Proposition Would Reserve Gas Taxes for Transportation

Staff Reporter

Searching for ways to close the gap on an estimated $100 billion backlog of transportation projects throughout the state, legislative leaders earlier this year got a little creative.

They placed on the March 5 ballot Proposition 42, a measure requiring that at least $1.4 billion dollars a year in gasoline sales tax money be diverted from the general fund and allocated for transportation use only.

The ballot measure is strongly supported by business groups, transit agencies and local governments that have been pushing for increased transportation funding to reduce congestion. Together, these groups have raised more than $6 million to make their case in commercials to be aired in the next three weeks.

Proposition 42 is opposed by teachers unions, the health care lobby and other interest groups that fear it will reduce outlays for their programs, especially in tight budget years. However, these groups have opted not to mount a formal campaign against the measure, instead hoping that voter confusion or apathy will lead to its defeat.

In the most recent Field Poll released late last month, 53 percent of likely voters surveyed said they supported the measure, up slightly from 51 percent in December. But 21 percent were still undecided.

"It will likely pass, since most voters are also drivers," said Genevieve Giuliano, professor with the School of Policy, Planning and Development and director of the METRANS Transportation Center at USC.

Confusing measure

But on first glance, the measure does appear a little confusing, which might account for the narrow lead in the polls. For starters, it wouldn't really kick in until 2008. That's because two years ago, Gov. Gray Davis and the state Legislature already agreed to an identical five-year arrangement: diverting gasoline and diesel fuel sales taxes from the general fund to the California Department of Transportation to fund $6 billion in road projects.

But last year, to close a budget gap and keep dollars flowing into the general fund, Davis and legislative leaders delayed implementing the law for two years. This, in effect, reduced state funding on a number of road and highway projects in the pipeline.

Proposition 42 was placed on the ballot by legislators in part to avoid similar actions in the future.

Specifically, the measure targets the sales tax on gasoline and diesel fuel, which now stands at 6 percent of each total sale. (The state already collects an 18-cent-per-gallon excise tax on these two fuels.)

Currently, most of the sales taxes on gasoline and diesel fuel go into the general fund, with only a small portion set aside for transportation projects. Proposition 42 requires that all the money collected from this sales tax which would start in 2008 at a projected $1.4 billion and grow each year along with gasoline sales be used for transportation purposes.

Specifically, the measure says 40 percent of the funds must go to transportation projects listed in the state's five-year transportation capital investment program; 40 percent directly to counties and cities to fund local road projects; and 20 percent for mass transit.

Few question the need to put more dollars into transportation projects. Back in 1998, the California Business Roundtable, made up of 65 executives from the state's leading corporations, issued a report estimating the backlog on road and highway repairs/expansions at $90 billion. Even with nearly $5 billion being allocated in the last three years, the Roundtable now estimates the backlog has reached $100 billion.

"When you combine all the federal, state and local dollars now available for transportation, it doesn't even come close to meeting the need that's out there," said Bill Hauck, executive director of the Roundtable. "It doesn't take a rocket scientist to figure out that we have serious congestion problems in our urban areas that hinders our ability to move people from their homes to their jobs and to move goods quickly and efficiently."

Hauck also said that the new budget unveiled by the Bush Administration, which cuts $600 million that had been earmarked for California transportation projects, is a signal that more constitutionally protected revenue sources are needed.

"The important thing about this measure is that it's not a new tax," Hauck added. "The money is already going to Sacramento."

Of course that's the rub for other groups that had been counting on those dollars.

"Our concern is that the legislative analyst says this is $1.4 billion would come out of the general fund," said Becky Zoglman, spokesperson for the California Teachers Association. "That's money that could be spent on additional textbooks or help schools."

Proposition 42 opponents say that the measure could have severe impacts in times of tight budgets, like the projected $12.5 billion debt for the 2002-03 fiscal year starting July 1.

"It may be only 1 percent of the general fund, but by saying this 1 percent is off limits, especially in bad years, you necessitate greater cuts in other services, like health care," said Beth Capell, lobbyist for Health Access, a coalition of consumers and unions.

Proposition 42: Responding to a growing backlog of state transportation projects.
- Requires the 6 percent sales tax on gasoline and diesel fuel, (currently $1.4 billion yearly), be used only for transportation projects.

- 40 percent of the funds must go to transportation projects listed in the state's five-year transportation capital investment program; 40 percent directly to counties and cities; 20 percent for mass transit.

- 18-cent-per-gallon excise tax on fuels not included under measure.

- Field Poll conducted in late January showed 53 percent of likely voters in support; 26 percent against; 21 percent undecided.

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