SB 1 Transportation Funding
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Last week, the California Legislature passed, and the Governor will sign, the largest fuel tax increase in California's history contained within Senate Bill 1 (Beall-D). The bill narrowly passed both Houses of the Legislature with only one Republican - Senator Anthony Cannella from the Central Valley - voting in support of the legislation.
Since the last increase in the gas tax California's population has grown by eight million, with millions more cars and trucks on our roads. Californians also drive more than 350 billion miles a year - more than any other state - yet road and transit investments have not kept pace with this growth.
Some reports state that the state highways system is facing $59 billion deferred maintenance backlog for road maintenance and repairs. Further, the total shortfall for local streets and roads maintenance is approximately $7.3 billion annually.
Summary
SB 1 eliminates, starting July 1, 2019, the annual adjustment required by the "Gas Tax Swap," from 2010, and instead imposes re-establishes the Price Based Excise tax (PBET) at its original rate of $0.173 per gallon. This requires revenues generated from the PBET adjustment to be allocated under the existing statutory framework with 44% for the State Transportation Improvement Program (STIP), 44% for cities and counties for local streets and roads, and 12% for the State Highway Operations and Protection Program (SHOPP).
Also, it requires that the tax rates and fees specified in this bill, other than the diesel sales tax, are adjusted annually based on the California Consumer Price Index (CPI).
SB 1 is expected to generate an amount equivalent to $52.4 billion in transportation revenues over a ten-year period, approximately $26.6 billion of which would be dedicated for local expenditures and $25.8 billion for state purposes. Overall revenues are estimated at $2.78 billion in 2017-18, $4.55 billion in 2018-19, and $4.88 billion in 2019-20.
Specifics
1) Increases the excise tax on gasoline by $0.12 per gallon, starting November 1, 2017.
2) Increases the excise tax on diesel fuel by $0.20 per gallon, starting November 1, 2017.
3) Increases the sales tax on diesel fuels by an additional 4% increment, starting November 1, 2017.
4) Creates a new annual Transportation Improvement Fee (TIF), starting January 1, 2018, based on the market value of the vehicle with the fee range described below:
5) Creates the Road Improvement Fee of $100 per vehicles for Zero-Emission Vehicles (ZEV)s, as defined, starting in 2020 for model year 2020 and later. |
| Also passed last night was Assembly Constitutional Amendment (ACA) 5 (Frazier-D), which will place an initiative on the ballot to prevent the use of transportation funds for anything other than transportation and infrastructure projects as described in the bill. |
