California Transportation: A New Way of Thinking, Not New Taxes

Carson Bruno
Assistant Dean for Admission and Program Relations at the Pepperdine School of Public Policy

Earlier this month, Assembly Speaker Toni Atkins of San Diego made a bold proposal – add another vehicle fee to the books. Californians typically punish their elected officials for tampering with their vehicle fees. Just ask former Governor Gray Davis, whose tripling of the vehicle license fee became a central argument for his eventual recall. But unlike Davis’s budget Hail Mary, Speaker Atkins’ proposal aims at fixing California’s inadequate transportation system.

According to the American Society of Civil Engineers (ASCE), California receives a C- for the state’s transportation infrastructure “due to existing conditions and the lack of adequate funding.” Moreover, California’s low quality transportation infrastructure is contributing to the state’s poor business climate. In the 2014 CNBC America’s Top States for Business report, California ranks 24th in the nation for its transportation infrastructure, a drop of 5 spots from 2007. Overall, the ASCE recommends that California increase annual transportation funding by $10 billion for ongoing maintenance and invest almost $37 billion in upgrades and new construction.

But California isn’t spending what it needs. The Governor’s Five-Year Infrastructure Plan calls for $57 billion in capital spending – over five years – of which 94% is directed toward transportation projects; however, of the $53 billion going toward transportation infrastructure, 48% is ear-marked for the High Speed Rail project, which will do nothing to ease most Californians’ transportation challenges.

But Speaker Atkins’s plan of closing the transportation funding gap is the wrong approach. To raise an estimated $2 billion per year, the Speaker calls for a new $52 per year per registered vehicle Road User Charge. California’s transportation underfunding, however, isn’t from a lack of resources. Rather, it is from the lack of priority-setting and the failure for California to adapt to a new revenue reality.

California leaders have taken its transportation system for granted and not properly invested in it. Between FY 1984-1985 and the FY 2014-2015, inflation adjusted transportation general and special fund expenditures have grown 2.7% per year, on average, slightly slower than overall inflation adjusted expenditures. And compared to other states, California is under-investing in transportation. According to the National Association of State Budget Officers, national state spending on transportation accounts for 7.8% of total spending, but in California it is just 5.6%. Moreover, the Governor, with the State Legislature’s assistance, plans to divert billions from needed transportation infrastructure toward the High Speed Rail project.

Atkins, however, is trying to adjust those priorities, but the plan still falls short. California’s transportation revenue system is outdated. While Californians are driving more miles (an increase of 26% from 1990), Californians are using less gas (a drop of 9% from 2005). And because California’s transportation revenue system is dependent on gas taxes, the state is collecting less revenue (a drop of 9%, also, between 2003 and 2013). With Californians driving more fuel-efficient cars and with California leading the way on electric vehicles, gas usage is no longer a good approximation of road usage. As a result, the current revenue arrangement will always underfund transportation, perpetually requiring new fees layered on top of the gas tax.

California’s roadways don’t need new taxes; they need a new way of thinking. In the short-term, Sacramento should redirect High Speed Rail funding to our decaying roads, bridges, and public transportation. And in the long-term, California should seriously examine a mileage usage fee in lieu of the gas tax as a more sustainable, fair, and efficient means to invest in the state’s transportation. Only then will California get its transportation priorities right without inefficiently overtaxing drivers.

Hoover Institution research fellow Carson Bruno studies California’s political and policy landscape. Follow him on Twitter @CarsonJFBruno.

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