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California Gas Tax Increase On The Radar Screen

As hundreds of California public works construction projects have been stopped in their tracks because of an acute cash shortage in state coffers, some Sacramento officials are warning that the current 18 cents per gallon gas tax must be increased.

February 16, 2009

As hundreds of California public works construction projects have been stopped in their tracks because of an acute cash shortage in state coffers, some Sacramento officials are warning that the current 18 cents per gallon gas tax must be increased. The California Legislative Analysts Office (www.lao.ca.gov) said this in a report in January:

Recommendation

Increase the state excise tax (“gas tax”) on gasoline and diesel fuel to provide a stable source of funding for highway maintenance and rehabilitation and index the tax to prevent erosion of the tax’s value over time.

Rationale

Gas tax revenues have traditionally paid for capacity expansions on highways and roads. In recent years, however, growing maintenance and rehabilitation costs have consumed these revenues, leaving little for new transportation projects. The California Transportation Commission projects that gas tax and weight fee revenues currently do not meet the state’s highway maintenance and rehabilitation needs. These revenues are the only source of funding available for highway maintenance. Though some rehabilitation costs can be funded with Proposition 1B bond funds and federal dollars, the long-term issue remains that maintenance and rehabilitation needs are growing faster than the revenues which pay for these activities …

Confirmation

At a recent legislative hearing concerning highway maintenance and repair needs, Transportation California (www.transportationca.com) noted this:

  • CalTrans now has an annual backlog of more than $3.5 billion annually for pavement and highway rehabilitation projects. It would require a 24 cents-per-gallon increase in the gas tax to wipe out that backlog. Transportation California Executive Director Mark Watts, testifying on behalf of transportation stakeholders, emphasized the imperative of addressing critical revenue shortfalls to allow California to move forward after the infusion from Proposition 1B bonds runs its course.

“We have made great progress in addressing the transportation gap in this state,” according to Mark Watts, “but we have a long way to go.”

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