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June 29, 2018

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What you need to know about California's gas tax repeal initiative

June 25, 2018

BY ALEXEI KOSEFF - Get ready for a big fight this fall over the condition of California's roads. An initiative to repeal the recent increase to state gasoline and diesel taxes, which is raising billions of dollars for repaving and other transportation projects, qualified for the November ballot on Monday. Here's what you need to know about the effort.


What would the initiative do?


The measure submitted by proponents is fairly simple: It requires that any new transportation fuel taxes or road usage fees in California be approved by a majority vote of the public. But that statute would be retroactive to the beginning of 2017. In effect, it wipes out a major funding deal passed by the Legislature last year that included both of those elements.


So what taxes and fees are we talking about?


There were four core elements to the funding deal, known as Senate Bill 1, which were supported by mostly Democratic lawmakers to tackle a maintenance backlog of approximately $130 billion for highways, roads and bridges.


Last November, the base excise tax on gasoline increased by 12 cents per gallon. Another price-based excise tax will reset in July 2019 to about half a cent more than what officials estimate it will be at that time, then continue adjusting for inflation starting the following year.


The base excise tax for diesel fuel increased by 20 cents per gallon last November and will begin adjusting for inflation in July 2020. An additional 1.75 percent sales tax also more than tripled to 5.75 percent.


In January, a new "transportation improvement fee" for car registrations took effect through the Department of Motor Vehicles. The DMV previously had a base registration of $53, but it now ranges from $25 to $175 depending on the value of the vehicle. Those fees will adjust for inflation beginning in 2020.


In July 2020, a $100 "road improvement fee" for zero-emission vehicles kicks in, with adjustments for inflation starting the following year. 


The owner of a car valued at $15,000, traveling 25,000 miles a year with 27-miles-a-gallon in mileage would see monthly taxes jump from $3.94 a month to $17.13 when the tax increases are fully implemented.


What does that money pay for?

These taxes and fees are expected to generate $52 billion for California's transportation needs over the next decade. The majority of that will go toward road rehabilitation and maintenance — half for state highways, half for city and county streets. SB 1 sets an ambitious goal for repairs so that by 2027, at least 98 percent of state highway pavement is in good or fair condition. At the local level, the emphasis is on creating "complete streets," which are safer for pedestrians and bicyclists, and include other features such as stormwater capture. But about a quarter of the money is designated for other purposes, including upgrades for bus and light-rail systems, improving the movement of goods from the state's ports and reducing traffic on some of the most heavily-congested travel corridors.



Sacramento County and its cities are set to receive nearly $40 million next fiscal year for basic road maintenance, such as repaving or fixing potholes. State transportation officials also awarded a $110 million grant to the region for projects along Highway 50, primarily adding carpool lanes from Watt Avenue through downtown Sacramento. A host of smaller grants have been doled out to widen White Rock Road in Folsom, expand Grant Line Road in Elk Grove, redesign the downtown Sacramento grid and reduce the number of lanes on Broadway, among other projects.

Would it just stop if the initiative passes?

Yes. If the repeal measure is approved by voters, the tax increases and new fees would cease beyond November. That means another $1.4 billion or so collected after July, and then nothing further in the years ahead. Amid the uncertainty, some localities have planned projects but are waiting to make major commitments until they know what happens with the initiative. Its backers, however, point to overflowing state coffers as evidence that SB 1 was unnecessary. They argue that the state could easily pay for this work already by rearranging the priorities within its massive budget.

Who is supporting the campaign?


The repeal push is led by members of California's Republican congressional delegation and GOP gubernatorial candidate John Cox. Many of them have personally contributed hundreds of thousands of dollars to qualify the initiative as part of a strategy to drive up conservative turnout in November and protect 10 Republican House seats that Democrats are trying to flip. The California Republican Party has already used the taxes, which are generally unpopular with the public, to recall a state senator who voted for the plan, thereby erasing Democrats' supermajority in the Senate.


Who is opposed?


Just about everybody else.


The California Chamber of Commerce believes it will hurt business in the state. Labor unions don't want to lose the construction jobs. Cities and counties are eager for the funding. Even many environmentalists have come around because money was set aside for public transit, pedestrian and bicycling projects. And, of course, Gov. Jerry Brown, who made the road and highway repairs one of his biggest policy priorities of the last few years, will be a leading voice against the initiative. He has already been making appearances at groundbreaking ceremonies with politically vulnerable Democrats who supported SB 1.



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