225 California Transportation Projects at Risk

March 7, 2016

"We're taking another whacking," spokesman John Goodwin of the Metropolitan Transportation Commission said of the decision last month to trim the State Transportation Improvement Plan by $754 million this year -- marking the largest scaling-back of that pot of money in nearly 20 years, with a $328.3 million cut likely next year.

About 225 shovel-ready transportation projects across the state are threatened this year, including the Interstate 680-Highway 4 widening near Antioch, the Willow Road-Highway 101 upgrade in Menlo Park and the planned Highway 1 widening in Santa Cruz.

According to the Mercury News, former Governor Schwarzenegger made a legislative deal in 2010 known as the gas-tax swap. The deal reduced the two part gas tax in two ways. First, the sales tax on gas based on the purchase price of a gallon of gas was lowered. Second, the excise tax which is based on the number of gallons of gas purchased was set to be adjusted annually by the Board of Equalization in an effort to make up for any difference.

The effect of current low gas prices and the increasing uses of hybrids, electric cars, and high efficiency gas vehicles means less sales tax is collected based on the lower gas prices and less excise tax is collected on fewer gallons sold.

Bottom line, each penny drop in the gas tax means a loss of $149.2 million a year. In the last two years, California has seen the gas tax drop 9 cents and expects it to drop 2.2 cents more by July.

In a letter to the Legislature, the California Transportation Commission said the effects of reducing the transportation improvement plan funding "will be nothing short of catastrophic." George Dondero, who heads the Santa Cruz County Regional Transportation Commission, calls the scale "unprecedented."

If gas prices remain low, as predicted through 2017, CalDot will have to push back projects or cancel them all together. Unlike past funding cuts, local agencies are being warned that some work will be canceled and not just delayed.

"The cuts come at a real bad time," said Sandy Wong, executive director of the San Mateo County Transportation Authority. "We expended a lot of resources in getting the projects ready. We also have lined up local match funds. But the state funds already committed for years are now all of a sudden in jeopardy."

The California legislature and Governor Jerry Brown are considering several funding proposals, some of which would raise the gas tax up to 22 cents per gallon, but similar attempts have met with strong opposition. Any proposal requires a two-thirds approval by the senate and assembly.

Most of the projects affected are streets and highways. For a list of projects in trouble, click here.

Source: Mercury News; Gary Richards.