Gov. Jerry Brown and legislative leaders last week 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 toward 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 a gallon 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.”
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 in this proposal.
The 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 March 29 calls for a constitutional amendment “to prohibit spending the funds on anything but transportation.”
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 this week.
The proposal has generated strong opposition from the California chapter of the National Federation of Independent Business, but the California Chamber of Commerce was generally supportive.
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