Fuel-efficient vehicles, while saving money in consumer’s pockets, are creating financial nightmares for the California Transportation Commission (CTC), the agency responsible for the programming and allocating of funds for the construction of highway, passenger rail and transit improvements throughout California.
During a Feb. 16 presentation to the Senate Transportation and Housing Committee, Will Kempton, Executive Director of the CTC, explained how improvement to our current transportation system has not kept pace with demand. Challenges include declining tax revenue and purchasing power due to vehicle efficiency and inflation.
Additionally, increased costs for road maintenance are compounded when that maintenance is deferred. Furthermore, money that has been earmarked for transportation purposes has been diverted for non-transportation purposes, drying up an already low-funded well of monies available for road repair statewide and capital improvement projects.
Funding the well is the gasoline excise tax, a 7.5 percent sales tax on gasoline dedicated to public roads and mass transit. Set at a level of 18 cents a gallon just a few years ago, the price-based portion of the gas tax dropped to 12 cents per gallon last year. The estimate approved by the CTC on Jan. 21 projects that the revenue will fall another two cents a gallon for the coming fiscal year and that stabilization of this source may take longer than expected. Each penny reduction in the gas tax decreases revenue to fund state and local roads by about $140 million per year.
Part of the excise tax funds goes into the State Transportation Improvement Program (STIP), which funds road improvement projects in each county.
However, fuel-efficient vehicles take less gasoline, making the tax less effective than it was even five years ago. Incrementally, this decrease has created a funding crisis that caused the CTC to cut $754 million in funding from the STIP, impacting the CTC’s ability to provide funding for new transportation projects. The slash marks the largest scale back of the state’s transportation program since the creation of the current funding structure nearly 20 years ago.
“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,” said CTC Chair Lucy Dunn. “The commission adopted the most optimistic scenario we could make in good conscience, in the hopes that an agreement will be reached on a number of reforms and new funding increases currently under consideration by the Legislature.”
The CTC is required by law to estimate the amount of funding expected to be allotted to the STIP, which is updated every two years. In August 2015, the CTC approved a funding estimate for 2016 based off of previous forecasts, however, more recent projections point to a worsening financial picture and a significant drop in dollars expected to be available for projects in the 2016 plan. This will require the CTC to rescind funds already committed to projects.
That rescinding process begins this week. On Thursday, March 24, beginning at 10 a.m. the CTC will hold a hearing for each county to present its projects for testimony in Sacramento.
Ten Sonoma County projects will be looked at for reconsideration. Six highway projects, through CalTrans, the Sonoma County Transportation Authority (SCTA) and Metropolitan Transportation Commission (MTC), are slated for funding in 2016. CalTrans projects include supplemental funding toward the Marin-Sonoma Narrows Petaluma project, supplemental funding toward HOV lanes at College Avenue/6th Avenue (Exit 789A) on Highway 101 and landscaping for College Avenue/6th Avenue (Exit 789A). SCTA and MTC both have requests for funding for planning, programming and monitoring projects.
According to Allyn Amsk, CalTrans District 4 Public Information Officer, the cutback will likely affect $31 million in funding for phase two in the Marin Sonoma Narrows Project, which is a gap closure project between the current project at the Petaluma River and the MSN B3 San Antonio Curve Correction project that is starting construction this spring.
Three projects fall under the bicycle and pedestrian projects category. SMART, and the City of Santa Rosa are the lead agencies for the projects. SMART plans to lay SMART bicycle and pedestrian pathways in Rohnert Park, while Santa Rosa plans to enhance its downtown streetscape.
The STIP budget cut is just one of many wells drying up due to the excise tax.
According to Jennifer Larocque, public affairs program manager with Sonoma County Transportation and Public Works, revenue for Sonoma County roads from the State of California Highway Users Tax Account (HUTA) is decreasing and has become highly volatile due to the annual adjustment imposed on the new excise tax intended to ensure the new excise tax provides the same amount of revenue expected from the sales tax on gas.
In fact, current estimates reflect a $7.8 million reduction in new HUTA funding over the two-year fiscal period of 2015-16 and 2016-17, a 67 percent decrease from average funding levels during 2010 to 2015. Larocque said Sonoma County has seen an overall decrease in $5.8 million in HUTA funding.
“Sonoma County has absorbed this reduction by leaving critical positions vacant and lowering investments in road materials, directly translating to a reduction in services to constituents,” Larocque said.
She added that the county has dedicated the “maximum local funds possible” toward county roads with an ongoing general fund contribution of $11.5 million with a one-time allocation of $13.5 million approved in November 2015. That $13.5 million approval came after Measure A, a general tax to pay for county road improvements, failed.
Larocque said there are multiple proposals being drafted in the state legislature that would increase funding in Sonoma County by up to $6.7 million, compared to the $11.9 million currently estimated for Sonoma County from HUTA funds in FY 2015-16.
Typically, transportation projects are funded from multiple sources. The total impact of defunding projects statewide will likely run into the billions and will have a real impact beyond just meeting the transportation needs of Californians. Every $1 billion in highway and transit investments supports 13,000 jobs, not to mention higher costs associated with project delays.