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Eno Transportation Weekly

June 5 California Primary Features Two Ballot Measures Relevant to Transportation

May 31, 2018 – California voters can weigh in on two separate transportation measures on the ballot next Tuesday, June 5. While the two propositions are unrelated, both are attempts to revisit major state legislation that was passed last year.

Proposition 69

In 2017, California enacted a major transportation revenue increase (Senate Bill 1) that increased the gas tax by 12 cents per gallon, the diesel excise tax by 20 cents per gallon, and the diesel sales and use tax by 4%. In addition, SB1 raised annual vehicle registration fees by up to $175 and established a $100 annual fee for zero-emission vehicles.  The purpose of the law was to raise an extra $5.2 billion per year to construct and maintain transportation infrastructure.

Proposition 69 proposes to amend the constitution by earmarking the funds raised in SB1 to be used for transportation purposes only, such as repairing roads and improving public transportation. It is effectively a “lockbox” amendment, like the one enacted by Illinois voters in 2016, by Louisiana voters in 2017, and similar to the one on the Connecticut ballot this fall.

If the measure does not pass, the California legislature could allow a portion of the funds raised from the 2017 law to be allocated toward non-transportation purposes. An analysis from the Los Angeles Times this week found that persistent accusations of diversion of transportation revenue to non-transportation programs was “essentially a myth” but did point out to one instance of diversion in 2000 under Gov. Gray Davis.

Lockbox measures are usually broadly popular, but this particular amendment is politically entwined with another that will be on the November ballot. Republican opponents of the SB1 gasoline tax increase are mounting a campaign to repeal the 2017 law in this November’s general election, with one poll indicating that 51% of voters favor repeal.

If Prop 69 passes next week, this might weaken the case this fall for repealing the gas tax increase, since the charge that the gas tax money could be diverted for other purposes would be a more difficult sell.

Proponents assert that Prop 69 will enable California to maintain its infrastructure without raising taxes again anytime soon. Groups such as the League of Women Voters of California, the California Chamber of Commerce, the California NAACP, and the Congress of California Seniors – all of which supported SB1 – support the measure.

California is not alone in facing a growing need to repair transportation infrastructure. The federal government and states nationwide must find ways to finance the maintenance of rapidly deteriorating assets. Amidst political opposition to indexing the gas tax to inflation rates, proposals like this one, which responds to increased taxes and fees by ensuring that those funds are specifically allocated to transportation needs, can begin to move the needle on years of backlogged infrastructure improvements.

Proposition 70 

This legislative constitutional amendment “requires [a] legislative supermajority vote approving use of [the] cap-and-trade reserve fund.” Prop 70 proposes that cap-and-trade revenues be placed into a reserve fund in the year 2024, and that only a two-thirds majority vote of the legislature can approve a plan for distributing that money in 2024 and subsequent years. This proposition is part of to Governor Jerry Brown’s compromise with the state legislature last year to extend the state’s cap and trade program, which requires companies to buy permits to release greenhouse gas emissions, through the year 2030.

In order to get the needed Republican votes for the cap-and-trade extension last year, Brown had to agree to put Prop 70 before voters this year. If successful, it would give the minority party – likely to be Republicans – the potential to veto how the billions of dollars raised through cap-and-trade are spent after 2024.

Proponents of the measure claim that a two-thirds majority vote will ensure that funds are not earmarked for politicians’ pet projects, and that the two-thirds majority in 2024 will be better equipped to ensure that cap-and-trade revenue is spent wisely. Gov. Brown, Rep. Chad Mayes (R), the California Chamber of Commerce, and the Rural County Representatives of California support the measure.

Opponents claim that the measure will not lead to more responsible spending, and that a two-thirds majority could lead to increased funding of pet projects to encourage on-the-fence lawmakers to sign on to future votes. They see the measure as an effort to ultimately curb the cap-and-trade program’s environmental benefits. The California Democratic Party and dozens of environmental organizations oppose the measure.

But if Prop 70 passes, the most immediate effects will be felt by the California high-speed rail project. The 2018 Business Plan of the project, adopted by its board of directors two weeks ago, calls for raising between $4 billion and $11 billion by issuing bonds to be repaid from cap-and-trade receipts after the year 2024. If Prop 70 passes, it will be unconstitutional for the legislature to allow bonds to be issued from post-2024 cap-and-trade proceeds until after that two-thirds vote six years from now. Without the cap-and-trade bonding, the new business plan does not show a way to complete the initial, San Jose to Bakersfield segment of the project (see chapter 3 of the document).

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