Brown and Legislature Hit Infrastructure Funding Gridlock

Infrastructure constructionWith big infrastructure questions still unanswered, Gov. Jerry Brown has found himself at loggerheads with lawmakers in Sacramento.

From water storage to road repair and beyond, legislators have not met Brown eye to eye, raising the prospect of a protracted conflict that continues well into next year, with elections looming next November.

Diminishing returns

Brown had prided himself on a relatively hands-off approach to Sacramento’s fractured political configuration, which has seen moderate Democrats sink strict environmental regulations and Republicans adopt an on-again, off-again approach to negotiations with the governor’s office. “This particular approach of mine has worked in the past,” Brown said, according to the Los Angeles Times. But between California’s drought and its challenges in shifting away from the gas tax to maintain public roads, that comfortable attitude has begun to show diminishing returns.

“Administration officials estimate that $59 billion is needed for state roads, and local officials say an additional $78 billion is required for cities and counties. The longer it takes to reach a deal, the bigger the price tag will be,” the Times reported.

Analysts and opinion writers, long frustrated with the low quality of California’s roads, have homed in on the latest round of infrastructure troubles. “Traffic accidents in California increased by 13 percent over a three-year period — the result of terrible roads and worse drivers,” as Victor Davis Hanson wrote in the San Jose Mercury News. Hanson and others have held up roads as a barometer of the state’s broader political and economic health. “Why is California choosing the path of Detroit,” he asked, “growing government that it cannot pay for, shorting the middle classes, hiking taxes but providing shoddy services and infrastructure in return, and obsessing over minor bumper-sticker issues while ignoring existential crises?”

Looking for leadership

Brown has even taken some implicit heat on infrastructure from within his own administration. The state’s treasury secretary John Chiang recently revealed his belief that the governor needs to launch a new, transparent and top-to-bottom review of California’s infrastructure needs.

“Chiang wants to use the treasurer’s office to foster long-term thinking that California is sorely lacking and arguably has lacked since Pat Brown was governor in the 1960s, Chiang said at his keynote address to the California Debt and Investment Advisory Commission’s event before the Bond Buyer’s California Public Finance Conference,” according to Bond Buyer.

“One of the challenges the state faces is to persuade people of the importance of long-term investment in an environment where many of them distrust the financial markets, Chiang said. That’s where transparency comes in. The state has made progress in governance and management evidenced by its boosted bond ratings, but people still ask what the long-range plan is, Chiang said. […] Such a study would need to come from the governor and the state Legislature, however, not the treasurer’s office, Chiang said. His office’s role would be to provide education.”

Winter worries

Clouding the picture further, Congressional Republicans in Washington have taken Brown to task on plans for shoring up the state’s water infrastructure. “The Republican members of California’s delegation are demanding a government plan to store the deluge of water that could come with El Nino this winter,” the Sacramento Bee reported. “Fourteen GOP lawmakers will send a letter to President Barack Obama and Gov. Jerry Brown on Thursday asking for specifics about how federal and state agencies expect to capture, save and transport water. […] Rep. Devin Nunes, R-Calif., said the governor has opposed a plan approved by the House, and the Senate hasn’t proposed one of its own.”

Meanwhile, the public utilities have joined in the chorus. In an op-ed at the Los Angeles Daily News, California Water Association executive director Jack Hawks warned that “we cannot build a reliable water supply on conservation alone. Customers have been doing an outstanding job during the current drought emergency, but this level of conservation is not sustainable over the long term.”

Originally published by CalWatchdog.com

CA Legislature Debates How to Fund Road Repair

LA-Freeway-Xchange-110-105There is consensus that California’s road and highways must be fixed. There is no consensus how the fix should be paid for. The Special Session legislative meeting Friday was called a first step in finding agreement to the funding problem. The Democrats see tax increases as part of the mix; Republicans want to prioritize the use of existing dollars for the roads. The tricky part of compromise is the push for any taxes in the context of so many other tax increases that could be presented to voters.

Governor Jerry Brown has proposed a yearly funding package for the roads of $3.6 billion. The package includes a 6-cent gasoline tax increase, an 11-cent diesel tax increase, both tied to inflation, a $65 car fee and cap-and-trade funds. His proposal is little more than half what legislative Democrats and a coalition of business, labor and construction groups have called for.

Republican proposals also include cap-and-trade money. In this case, the money would be used directly for the roads. The governor’s plan would funnel cap-and-trade dollars to bus lanes and rail. The Republicans also would trim CalTrans staff, direct weight fees and other transportation monies exclusively for the roads and employee other methods without raising taxes.

Not only have the Republicans expressed opposition to tax increases but there is no certainty that all Democratic legislators would support a tax increase.

The informal group of Moderate Democrats who banned together to stop the provision in climate change bill SB 350 to cut petroleum use in half over 15 years objected that their constituents would pay a higher cost for commuting. Cap-and-trade that now covers gasoline refining and has raised the cost of gasoline about 10-cents a gallon. Additional taxes on gasoline would adversely affect many of their constituents, the moderate Democrats believe.

The governor wants the funding package to move through the legislature quickly for strategic reasons.

For one thing, the plunging cost of gasoline may undermine the argument that the gas tax increase will hurt low-income drivers. Even a tax increase on gas would leave the cost of a gallon of gasoline well below recent price levels.

If debate lingers until next year, it becomes an issue for candidates running for office in an election year. Remember, a car fee increase was a major reason for a governor’s recall just a decade ago.

If a package of gasoline taxes and car fees should end up on the ballot it would probably get a cold stare from the voters. Likely there will be a number of tax increases on the November ballot. An extension of Proposition 30, a cigarette tax, perhaps a property tax, maybe others could be on that ballot. A roads funding package will not look so good in the context of all these tax increase proposals.

The roads and highways are the veins and arteries that pump life into our economic system. They must be cared for to prevent the economic system from getting a form of man-made sclerosis. The governor and legislators during the Special Session are walking a tightrope to balance the need to improve the roads and highways with voters being turned-off by a slew of tax proposals.

Originally published by Fox and Hounds Daily

On Bullet Train, Voters Finally May Get to Apply the Brakes

high speed rail trainPencils have erasers. Computers have the undo command and the escape key.

If you had it to do over again, would you vote for the bullet train?

It was called the “Safe, Reliable High-Speed Passenger Train Bond Act” on the 2008 ballot, and it authorized $9 billion in bonds — borrowed money — to “partially fund” a high-speed train system in California.

The ballot measure required that there would be “private and public matching funds,” “accountability and oversight” and a focus on completing “Phase I” from Los Angeles to San Francisco to Anaheim. Bond funds could not be spent on the other corridors, like Fresno to Bakersfield, unless there was “no negative impact on the construction of Phase I.”

Today the estimated cost is over $68 billion, private and federal funds are not in sight, and accountability has been cut back — instead of two spending reports to the Legislature every year, only one report every two years will be required. And “Phase I” broke ground in Fresno.

Place your finger on the escape key and stand by. State Sen. Andy Vidak, R-Fresno, has introduced a bill, co-authored by Assemblyman Rudy Salas, D-Bakersfield, to put the bullet train before the voters again. If Senate Bill 3 (SBX1-3) can muster a two-thirds vote in the state Senate and Assembly, it will be on the June 2016 ballot.

The measure would freeze spending on the bullet train and direct unspent funds to the Department of Transportation to be used for roads, which would come in handy because California needs $59 billion just to maintain the freeways for the next 10 years. Gov. Jerry Brown has called a special session of the Legislature to look for revenue to fill the state’s transportation budget pothole after signing a “balanced” budget that left that item out.

The non-partisan Legislative Analyst’s Office offered some suggestions that illustrate the difference between what tax increases can raise and what the bullet train costs.

• Raising the tax on a gallon of gasoline brings in $150 million per 1 cent increase.

• Raising the tax on a gallon of diesel fuel collects $30 million per 1 cent increase.

• Raising the vehicle registration fee nets $33 million per $1 increase.

• Doubling the vehicle weight fees raises about $1 billion.

• Raising the vehicle license fee hauls in roughly $3 billion per 1 percent increase.

There are other options. The LAO says lawmakers could prioritize the budget to use money from the general fund to maintain and construct roads. Billions in cap-and-trade revenue, collected from fees now levied on gasoline and diesel fuel, could be used for highway projects that reduce traffic and improve mileage.

Additionally, $900 million that was loaned from state transportation accounts to the general fund could be repaid and used for roads. “Efficiency and effectiveness” could be improved by prioritizing cost-effective maintenance projects, increasing accountability and oversight, and examining Caltrans’ “capital outlay support” program to see if it is “operating efficiently.” Hint, hint.

The scrimping, saving and tax hikes needed to maintain the freeways can’t begin to address all the other transportation infrastructure needs, and we still have to pay for the rising costs of Medi-Cal, unfunded pensions and health benefits for state employees, and desperately needed water projects.

In 2008, the ballot argument for the bullet train promised high-speed rail “without raising taxes,” but it’s a shell game if tax revenue is spent on the train while taxes are raised for the roads.

Sen. Vidak’s bipartisan bill ought to have the support of every lawmaker. Voters deserve a chance to undo the bullet train and escape from this mess.

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Reach the author at Susan@SusanShelley.com or follow Susan on Twitter: @Susan_Shelley.

​Why Higher Taxes for Potholes is a Bad Idea

road_blockTo paraphrase Ronald Reagan, here we go again. Once more, taxpayers are being told by our political elites that, if we want good roads, we have to have higher taxes.

Just a few weeks ago, this column exposed the politicians’ plan to hike gas taxes along with vehicle license fees and registration. This plan, by San Jose lawmaker Jim Beall, would slam taxpayers in three ways. First, it would raise at least $3 billion annually by increasing the gas tax by another 10 cents a gallon. Second, it would hike the vehicle license fee, which is based on value, by more than 50 percent over 5 years. Third, it would increase the cost to register a vehicle by over 80 percent.

The latest scheme is Assembly Constitutional Amendment 4 which would weaken Proposition 13 by eliminating the two-thirds vote for local transportation sales taxes. ACA 4 is a bad idea. California already has the highest state sales tax in the nation. Not only that, but sales taxes are highly regressive, hitting the poor and working middle class the hardest.

It is true that California ranks very low nationally in the condition of its roads and highways. But, in addition to an already high sales tax we also have the highest income tax rate in America and the 4th highest gas tax. (And, by the way, that gas tax doesn’t even include the cost of California’s one of a kind “cap and trade” regulations which substantially increases the cost of every gallon of fuel pumped in California).

The truth is that the sad condition of our highways has nothing to do with the lack of tax dollars and has everything to do with poor management and bad choices in deciding where our transportation dollars are spent. Our taxes are far more likely to be paying for projects we don’t even need — like High Speed Rail — or a bloated Caltrans budget than they are for fixing roads.

There’s another compelling reason why, should it ever make it to the ballot, ACA 4 deserves to be resoundingly defeated.  At least 20 counties in California, including all the large ones, have already passed higher sales taxes with the two-thirds supermajority vote mandated by Prop 13. Billions of dollars have been raised by these so-called “Self-Help Counties” all for transportation purposes. In going to the voters, local officials have to make sure that they propose projects that are truly needed. Lowering the vote threshold will only incentivize waste and the funding of pet projects, not the high priority needs of California motorists.

We believe very strongly that taxpayers shouldn’t have to pay the price for bad decisions made by politicians and bureaucrats. Until our elected leaders direct the vast amount of money already available for highway improvements to those needed projects, we certainly shouldn’t consider even higher taxes and weakening Prop. 13. That’s why HJTA will oppose ACA 4 and we urge all California taxpayers to do the same.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Originally published by the HJTA.org

CA Politicians Reach Into Transportation Funds, Ignore Crumbling Infrastructure

california roads infrastructureNow there is no question that road and bridge maintenance is lagging in the Golden State. Most counties have an average pavement rating of “at risk” or “poor” according to a finding by the California Transportation Commission. In addition to the safety hazards caused by poor road maintenance, there is a direct cost to the average California driver of hundreds of dollars for vehicle maintenance and tire wear.

Before assuming that that the Sacramento politicians are justified in seeking to dig deeper into drivers’ wallets, it is important to point out that billions in transportation tax dollars have been spent on other programs. State government has been diverting a billion dollars a year in annual truck weight fees to pay debt service on general obligation bonds and another $100 million annually in gas tax revenues to the general fund.

Now, in theory, all transportation tax revenues are to go for transportation purposes. Voters have passed several propositions they were assured would guarantee this result.

However, Sacramento has used slight-of-hand to divert these revenues. For example, after voters approved $20 billion in transportation bonds in 2006, bonds that were to be repaid from the general fund, officials later decided to use transportation tax revenue for bond repayment, freeing up general fund revenue for other purposes.

Some will argue that it is appropriate that transportation taxes repay transportation bonds, but voters were lead to believe the money would come from the general fund. When the state passes school bonds, they are repaid from the general fund.  When water bonds are passed, they too are repaid by the general fund. There is no reason transportation bonds should be different. By using transportation tax revenue to pay off bonds, there is not enough money left to maintain the improvements the bonds pay for.

Senate Republican Leader Bob Huff has a better idea that will slap the hands of those who have been reaching into the transportation tax cookie jar and diverting funds from road and bridge maintenance. Huff’s legislation, Senate Constitutional Amendment 7, would close the loopholes and stop this theft of transportation dollars. SCA 7 is the only plan in the Legislature that would provide funds to improve state roads and highways without raising taxes.

However don’t look for quick or easy passage of SCA 7. Its flaw? It does not require a tax increase and for the majority party in Sacramento, which is obsessed with extracting more money from taxpayers, this flaw is likely to be fatal.

It is hard to blame California drivers if they feel a like a lot like the late comedian Rodney Dangerfield who would complain, “I don’t get no respect.”

Jon Coupal is president of the Howard Jarvis Taxpayers Association. Originally posted on HJTA.

Libertarians, Government Unions and Infrastructure Development

 

“Alright, but apart from the sanitation, the medicine, education, wine, public order, irrigation, roads, the fresh water system and public health, what have the Romans ever done for us?”
–  John Cleese, Monty Python’s Life of Brian, 1979

Infrastructure constructionAny discussion of California’s neglected infrastructure has to recognize the three factors most responsible: Libertarians, environmentalists and government unions. Picking libertarians as the first example is not by accident, because libertarians are perhaps the most unwitting participants in the squelching of public infrastructure investment. By resisting government involvement in any massive public works project, libertarians provide cover to public sector unions who know that public works funding competes for tax revenues with their own pay and benefits.

When it comes to squelching public infrastructure investment, however, nobody can compete with California’s environmentalist lobby. Their lawsuits have stalled infrastructure development for decades. And the identity of interests between government unions and environmentalists is multi-faceted. The most obvious is that when there is no money for infrastructure there is more money for government worker pay and benefits. And of course, the more environmentalist regulations are passed, the more need to hire more unionized government workers.

Then there are the unintended and largely unnoticed financial consequences of environmentalism abetting the government union agenda. As California’s carbon emission auction collections slowly grow into billions per year, government jobs are redefined to incorporate “climate change mitigation.” Code inspectors and planning department personnel become climate change enforcers ala revised building codes and zoning laws. Bus drivers become mass transit workers mitigating climate change. Firefighters combat lengthier fire seasons, and even police are called into action because hotter weather is correlated to higher crime rates. And as they work to mitigate the impact of climate change, all of them quietly qualify for a share of the carbon emission auction proceeds.

The unintended economic consequences of environmentalism abetting the government union agenda are among the hardest to explain. Of course environmentalism can slow down economic growth. At some reasonable level – which we’re well beyond – that’s even desirable. But the environmentalist squelching of public infrastructure development, along with competitive private sector development of land, energy and water resources, has created artificial scarcity. In turn, this drives up asset values which helps government pension funds two ways (1) directly through appreciation of their invested assets, and (2) indirectly, by creating new real estate collateral for consumer borrowing which stimulates consumer spending which creates corporate profits and stock appreciation. In short, the economic consequences of artificial scarcity are asset bubbles that, for a time, keep unionized government worker pension funds solvent. When you can’t afford to own a modest home, or run an energy intensive business, remember this.

What libertarians and environmentalists both need to understand is that massive public works are one of the prerequisites for broadly distributed prosperity. And the environmentalist bias against massive civil engineering projects is two-faced. For example, managing delta salinity, the flow of the San Joaquin River, and the very existence of one of the largest refuges for waterfowl in the American southwest, the Salton Sea, are all dependent on dams, aqueducts and irrigation. But no more?

If you search for interest groups that favor massive civil engineering projects, you’ll look far and wide and find nothing of significance. Private sector unions ought to be leading the charge, but in recognition of the power of environmentalists and government unions, they settle for politically correct projects of marginal productive value – high speed rail, delta tunnels, and the occasional stadium. The Silicon Valley lobby is even worse – rather than support abundance through innovation, they embrace conservation through surveillance. If Californians recovered an additional 10 million acre feet per year of fresh water through civil engineering projects such as desalination, dam storage, and sewage reuse, there would be no need to embed internet devices into “smart” (and mandatory) side loading washers, low flow toilets, water meters, dish washers, and irrigation systems.

The biggest challenge ideologically however confronts libertarians. Because in the real world, we need to build civil infrastructure within a financial and legal framework that relies to some significant degree on government. If libertarians can reconcile their ideals with the needs of Californians, they might rally private sector union leadership, practical environmentalists, and altruistic members of the public sector. Massive infrastructure development in California on all fronts is long overdue. The revenue producing elements of this infrastructure could be financed through the pension funds – only consuming a fraction of their assets – and give truth to their currently preposterous assertion that they’re helping our economy.

Imagine if California’s government, with help from private and federal sources, was truly committed to creating abundance again through massive civil engineering projects across all areas of critical infrastructure. Can libertarians find a formula that would enable them to urgently support this without violating their core ideals? Can they support development while also being the watchdog against corruption? It could make all the difference in the world.

*   *   *

Ed Ring is the executive director of the California Policy Center.

Desalination Plants vs. Bullet Trains and Pensions

Current policy solutions enacted to address California’s water crisis provide an object lesson in how corruption masquerading as virtue is impoverishing the general population to enrich a handful of elites. Instead of building freeways, expanding ports, restoring bridges and aqueducts, and constructing dams, desalination plants, and power stations, California’s taxpayers are pouring tens of billions each year into public sector pension funds – who invest 90 percent of the proceeds out-of-state, and the one big construction project on the table, the $100M+ “bullet train,” fails to justify itself under virtually any credible cost/benefit analysis. Why?

The reason is because infrastructure, genuinely conceived in the public interest, lowers the cost of living. This in-turn causes artificially inflated asset values to fall, imperiling the solvency of pension funds – something that would force them to reduce benefits. Beneficial infrastructure is also a threat to crony capitalists who don’t want a business climate that attracts competitors. Affordable land, energy, and water encourage economic growth. Crony capitalists and public sector unions alike hide behind environmentalists, who oppose growth and development, all of it, everywhere – because no new developments, anywhere, suits their monopolistic interests. No wonder the only infrastructure vision still alive in California, the “bullet train,” is nothing more than a gigantic, tragic farce.

Urban Water Consumption is a Small Fraction of Total Water Use

Returning to the topic of water, a basic examination of the facts reveals the current drought to be a problem that could be easily solved, if it weren’t for powerful special interests who don’t want it to be solved, ever. Here’s a rough summary of California’s annual water use. In a dry year, around 150 million acre feet (MAF) fall onto California’s watersheds in the form of rain or snow, in a wet year, we get about twice that much. Most of that water either evaporates, percolates or eventually runs into the ocean. In terms of net water withdrawals, each year around 31 MAF are diverted for the environment, such as to guarantee fresh water inflow into the delta, 27 MAF are diverted for agriculture, and 6.6 MAF are diverted for urban use. Of the 6.6 MAF that is diverted for urban use, 3.7 MAF is used by residential customers, and the rest is used by industrial, commercial and government customers.

Put another way, we divert 65 million acre feet of water each year in California for environmental, agricultural and urban uses, and a 25 percent reduction in water usage by residential customers will save exactly 0.9 million acre feet – or 1.4 percent of our total statewide water usage. One good storm easily dumps ten times as much water onto California’s watersheds as we’ll save via a 25 percent reduction in annual residential water consumption.

California’s politicians can impose utterly draconian curbs on residential water consumption, and it won’t make more than a small dent in the problem. We have to increase the supply of water.

Desalination is An Affordable Option

water-desalinationOne way to increase California’s supply of fresh water is to build desalination plants. This technology is already in widespread use throughout the world, deployed at massive scale in Singapore, Israel, Saudi Arabia, Australia and elsewhere. One of the newest plants worldwide, the Sorek plant in Israel, cost $500 million to build and desalinates 627,000 cubic meters of water per day. That means that five of these plants, costing $2.5 billion to build, could desalinate 1.0 million acre feet per year. And since these modern plants, using 16″ diameter reverse osmosis filtration tubes, only require 5 kWh per cubic meter of desalinated water, it would only require a 700 megawatt power plant to provide sufficient energy to desalinate 1.0 million acre feet per year. Currently it takes about 300 megawatts for the Edmonston Pumping Plant to lift one MAF of water from the California aqueduct 1,926 ft (587 m) over the Tehachapi Mountains into the Los Angeles basin. And that’s just the biggest lift, the California aqueduct uses several pumping stations to transport water from north to south. So the net energy costs to desalinate water on location vs transporting it hundreds of miles are not that far apart.

The entire net urban water consumption on California’s “South Coast” (this includes all of Los Angeles and Orange County – over 13 million people) is 3.5 MAF. Desalination plants with capacity to supply 100 percent of the urban water required by Los Angeles and Orange counties would cost under $10 billion, and require 2.5 gigawatts of electric power. These power stations could also be built for under $10 billion.

Imagine that. For $20 billion in capital investment we could provide 100 percent of the fresh water required by nearly all of Southern California’s urban water users. For around $50 billion, 100 percent of California’s urban water requirements, statewide, could be financed – the desalination plants and the power stations.

California’s taxpayers are currently condemned to shell out at least 500 billion dollars over the next 20-30 years so a train that hardly anyone will ride will careen through expropriated land, and pension funds can invest 90 percent of their assets out-of-state so public sector employees can retire 10-15 years early with pensions that are 3-5 times greater than Social Security. For less than one-tenth of that amount, we can solve our water crisis by investing in desalination. Why not, environmentalists? We’re willing to carpet the land with solar farms, exterminate raptors with the blades of wind turbines, and incinerate the rain forests to grow palm oil – all financed by selling carbon emission permits. Why not disburse brine offshore, where the California current will disburse it far more efficiently than any desalination plant situated on the Mediterranean Sea?

Another way to solve California’s urban water crisis is to recycle 100% of indoor water. Quaternary treatment, where water from sewage is purified and sent back upstream for reuse, is another proven technology already in limited use throughout California. In theory, not one drop of indoor water use can be wasted, since all of it can be reused.

And, of course, imagine how quickly California’s water crisis could be solved if farmers could sell their water allotments to urban water agencies. As it is, myriad restrictions largely prevent them from exercising this option, even though many of them could profitably sell their water allotments and make more than they make farming the crop. Do we really need to grow rice in the Mojave desert to export to China?

Environmentalists alone are not powerful enough to stop Californians from acting to increase water supply. Powerful government unions, pension funds, and anti-competitive corporate interests all have a stake in perpetuating artificial scarcity and authoritarian remedies. It suits them because it consolidates their power, and ensures they get a bigger slice of a smaller pie.

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Ed Ring is the executive director of the California Policy Center.

CARTOON: Fix CA Roads?

Roads cartoon

Wolverton, Cagle Cartoons

10 Reasons to Support Mileage-based User Fees

The debate over gas taxes or mileage-based user fees to fund road construction and maintenance is heating up. Proponents of gas tax increases argue now is the time to proceed because lower gasoline prices would lessen the blow on consumers and blunt political opposition. In California, a commission to study road usage charges and establish a pilot program for mileage charges has begun meeting. Assembly Speaker Toni Atkins has revealed her quest for non-specific fees to pay for road maintenance.

Fuel taxes have been used as the prime method to fund roads since Oregon implemented a gas tax in 1919. Because fuel taxes are charged per gallon, the tax has dropped proportionately with the advent of electric, hybrid, and fuel-efficient vehicles.

Taxpayer advocates have complained that money for the roads has been used for other purposes, especially during the recession. Meanwhile, some electric car users say the gas tax should be increased as if there is no cost to the roads from electric vehicles even though electric car manufacturers and purchasers have received subsidies from the state.

Perhaps surprising to some, the idea of a mileage user fee is supported by the small government, libertarian Reason Foundation and one its founders, transportation expert Robert Poole.

Along with Adrian Moore, Poole produced a report last year supporting mileage based user fees for highways. While the study expressly deals with federal highways, the discussion over mileage base fees could also apply to state roads.

Poole and Moore list ten reasons why supporting a mileage user fee is the best way to fund transportation. As Poole summarized those reasons:

  • Reason 1: Per-mile tolling is a direct, rather than indirect, user fee. Motorists would pay for the amount of service they received; they would pay providers directly for providing that service; and they would know exactly how much they were paying and what they were getting for it.
  • Reason 2: Per-mile tolling is a sustainable long-term funding source for long-term infrastructure, which does not depend on the energy source used to propel the vehicles. Its transparency should help rebuild trust in the highway funding system.
  • Reason 3: Per-mile tolls can be tailored to the cost of each road and bridge, rather than being averaged across all types of roads, from neighborhood streets to massive Interstates; this ensures adequate funding for major highway projects like Interstate reconstruction and modernization.
  • Reason 4: Per-mile tolling reflects greater fairness, since those who drive mostly on Interstates will pay higher rates than those who drive mostly on local streets.
  • Reason 5: If per-mile tolling is implemented as a true user fee, it will be self-limiting, dedicated solely to the purpose for which it was implemented (and enforceable via bond covenants with those who buy toll revenue bonds).
  • Reason 6: Per-mile tolling will guarantee proper ongoing maintenance of the tolled corridors, since bond-buyers and other investors legally require this as a condition of providing the funds.
  • Reason 7: Per-mile tolling also provides a ready source of funding for future improvements to the tolled corridor.
  • Reason 8: Toll financing means needed projects, such as reconstruction and widening, can be done when they are needed, and paid for over several decades as highway users enjoy the benefits of the improved facilities.
  • Reason 9: A per-mile tolling system using all-electronic tolling can easily implement variable pricing on urban expressways to reduce and manage traffic congestion.
  • Reason 10: Per-mile tolling would be the first big step toward replacing fuel taxes with mileage-based user fees—something that most of the transportation research and policy community has concluded should eventually happen.

Concluded Poole: As this policy brief makes clear, the fuel tax was never an “ideal user fee”. It should be replaced with a direct charge for highway services that is sustainable, fair, efficient and—for major highways and bridges—tailored to the capital and operating cost of individual facilities. This system should not create privacy concerns by enabling governments to track where and when people travel, and should give motorists choices in how to pay for their miles traveled.

Others have argued that money for the roads should come from state surpluses or from re-directing revenues dedicated to the high-speed rail project.

The debate over road maintenance costs has begun in earnest.

Originally published by Fox and Hounds Daily

Gas Tax vs. Fee on Miles Driven

Seeking a creative and long-term solution for financing highway and road construction and upkeep, a new commission kicked off its investigation of a “Road User Charge” as a possible replacement for the well-traveled gasoline tax.

Created by 2014 legislation and given the nod by Governor Brown, the ponderously-named Road User Charge Pilot Program Technical Advisory Committee kicked off its deliberations last week. I am privileged to have been appointed one of of the committee’s 15 members, representing business and economic interests.

A confluence of forces continues to reduce the effectiveness of the gasoline tax as a stable revenue source for highways. Pegged to the amount of gasoline purchased, the tax could keep pace neither with inflation in construction costs or increased efficiency in automobile performance. CalTrans has estimated that inflation and improved vehicle efficiency has eroded more than 60 percent of the value of the gasoline tax since 1994. 

And this is before the ambitious roll-out of electric, plug-in hybrid and fuels cell vehicles in the state – which use little or no gasoline and therefore are the quintessential “free riders.”

In his inaugural address, Gov. Brown spoke of the “importance in having the roads, highways and bridges in good enough shape to get people and commerce to where they need to go,” estimating that the state has deferred maintenance and upkeep needs of $59 billion. In calling for a bipartisan solution for transportation finance, the Governor did not single out a mileage fee, but this option is certainly deeply in the mix.

The Advisory Committee has an ambitious agenda: within one year it must recommend how the state’s Transportation Agency can launch a pilot program testing a Road User Charge in real world circumstances. The committee will examine technical feasibility, reliability, implication for privacy rights, data security, motorist compliance, and overhead costs.

California will probably not break new policy ground on this project. The states of Oregon and Washington are already examining mileage fee alternatives, with Oregon on the verge of implementing a pilot project with 5,000 volunteer motorists. Findings from these other West Coast states will be invaluable for California’s consideration.

For more information on this effort and on the Technical Advisory Committee, visit this website at the California Transportation Commission.

Originally published on Fox and Hounds Daily