Gas Tax 'Swap' Results In More Potholes In California Cities

The annual budget for Paso Robles' road maintenance fund went from $400,000 to $38,000 after Gov. Schwarzenegger and the legislature agreed in 2010 to a complicated gas tax maneuver dubbed the "fuel tax swap" to balance the budget.

2 minute read

May 26, 2012, 7:00 AM PDT

By Irvin Dawid

Tonya Strickland investigates why the roads in the small, central coast town of Paso Robles in San Luis Obispo County are falling into disrepair. Public Works Director Doug Monn reveals how an arcane budget maneuver had dire effects on the condition of his town's roads.

According to Monn, "Former Gov. Arnold Schwarzenegger all but obliterated Paso Robles' road maintenance budget in 2010 with his decision to borrow most of the sales tax revenue that all cities got from gasoline sales to help fill the state's deficit.

"The state Legislature doesn't make it clear how or when cities will get that revenue back, Monn added."

The 2010 gas tax swap, a complicated budget maneuver that initially eliminated the state sales tax on fuel for an equal increase in the state fuel excise tax (thus the equal 'swap' as there was no revenue increase) helped the legislature to balance the budget that year. However, the law ran into conflicts with two voter initiatives, Propositions 22 and 26, and the legislature fixed the swap measure in 2011.

[See the Board of Equalization's FAQ for everything you want to know on the swap.].

"The gas tax change dropped Paso Robles' road fund from nearly $400,000 a year for fresh coats and seals to a mere $38,000 annual share from the city's general fund, and that figure fluctuates depending on the year."

A half-cent, local sales tax increase on the November ballot may bring relief.

"Like other California counties and cities, Paso Robles receives 1 percent of the 7.25 percent sales tax that local shoppers see on their receipts. Since the new revenue would go to specific purposes rather than general uses, the increase would require two-thirds voter approval under state law. The City Council identified roads and police as its key recovery areas."

Thanks to Thomas A. Rubin

Friday, May 18, 2012 in The (San Luis Obispo) Tribune

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