. “Fixing the roads will not get cheaper by waiting – or ignoring the problem. This is a smart plan that will improve the quality of life in California.”

Assembly Speaker Anthony Rendon, D-Los Angeles and Sen. President Kevin de Leon, D-Los Angeles, said they intend to bring the package to a vote in both houses by April 6.

The proposal has already generated strong opposition from at least one business group, the California chapter of the National Federation of Independent Business.

“NFIB is firmly opposed to this package of transportation tax increases, which includes the highest gas tax increase in California history,” the organization said in a statement released Wednesday. “While we can all agree there is a dire need to invest in our roads and infrastructure, Californians already pay billions in taxes every year to fund these repairs. Sacramento already has the money to fix our roads, but Gov. Brown, Senate Pro Tem Kevin de Leon, and Speaker Anthony Rendon today announced they would rather raise new taxes on the backs of small businesses and working families. This is unacceptable.”

An assessment of the road and highway repair and maintenance backlog presented last year to the California Transportation Commission by the League of California Cities and various local government agencies put the total statewide price tag at nearly $107 billion, with current funding only able to meet about a third of that cost. Los Angeles County’s price tag is put at “more than $4 billion.” These figures do not include projects to relieve congestion.

Local trucking company owners told the Business Journal earlier this month that they conditionally support increasing diesel fuel taxes to fund road repair projects, but not to the levels set out in this proposal.

Related Link: Driving Issue

The trucking company owners also said they wanted guarantees that the funds raised through these increased taxes and fees would not be raided to close general budget shortfalls. The proposal unveiled Wednesday calls for a constitutional amendment “to prohibit spending the funds on anything but transportation.”

Public policy and energy reporter Howard Fine can be reached at hfine@labusinessjournal.com. Follow him on Twitter @howardafine.

Howard Fine
Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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