Highway construction in Scotts Valley, CA. (Photo Credit: Richard Masoner/Flickr)
When two of California’s biggest transportation coalitions filed ballot language this week for an initiative that would raise almost $3 billion a year to repair the state’s deteriorating roads and highways—funds that would help close huge fiscal gaps facing the state’s transportation network—they threw their weight behind what experts have called the “best new revenue concept” for the cash-strapped system.
That concept is simple enough: Instead of raising taxes on gasoline or other purchases, the measure adopts the principle of “user-pays.” Drive a car, help pay for the upkeep of the roads.
The news was followed by some expected grumbling about California’s already high taxes—and the measure’s authors, Transportation California, a coalition of business, labor, and regional planning agencies, and the Alliance for Jobs, which represents more than 2,000 heavy construction companies and 80,000 union construction workers, released a statement saying they plan to wait until receiving a title and summary in January before making a final decision about whether they will proceed.
The truth is, though, as big as the measure is—and as uncertain as its political future may be—it’s only a first step toward meeting the very real transportation funding crisis the state faces in the years to come. Which is why the California Economic Summit, with the support of the measure’s authors, has recently outlined a comprehensive infrastructure strategy for the state—a four-point plan that proposes new ways not only to access adequate resources to support California’s aging transportation network, but for exploring other approaches to financing public works, including tapping private investment.
What the measure does
The transportation coalition’s “Road Repairs Act” focuses on the first piece of the funding puzzle. (See ballot language here.) By raising the state’s Vehicle License Fee by 1 percent—charging drivers an additional fee each year on the market value of their cars—the measure would grow a new state “road repairs fund” to $2.9 billion a year by 2018. Every penny of these new funds—which would be treated separately from the revenues generated by the VLF’s current 0.65 percent fee—would go to California’s top transportation priority: maintaining the state’s deteriorating roads, highways, and transit systems.
This approach—tying new investment to a specific goal, while providing assurances these dollars will be well spent—is a time-tested strategy for winning at the ballot box, even if the measure’s revenue source, the VLF, has become a political lightning rod in recent years.
Transportation California and the Alliance for Jobs released a statement after the measure was filed saying they had “worked diligently over the past 2 years on this effort, including substantial political survey research that has led us to this point.”
A case can certainly be made that, depending on the final title and summary, there will be ways to sell the measure—in spite of its $3 billion price-tag—to show drivers they will actually come out ahead. If you’re the new owner of a 2014 Subaru Outback, for example (MSRP: $23,495), the measure would raise your total vehicle license fee to $387 a year, or about $230 more than you pay today. Balance this new fee against the more than $600 a year in maintenance costs the average California driver pays now due to the poor conditions of the state’s roads, and it may very well be a bargain. (Especially for, say, a middle-class taxpayer who could deduct between 25-30 percent of that $387 from their federal and state incomes taxes.)
Why there’s more to do
It’s a bargain, though, that reflects something even the “Road Repairs Act’s” authors have acknowledged in the past: As big as the measure is—and at $3 billion-a-year, it would be a larger investment over time than even the revised water bond moving toward the November 2014 ballot—the initiative is still just a careful first step toward taking on the full scope of the state’s transportation funding crisis.
There is a reason the state’s auditor recently put California’s transportation network in the same “high-risk” category as the state’s pension and health systems: The state’s main source of revenue for repairing California’s road, bridges, and highways—the gas tax—is broken. Even with the highest gas taxes in the country, California, like many other states, has found revenues failing to keep pace with the rising costs of street and highway repairs—a trend that is only worsening as more drivers convert to fuel-efficient vehicles. The last big infusion of cash into the transportation system, Prop 1B in 2006, bridged this gap by authorizing the state to borrow $20 billion for road projects, but those funds, too, are running out next year.
With the state’s population only growing—and with more drivers than ever on the roads—the bottom line is this: According to a recent Caltrans report, California needs roughly $6.2 billion a year to maintain its state highways, $6 billion to preserve local roads, and another $6.4 billion to keep up the state’s mass transit systems.
The problem is, with current revenues, the state only has the resources to fund about half of these projects. Tapping into a new $3-billion-a-year revenue source will allow California to top off one of its three transportation buckets, but it will leave the other two half-empty.
How to avoid falling off the cliff
“We’ve reached a cliff, and we’re falling off it. We’ve got to invest in infrastructure to improve our quality of life,” Will Kempton, a former Caltrans director and the executive director of Transportation California, said at a recent Summit briefing. “But we don’t think there’s going to be one solution to answer this problem. It’s going to have to be done through a variety of different means.”
While the transportation coalition makes the case for repairing roads by charging the drivers who use them, the Summit is continuing to explore these “different means,” as well. At the Summit itself in Los Angeles earlier this month, 450 business, labor, government, and nonprofit leaders from across the state shared their own struggles with paying for infrastructure projects—and reviewed a plan to pursue a range of new approaches for financing public works, including attracting private sector capital to extend the reach of public dollars.
“What we heard loud and clear is that we have a real infrastructure problem in this state, and we need to bring resources to the table,” Mark Pisano, a senior fellow at USC’s Price School of Public Policy and Summit team leader, said recently. “We’re going to have to figure out a new and different way of building infrastructure. Water, energy, and telecommunications have used different models for a long time—relying on user fees and other approaches. These aren’t new notions. We’re going to have to figure out how to bring it to areas like transportation, figure out what we did in the past that worked, and how we can move it into the future.”
While the Summit continues its work over the next year, the transportation coalition’s $3 billion measure may be a good start. But ultimately, it’s just that: a start.