In April 2017, Governor Brown signed Senate Bill 1 (SB 1), the Road Repair and Accountability Act, into law. This legislation addresses road maintenance, rehabilitation, and safety needs of both the State highway system and local streets by increasing the fuel excise tax, diesel fuel sales tax, and charging additional vehicle registration fees. Specifically, SB 1 includes a 12-cent per gallon increase in the gasoline excise tax; a 20-cent per gallon increase in the diesel excise tax; a 4% per gallon increase in the diesel sales tax rate; a new vehicle registration fee known as the “Transportation Improvement Fee” ranging from $25-$175; and a new $100 per year “Road Improvement Fee” on zero-emission vehicles starting with year 2020 models. In total, SB 1 is estimated to generate $5 billion annually in transportation funding statewide, including $1.5 billion a year for California cities and counties to supplement local funding for street maintenance efforts.
Since November 1, 2017, a portion of this new funding, the Road Maintenance and Rehabilitation Account (“RMRA”), has been apportioned by formula to eligible cities and counties for local street purposes. This funding has been used to help augment the City’s Fiscal Year 2017-2018 paving capital project, which included the re-paving and repair of 16 streets, including Ocean Avenue. The estimated SB 1 revenue for Fiscal Year 2018-2019 is proposed to be combined with local funds (Measure D and Measure X) to repair failed paving areas, slurry seal and restore striping and paving markings along 26 street segments and overlay 8 street segments throughout the Village.
On June 28, 2018, the California Secretary of State qualified the Proposed Initiative No. 17-0033, “Voter Approval for Increases in Gas and Car Tax” for the November 6, 2018 general election ballot (Attachment 1). This initiative, known as Proposition 6, proposes to amend the State Constitution to require voter approval of the recently enacted increase in gas and vehicle tax as well as any future increases in gas and vehicle taxes and fees.
As displayed on the California Secretary of State webpage, Proposition 6
“Eliminates Recently Enacted Road Repair and Transportation Funding by Repealing Revenues Dedicated for those Purposes. Requires any Measure to Enact Certain Vehicle Fuel Taxes and Vehicle Fees be Submitted to and Approved by the Electorate. Initiative Constitutional Amendment.
Repeals a 2017 transportation law’s tax and fee provisions that pay for repairs and improvements to local roads, state highways, and public transportation. Requires the Legislature to submit any measure enacting specified taxes or fees on gas or diesel fuel, or on the privilege to operate a vehicle on public highways, to the electorate for approval.
Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Reduced annual state transportation tax revenues of $2.9 billion in 2018-19, increasing to $4.9 billion annually by 2020-21. These revenues would primarily have supported state highway maintenance and rehabilitation, local streets and roads, and mass transit. In addition, potentially lower transportation tax revenues in the future from requiring voter approval of such tax increases, with the impact dependent on future actions by the Legislature and voters.”
Should Proposition 6 pass, it will eliminate $5 billion in annual transportation funding for State highway maintenance and rehabilitation, bridge repairs, local street repairs, public transit improvements, and bicycle and pedestrian safety projects. According to the California State Transportation Agency, there are more than 6,500 local transportation improvement projects underway throughout the State, which would be jeopardized as a result of the loss of funding. Examples of projects underway in the Monterey and Santa Cruz region that could be threatened are included as reference (Attachment 2).
As the repeal of SB 1 will have significant impacts to transportation funding, investments in infrastructure, job creation and public safety, a broad coalition of local government groups, including the California League of Cities and California State Association of Counties, labor, business, environmentalists and public safety first responders are opposed to Proposition 6 and have created a “No on 6” fact sheet citing reasons to vote against this ballot measure (Attachment 3).
The purpose of this agenda item is for City Council to consider taking a position on this ballot measure. As explained in more detail within the fiscal impact section of the staff report, SB 1 provides a dedicated funding source to the City for its local street repaving and repair efforts. Thus, staff recommends that the City Council adopt the attached resolution (Attachment 4) and oppose Proposition 6.