On Sunday I wrote this in the context of arguing against Props 1B – E:
Nobody can deny the importance of the goals that Propositions 1A – 1E aim at. California’s infrastructure, especially its transportation system, is crucial to the smooth functioning of its economy.
Consider that all the time we spend stuck in traffic results in a massive loss of productivity. All those cars stuck in bumper to bumper traffic during rush hour could be spent at the office or at home engaged in productive tasks.
On top of that there is the emotional cost, the frustration that comes from being stuck in traffic and knowing you are going to have to weather it day in, day out, as well as the cost in accidents and the injuries and lost lives that result from them.
The problem with Props 1B – E, specifically 1B, the transportation proposition, is that we don’t need to issue new bonds to address the problem. We already have state taxes in place that are supposed to be used to maintain and improve our transportation infrastructure.
According to the Legislative Analyst, the state currently levies two types of taxes on motor fuels meant to fund transportation infrastructure: an 18 cents/gallon gas tax and a 6% sales tax. Revenues from the gas tax total about $3.4 billion per year and are restricted to transportation purposes by the State Constitution. The sales tax provides about $2 billion per year but up until 2002 those revenues were not used for transportation purposes.
In 2002, Californians passed Proposition 42 to dedicate those $2 billion in sales tax revenues to transportation purposes. But there was a so called “loophole”:
Proposition 42, however, allows the transfer [of funds from the General Fund to the Transportation Investment Fund] to be suspended when the state faces fiscal difficulties. Proposition 42 is silent as to whether suspendd transfer amounts are to be repaid to transportation.
In 2003-04 the state partially suspended transfer of the sales tax funds to the Transportation Investment Fund and in 2004-05 it fully suspended their transfer.
Proposition 1A plugs the loopholes in Proposition 42. Transfer suspensions are to be treated as loans and repaid, with interest, within three years of suspension. Second, suspensions are limited to twice every 10 years. Finally, the proposition lays out arrangements for the suspended funds in 2003-04 and 2004-05 to be repaid.
California’s voters already decided back in 2002, with the passage of Proposition 42, that the $2 billion in sales tax revenues on the sale of motor fuels should be used for transportation purposes. Let’s plug the loophole by passing Proposition 1A!