06/18/2015 by Justin Ewers

CA Fwd offers policy framework for special legislative session on road funding


(Photo Credit: bcgrote/Flickr)

While state leaders agreed on a $167 billion budget this week, Gov. Brown also called a special legislative session to solve a funding challenge the last three governors have struggled to address: a $59 billion backlog in state road and highways maintenance.

CA Fwd highlighted this shortfall as one of the state’s biggest fiscal issues in its Financing the Future series—and this week offered lawmakers a detailed set of revenue options for closing funding gaps, while also improving the governance of the transportation system.                                                                                                                                      

“If your roof is leaking, you better plug it up or you're going to pay more later,” the governor said this week, noting that “everything” would have to be on the table for California to remain a “first-class” state: “We have massive underfunding of our road maintenance program, and one way or the other we're going to have to find some solutions."

State roads aren’t the only part of the transportation system in desperate need of investment, of course. According to a recent study by the California Transportation Commission, the state will need to spend over $500 billion over the next decade to maintain everything from airports, freight lines, and public transit systems. Between federal, state, and local sources, there is only enough funding to support about half of these investments.

“The key to sustainable infrastructure financing will be integrating new funding sources and incentives with changes in governance and procurement practices," said Jim Mayer, president and CEO of CA Fwd. “We also will need to rethink the constitutional rules that make it difficult for regions and local communities to fund more of these projects themselves. It is heartening to see this is exactly what the governor’s executive order puts on the table.”

According to a recent Caltrans report, California requires roughly $6.2 billion a year to maintain state highways, $6 billion to preserve local roads, and another $6.4 billion to keep up mass transit systems. As cars become increasingly fuel-efficient while maintenance costs climb, gas tax revenues have not been able to keep pace. The state currently has the resources to fund about half of these projects.

Lawmakers have introduced several bills that would raise between $2 billion and $3 billion annually, but they would expire after five years, providing only temporary funding. And while the proposals would certainly reduce the road system’s funding shortfall, even a $3 billion-a-year revenue solution would only allow California to top off one of its three transportation buckets—leaving the other two half-empty.

In Financing the Future, CA Fwd urged state leaders to think more broadly about the state’s infrastructure financing challenges—outlining a comprehensive policy framework with a menu of revenue and governance options for meeting the state’s transportation funding needs. These ideas include a range of state funding options—the gas tax, Vehicle License Fee, and a proposed new road usage charge—as well as ideas for providing local governments and regions with more flexibility to address these funding shortfalls themselves.

“As the state grows in diversity and complexity, new approaches are required to support our highest priorities. This includes looking outside the state budget—and trying to find ways to connect local revenues with economic regions to improve how investments are made,” said CA Fwd’s Mayer. “The ideas highlighted in Financing the Future aren’t the only ones out there, but they have the most potential for allocating the tax burden fairly, encouraging economic growth, and producing stable and adequate revenue—while also giving voters more control over the taxes they pay.”

Call it a policy framework. Call it a draft agenda for the new special session. To close a nearly $60 billion funding shortfall, all of these options will need to be considered.

Categories: Fiscal Reform, Budget Reform, State Budget, Revenue Reform, Tax Reform, Economy, Smart Investment, Infrastructure, State Budget, Tax Reform

More Stories +Share this Post