Gavin Newsom’s threat to localities is extortion by any other name

Shortly after his inauguration, Gov. Gavin Newsom announced that he would withhold funds designated for transportation from local governments that didn’t comply with his vision for affordable housing. His move could be characterized as either the height of hypocrisy or extortion. Take your pick.

Let’s start with the hypocrisy. Our new governor has complained bitterly about how the federal government — i.e., the evil Trump administration — threatens to withhold funds from California. He has criticized the withholding of high-speed rail funds from the feds because of California’s failure to meet benchmarks imposed as a condition for the receipt of those funds and he complained about the withholding of law enforcement dollars because of the refusal of California to cooperate with ICE.

In his ongoing war with the federal government, Newsom has bragged about how many times he has sued the federal government, alleging that Trump is engaging in heavy-handed pressure against progressive states like California. It is apparently lost on the governor how hollow his protests appear when he threatens local governments in the same manner.

As for the extortive threat itself, it is little wonder that Newsom has received copious amounts of blowback from other elected officials across the political spectrum. Sen. Jim Beall, D-San Jose, chair of the Senate Transportation Committee, called the move “very unwise.” Likewise, the chairman of the Assembly Transportation Committee, Jim Frazier, D-Discovery Bay, challenged the idea that new conditions should be placed on road maintenance funds. “It is not fair, or in good faith, to deny them the benefits of [gas tax money] after they have paid for it, based on local government decisions they have no control over.”

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Democrats eye post-election transportation session

As reported by Politico:

SACRAMENTO — After a year of stalled negotiations on a multi-billion dollar transportation plan, Democratic legislative leaders are privately discussing reconvening the state Legislature after the Nov. 8 election to take up road funding in a special session, legislative sources said.

In a lobbying effort supported by Assembly Speaker Anthony Rendon and Senate President Pro Tem Kevin de León, state Sen. Jim Beall and Assemblyman Jim Frazier, chairman of the chamber’s Transportation Committee, have reached out to colleagues in recent days to seek support for a transportation bill.

Frazier and Beall helped craft a $7.4 billion transportation proposal this year that would have included a 17-cent-per-gallon increase in the gas tax, though that measure would likely be amended before lawmakers take it up. Gov. Jerry Brown, who previously called for a smaller, $3.6 billion transportation package, remains resistant to the lawmakers’ more expensive proposal, sources said. …

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17-Cent Gas Tax Hike on the Horizon

gas prices 2The Democratic member who has led the push in the Assembly for a gas tax hike to pay for transportation improvements is teaming with the Democratic senator who has played the same role in his chamber. And the pair want to be far bolder that Gov. Jerry Brown was in his 2015 proposal.

Assemblyman Jim Frazier, D-Oakley, and Sen. Jim Beall, D-San Jose, propose a 17 cent per gallon tax increase to fund a $7.4 billion transportation program, with likely additional annual hikes after adoption because the rate is indexed to inflation. They also want to increase the tax on diesel fuels by 30 cents a gallon, with the same indexing provision, and to make it easier to get approvals for transportation infrastructure improvements.

Brown’s proposal — which went nowhere in a special session — was built on a 6 cent per gallon tax increase and other provisions that would have funded a $3.6 billion transportation plan.

Bitterness over 2010 gas tax swap hangs over debate

The huge problem facing any proposal to raise taxes of this sort is the need for two-thirds approval, which means Republican votes in both the Assembly and Senate are necessary. And Democrats lobbying for GOP support don’t just have to overcome traditional Republican opposition to higher taxes. There continues to be deep bitterness over the gas tax swap that GOP Gov. Arnold Schwarzenegger and Democratic lawmakers pulled off in 2010 to plug a $1.8 billion hole in the 2010-11 budget. Republicans aware of this history would struggle to believe that the tax hikes that Frazier and Beall seek for road repairs might not at some future date be used to pay for state salaries, pensions or other needs unrelated to potholes and aging bridges.

The background: Irate over previous diversions of gasoline sales taxes from road repairs to other uses, California voters twice this century passed ballot measures — Proposition 42 in 2002 and Proposition 1A in 2006 — that banned such use of gas sales tax revenue.

But gasoline excise taxes can be spent on general fund obligations. So in 2010, gas excise taxes were sharply raised and gas sales taxes sharply reduced. Because the move was revenue-neutral, Schwarzenegger and Democrats successfully argued that the maneuver only needed to pass on a simple majority vote — not the two-thirds vote needed for tax hikes.

As a result, each year, the state Board of Equalization announces whether it is raising or cutting state excise taxes on gasoline to honor the deal’s requirement that the 2010 gas tax swap be roughly revenue-neutral.

Recent coverage of the Frazier-Beall initiative has not detailed whether the 17 cent per gallon tax hike would be entirely in the gas sales tax or entirely in the gas excise tax or a combination of increases in each.  If it were in the gas sales tax, that would nominally mean the money could only be spent on road repairs and infrastructure improvement because of Propositions 42 and 1A. But another gas tax swap could enable the money to be diverted to the general fund by a simple majority of the Legislature in the future, at least if the governor was amenable.

Republican lawmakers are also likely to be wary of another part of the Democratic lawmakers’ proposal: a $165 yearly fee for owners of zero-emission vehicles to help pay for road improvements. While that’s higher than what most states with such fees charge, it’s only half of what the average U.S. car owner pays in gas taxes a year, according to data from 2013.

The argument that zero-emission vehicles should pay more toward road maintenance is dismissed by greens who cite the environmental benefits of the vehicles. But as such vehicles become more common — and as states push gas taxes higher — owners of regular vehicles and free-market advocates are likely to cry foul.

Originally published by CalWatchdog.com

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