Unlikely Sector Supports Increased California Fuel Taxes

Anti-tax, business groups are backing plans to fill the road budget shortfall by increasing fuel taxes and registration fees, but they want general fund dollars diverted to the road budget as well.
August 25, 2015, 8am PDT | Irvin Dawid
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"Now is the time to raise taxes and other revenue to repair California’s roads," is the message coming from the California Business Roundtable, a "trade group, which represents Chevron, Sempra Energy and 25 other major employers (which) normally opposes taxes," writes Allen Young for the Sacramento Business Journal. 

(E)arlier this month, the roundtable joined forces with the California Chamber of Commerce and organized labor to promote a plan that would raise $6 billion for infrastructure. The plan calls for a mix road-related driver fees and for funneling existing tax dollars into roads, highways and bridges.

The business-labor plan, as described above and in an August 10 article by Young, calls for subsidizing the road budget with general fund transfers in addition to unspecified increases in fuel taxes and registration fees, unlike Sen. Jim Beall's SB 16 (see legislation) which relies on mostly on user fees listed earlier here for its five-year duration, after which the legislature would have to reauthorize it.

The one diversion, according to Beall's April 15 press release, is "to take the truck weight fee, which raises about $1 billion a year, from the general fund and return it to its intended purpose: mitigating the damage to roads caused by heavy commercial trucks."

Still, the business proposal could be a game-changer. Heretofore, Republican transportation funding plans were based largely on tax diversions, i.e., diverting existing revenue streams to the road budget, and general fund transfers. Click on press releases, scroll down to: "6/29/2015, Fixing Our Roads #MakeGovWork," to see the Republican plan, including:

Make a formal commitment in the State Budget General Fund to fund transportation: $1 Billion annually.

For SB 16 to pass, it will need some Republican votes as Democrats lack a two-thirds majority in both the House and the Senate, a legacy of the landmark 1978 Proposition 13. But hiking taxes and fees are considered anathema to the policies of California Republicans, so the support of the business community could set the table for a compromise.

At a news conference at the Port of Oakland on Wednesday, Gov. Jerry Brown indicated he wants the funding plan to have bi-partisan support.

"Joined by Assembly Speaker Toni Atkins, D-San Diego, Brown urge(d) the Legislature’s Republicans and Democrats to work together in a special session he called to find a long-term answer to California’s continuing lack of cash for highway and infrastructure repairs," write Rachel Swan and John Wildermuth for the San Francisco Chronicle.

The clock is running on the transportation talks. The legislative session ends Sept. 11, which is the final day any bills can be approved.

Perhaps Republicans will be responsive to the the Roundtable's admonition: "Failure to act will hurt business," and consider fuel tax hikes and fee increases. Likewise, Democrats may need to consider more tax diversions to the Highway Users Fund, including Greenhouse Gas Reduction Funds from cap-and-trade which are intended to reduce emissions, which the Republican plan targets.

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Published on Thursday, August 20, 2015 in Sacramento Business Journal
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