Falling Gas Tax Revenue Leads to Slash in State Transportation Money

The timing seems less than coincidental, announcing a cut in transportation funding days after announcing a pilot program to study road users’ fees–but the message is just as stark. The State of California is running out of money to fund transportation.

Democrats in the Assembly are trying to keep the focus on the poor repair of the state's roads rather than the need to raise more funds to fix them. Image: ##http://asmdc.org/fixtheroads/##California State Assembly Democrats##
Democrats in the Assembly are trying to keep the focus on the poor repair of the state’s roads rather than the need to raise more funds to fix them. Image: ##http://asmdc.org/fixtheroads/##California State Assembly Democrats##

Last week, the California Transportation Commission (CTC) slashed its own estimates of what the gas tax would bring in by $754 million over the next five years.  The Commission’s action impacts what the state budget will look like for transportation and heralds dire news for counties and municipalities that were counting on state dollars to fund infrastructure needs.

“What this means is that almost every county in California that relies on this source of funding for projects that improve traffic and air quality will have to cut or delay projects indefinitely,” stated CTC Chair Lucy Dunn.

“The commission adopted the most optimistic scenario we could make in good conscience, in the hope agreement will be reached on a number of reforms and new funding increases currently under consideration by the Legislature. But failing that, I fear we will be faced with even more draconian cuts next year.”

While the state is exploring the option of switching away from the gas tax, that change won’t be happening for years. In the meantime, raising the tax seems the most likely way to solve the problem in the short-term.

Assembly Transportation Committee Chair Jim Frazier is recommending a series of revenue enhancements including a ten-and-a-half-cent-per-gallon increase to the gas tax (from its current level of twelve cents per gallon). Frazier has been outspoken on the issue of repairing California’s roads and is one of the legislative leaders of the “Keep California Moving” coalition of business, labor, and government groups.

However, movement from the legislature has been slow, despite a special session that was called last year specifically to look at the funding crisis. No idea to increase revenue gained traction, and the issue was tabled even as the backlog of transportation projects on hold grew. With last week’s action by the CTC, three quarters of a billion dollars in promised funds to county and local governments will likely need to be with held.

The special session followed the creation of a special bipartisan joint committee that was also tasked with increasing the flow of funding for transportation projects.

But if you’re expecting a bipartisan solution to the cash shortfall, don’t hold your breath. The Sacramento Bee talked to a Republican leader who seemed unaware that the state’s transportation funding crisis was an ongoing, long-term issue.

Following Brown’s State of the State address on Thursday, Senate Republican leader Jean Fuller of Bakersfield said that given the increasing amount of revenue California is taking in, “it seems a little premature to fix the newest problems with new taxes.”

  • AlecMitchell

    The fix here is to stop adjusting the gas tax based on fuel prices (which creates backwards incentives) and simply use a fixed tax per gallon with an annual inflation (excluding fuel costs) adjustment. Decreasing tax per gallon in response to the cost per gallon going down makes no sense from either an economic or environmental standpoint.

  • GlobalLA

    What happened to Brown’s Rainy Day funds? Oh I get it, those will used to subsidize other political agendas up in Sacramento…

  • “What this means is that almost every county in California that relies on this source of funding for projects that improve traffic and air quality will have to cut or delay projects indefinitely,” stated CTC Chair Lucy Dunn.

    Everyone knows that “projects that improve traffic and air quality” is actually just code for widening roads. Maybe this drop in revenue, coupled with the pivot away from LOS, is the push that will finally force agencies to begin to start focusing on measures that actually reduce congestion, not just gobble up land and destroy our cities in a bid to provide space for every car to be at the front of every line all the time.

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