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SCCA Magazine |
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 Critical initiatives on November 2 ballot
As
boring as it
may seem
initially to
read the
official
version of
what these
propositions
will do if
passed, most
of them are
important
enough to
your
business,
your wallet,
your
industry
and/or your
future that
they deserve
a closer
look so you
can make an
informed
decision at
the ballot
box.
$20.9 billion
shortage in
unemployment
funds predicted
As California’s estimated
$20 billion budget deficit
looms, even more devastating
to the state’s economy could
be a $15.3 billion shortfall in unemployment
funds predicted to occur
by the end of 2010 and a $20.9 billion
shortfall expected by the end
of 2011.
How to meet Caltrans requirements
for DBEs
You are required to maintain complete lists of outreach efforts, contacts made, follow-up efforts,
bids received and assistance offered to DBEs. Here's how.
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PLUS |
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Member Spotlight: Dalton Trucking
Dalton Trucking is a widely diverse aggregates, freight,
heavy-haul and mining company.
Member Spotlight: Crane Rental Service
Crane Rental service has one of the largest crane fleets in the
Western United States with 25- to 350-ton hydraulic cranes, 30-ton boom truck and 50-ton rough-terrain cranes, all of which are available on an hourly basis.
Mr. Crane places Bolsa Chica footbridge
Mr. Crane’s self-erecting Liebherr 500-ton LTM-1400 crane, with rigging, hook and block weighing approximately 76,000 pounds, was ideal for the project.
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AND MORE! |
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The gas tax swap and transportation funding
Big changes have come to the way California
funds transportation projects. Effective July 1,
the state will no longer collect sales tax on gasoline
as required by Proposition 42. Instead, pursuant
to legislation signed by Governor Schwarzenegger in
March, the state will collect an excise tax on gasoline.
That tax, called the “gas tax swap,” will be increased
to match the loss the state will see from
elimination of the sales tax on gasoline and frees up
some funds for the state at the expense of transportation
funding protections.
But before delving into a discussion of Proposition
42 and how the gas tax has changed transportation
funding, we’d like to call your attention to a
small victory for those that dislike the idea of the
government taxing you – or in this case, taxing your
taxes.
To understand this small victory, you must first understand
how the state collects taxes on gasoline. The
overall price at the pump is the price of the fuel plus
18.4 cents in federal excise tax plus 18 cents in state excise
tax plus sales tax of 8.25 percent. The sales tax is
actually levied on the state and federal excise tax. In
other words, the state collects a sales tax on the tax.
With passage of the gas tax swap, the state’s share of
the sales tax is replaced with an increase in the state
excise tax. No longer will the state tax a tax.
But that only accounts for the state’s share of the
sales tax. There are sales taxes for other programs:
• 0.50 percent to the Local Revenue Account for
city and county mental health, social service and
health programs.
• 0.25 percent to pay the principal, interest and
premium of the Fiscal Recovery Bonds of 2003.
• 0.50 percent for local police and sheriff departments.
• 1.0 percent for California’s 58 counties.
• 1.0 percent for so-called self-help counties that
agree to increase their sales tax by 1.0 percent and
dedicate the revenue to transportation funding.
The new state excise tax
July 1, the new state excise tax on gasoline increased
by $0.173 to $0.353 per gallon with a federal excise
tax of $0.184 and up to 3.25 percent for specific programs.
This is very important to transportation
funding and I can give you 3.4 billion reasons why.
Proposition 42 brings in about $3.4 billion annually
to transportation and transit capital funding.
In 2002, SCCA strongly supported passage of
Proposition 42, which requires the sales tax on
motor fuels be dedicated to specific transportation
funding.
In 2006, SCCA supported passage of Proposition
1A. After several years of having Sacramento
siphon off Prop 42 funding and with massive pressure
by the construction industry, the legislature placed
Prop 1A on the ballot, limiting the times legislature
could take Prop 42 funding to twice in 10 years and requiring
repayment within three years. Prop 1A passed
with 76.6 percent approval.
In 2010, the legislature decided if the state eliminated
sales tax on motor fuels, it could completely
bypass both Prop 42 and Prop 1A. With the state
facing a deficit of $20 billion from early 2010 to
mid 2011, the legislature passed the gas tax swap.
The legislature didn’t dump all the money into the
state’s General Fund. Under Prop 42, the revenue
was to be allocated 20 percent to public transportation,
40 percent to transportation improvement
projects and 40 percent to local streets and highways.
The gas tax swap uses a similar formula: 30
percent to transportation improvement projects, 30
percent to highway maintenance and 40 percent to
local streets and highways. However, the formula
only applies after the state pays the debt service on
several transportation related bonds, including
Prop 1B.
Why did the legislature propose this? With the
gas tax swap paying the debt service, the general
fund savings in 2011 will be $727 million. If the
state is saving $727 million, is transportation funding
losing that amount? No. There is now a dedicated
revenue stream to the debt service. It will be
less expensive for the state to sell transportation
bonds to raise more funding for transportation.
And Prop 1B authorized up to $20 billion in bonds.
So far, the state has only sold $4.5 billion in bonds.
Add the gas tax swap, and that $15.5 billion is no
longer a general obligation bond, but a revenue
bond. The gas tax swap should be revenue neutral,
but the change in the revenue allocation formula
should provide for sale of additional bonds for
continued transportation funding.
Todd Bloomstine is a California registered lobbyist. He has
represented SCCA since 2001.
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