#185 Public Transportation Trust Funds. Gasoline Sales Tax.

by Mary Beth Barber
Copyright 1994, California Journal

An initiative statute that provides for an additional 4 percent tax on
gasoline sales. Revenue would be used for electric rail and clean fuel buses,
light rail, commuter and intercity rail systems, and other transportation
related programs, including wetlands, riparian habitat and parks.

Background: The operating and maintenance costs of the state highway
system are funded mainly from motor vehicle fuel taxes or "gasoline taxes"
and commercial vehicle weight fees or "truck fees." In the 1993 94
fiscal year, California spent approximately $880 million to maintain and
operate state highways. Local roads and streets were maintained by cities
and counties. Transportation experts are concerned that while maintenance and
capital costs are rising, revenues are dwindling. All this aside, Proposition
185 marks the latest in a string of initiatives sponsored by the California
Planning and Conservation League, and its executive director, Gerald Meral.
In the past, the PCL has placed initiative bond measures before the public,
and has been successful in winning their passage. Their efforts, however,
also earned the scorn of legislators and other opponents, who claimed that
the League's proposals amounted to "Christmas trees," because, they charged,
the PCL used bond money to fund the pet projects of various special interests
in exchange for those interests' financial support in qualifying and passing
the initiative. The PCL's most recent bond effort Proposition 180 for
state parks was defeated by voters during the June primary election. This
time, the League has eschewed bonds as a funding sources for its measure and
instead proposed upping the gasoline tax.

Proposal: This measure imposes a 4 percent sales tax on gasoline not
diesel fuel beginning January 1, 1995. This new sales tax is in addition
to the existing $.18 per gallon state tax on gasoline and diesel fuel and the
average sales tax of approximately 8 percent imposed by the state and local
governments on all goods, including gasoline. Revenues generated by the
increased tax will be used to improve and operate passenger rail and mass
transit bus services, and to make specific improvements to streets and
highways. The measure also contains various provisions that generally place
restrictions on the use of certain state and local revenues for
transportation purposes. Earthquake safety projects and electric and
clean fuel vehicle research and development, an early priority, would expire
in 2000 and 2010, respectively. High speed rail in along the Los Angeles San
Francisco corridor would be a priority, as well as transit services in the
Yosemite and Lake Tahoe areas. Based on current gasoline prices and
consumption levels, the measure would generate about $630 million annually.

Arguments for: Proponents include officials from the Congress of
California Seniors, the Coalition for Clean Air, the Planning and
Conservation League, Citizens for Reliable and Safe Highways, and the
California Public Interest Research Group. They claim that the measure is a
comprehensive transportation plan that will streamline and revitalize
California's transportation system and therefore California's economy
while ensuring that the revenue is specifically used for transportation
projects, mostly by local governmental agencies. The Legislature, they
claim, has taken money allotted for transportation and spent it for other
purposes, and has allowed large amounts of money to be spent on bureaucracy.
Funds also will be used to reinforce bridges and roads against earthquake
damage a high priority in earthquake prone areas, especially in light of
the Northridge earthquake.

Arguments against: Opponents include officials from the California
Transportation Commission, the California Highway Users Conference, the
California Taxpayers' Association, the California Business Alliance, and the
Alliance of California Taxpayers and Involved Voters. They argue that the
additional tax is a permanent tax that can't be limited in the future and
would hurt the state's fragile economy. Also, the initiative identifies too
many specific programs or "pet projects" rather than allowing regional and
local transportation planners decide how best to spend the funds. Priorities
in the initiative are those of the proponents and their groups, not of the
citizens of California, opponents say. Funding for earthquake safety isn't
adequate in this program, they claim, and priorities established in the
measure are not in line with the state's real needs. They favor cutting waste
and carefully selecting projects to create a better solution to California's
transportation problems.


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