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Compromise Transportation Funding Plan Floated by California Gov. Jerry Brown

With five days left in the legislative season, Gov. Jerry Brown halved the fuels tax increases proposed in the Democratic bill as a sweetener to tax-averse Republicans, though they haven't show any willingness to date to compromise.
September 5, 2015, 1pm PDT | Irvin Dawid
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"Officials of Gov. Jerry Brown's administration met with Republican legislative leaders on Thursday and urged them to back a new plan for financing badly needed road repairs," writes Jessica Calefati for the San Jose Mercury News. "It differs from another plan backed by Sen. Jim Beall, D-San Jose."

The plan addresses one of three infrastructure goals that Brown highlighted in his January inaugural address: "The enormous $59 billion problem of deferred highway and bridge maintenance."

Beall's bill, SB X1-1 (described here) in the special session raises $4.3 billion annually in part by raising the gasoline excise tax by 12 cents and the diesel excise tax by 22 cents, a 169 percent increase of the existing 13-cent diesel excise tax or 55 percent increase when the 9.25 percent sales tax is considered. [See legislative analysis.].

Whether Beall can get a few Republicans in each chamber to agree to the tax increases by Sept. 11, the end of the legislative season, is a huge gamble. However, the same uncertainty existing for Brown's milder tax increases. In California, two-thirds support in each chamber is necessary to pass taxes, as required by the the 1978 Proposition 13].

"Since Prop. 13, the GOP's main political strategy — and arguably its only successful one — has been to fight taxes," writes George Skelton, political columnist for the Los Angeles Times. 

Brown would raise the existing 30-cent gas tax by six cents and the diesel tax by 11 cents, helping to generate $3.5 billion annually.  Both plans would index the taxes.

"Brown has adopted several proposals initially made by Republicans:

  • "offering California Environmental Quality Act [CEQA] waivers for contractors doing repair work, 
  • "encouraging public-private partnerships to cut costs and increasing accountability at Caltrans, the state's transportation agency."

In addition, Jeremy B. White of the Sacramento Bee listed "$500 million annually from California’s cap-and-trade system of selling emissions permits, which Republicans have said should go to infrastructure repair and $100 million would come from new “efficiencies” in the state transportation agency Caltrans, which Republicans have criticized as bloated and overstaffed."

The cap-and-trade or Greenhouse Gas Reduction Fund is intended by law, AB 32, to do just what the name states, not keep roads in good repair. However, the Associated Press indicates the $400 million would go to public transit via local governments.

"I don't see any bipartisan momentum," said Assembly Republican leader Kristin Olsen, R-Modesto, who is still leery of tax and fee increases. "The difference between this issue and how we came together to craft the water bond and the rainy day fund is like night and day." [San Jose Mercury News]

She spoke more to the point in a quote in the Sacramento Bee:  "Unfortunately, the administration’s ideas call for more than doubling the vehicle registration fees and raising the price of fuel on all Californians — we disagree and think Californians have paid enough," she said.

Olsen's negative reaction comes as no surprise to The Times Skelton. "Republicans contend there's enough money available without raising taxes. They always do, regardless of what the tax is for."

The big question is whether any Republican will vote for a tax increase no matter how sweet the deal.

By undercutting Beall's bill in hopes of getting a few Republicans willing to increase fees and taxes, Brown is shortchanging his own infrastructure goals, and that may not sit well with two powerful business organizations who want an even more aggressive plan that the governor's $3.5 billion plan and Beall's $4.3 billion bill.

"Last month, business organizations such as the California Chamber of Commerce and the Silicon Valley Leadership Group said any deal should seek to raise at least $6 billion annually by raising gas and diesel taxes and increasing vehicle registration and license fees," writes Calefati.

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Published on Friday, September 4, 2015 in San Jose Mercury News
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