California Considers New Transportation Funding

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Last month the California Road Charge Pilot Program Technical Advisory Committee (CRCPPTAC) released a 12 page white paper detailing a series of new options for funding California’s chronically underperforming transportation system. The committee, which was originally set into motion by a law signed by Governor Brown, is charged with exploring all possible transportation funding sources, considering case studies from other states, and gathering input from the public.

Currently, the majority of transportation funding in the state comes from the Gas Tax, which has been steadily declining in revenue for the past 2 decades. Not only has the gas tax not been raised since 1994, meaning that it hasn’t kept pace with inflation, but during that time fuel efficiency performance and standards have drastically reduced the amount of gas Americans are using. For instance, the amount of gasoline sold in California actually peaked in 2003, at 15.9 billion gallons, and has been decreasing ever since despite a growing state population. And even though electric cars represent a little less than 1 percent of all cars in California, they compromised 3 percent of total sales last year, which means more people that aren’t paying any tax at all.

Many counties in California have countered this declining revenue by passing sales tax measures of their own, but with the required threshold of 66 percent approval for passing new taxes, even at the local level, this approach has proven to be an uphill battle. The causes and effects of different counties relying on different sources of revenue have resulted in varied levels of service across the state, sometimes with much higher performing counties being directly adjacent to lower performing counties. And from a driver’s perspective, California has the most congested roads of any state, stifling economic activity and leading to more greenhouse gas emissions as cars travel at sub optimal speeds for longer times.

Recently the debate over transportation and infrastructure funding has also reached the federal level, with multiple senators from both sides of the aisle calling for an increase to the federal gas tax. Though any new federal legislation would be primarily focused on larger scale infrastructure projects, leaving smaller jurisdictions like states and counties to compete over a smaller portion of any new funds generated. President Obama even mentioned the issue in his State of the Union speech, signaling that he may look favorably on a bill to increase the tax, should it come across his desk.

However, increasing the gas tax at the federal level, while providing for much needed funding, would do nothing to address the financial uncertainty of the gas tax in the long term because people are simply using less gas. This is why states like Oregon and California have taken their own measures to explore new funding options. Oregon has gone so far as to initiate a pilot program to tax people per miles travelled, but has run into privacy concerns about how they plan to record the data. The pilot program is now operating on a voluntary basis, but the idea no doubt has traction, given that it would charge the most to people who have the greatest impact on the roads. California’s Speaker of the Assembly, Toni Atkins, has put forward her own plan to make up the funding shortfall, again based on Vehicular Miles Travelled, only this plan would likely be implemented in partnership with insurance companies who would add the additional fee on to premium payments.

However, some have called these proposals inherently unfair, and have likened them to a regressive tax. Those who can afford to drive less, the argument goes, tend to be wealthier because they can afford to live in expensive urban centers. Those who cannot afford to live in these areas are the ones who are forced to commute the most, and would thus be paying more if charged per mile travelled.

What does the future of transportation funding hold? Should we be encouraging the purchase of electric vehicles by exempting them from new taxes? Is simply raising the gas tax the most effective way to address the funding shortfall, or does the whole financial model need to be rethought? How can we balance equity with the impact of driving? Vote and comment on a couple of these proposals below, or submit your own.

Mileage Fee to Replace Gas Tax

Toni Atkins, Speaker of the California Assembly, announced a proposal that would offer a new approach to funding road maintenance with $1.8 billion in fees on California drivers.

Increase the Federal Gas Tax by 12 Cents a Gallon

The Federal Gas Tax is currently 18.4 cents per gallon, and is used to fund federal infrastructure projects through the Highway Trust Fund (HTF).

Quarter Cent Sales Tax for Local and Regional Transportation Funding

Given the decline in gas tax revenue, transportation agencies across the state have struggled to keep pace with the demands on their respective systems.

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