The California Transportation Commission (CTC) adopted a five-year transportation funding plan that cuts or delays $1.5 billion in highway, bridge and transit projects. The plan cuts $754 million in projects from CTC’s current transportation budget. An additional $755 million in planned projects will be delayed until 2019-20 or 2020-21. The list of cut and delayed projects was released as part of CTC’s updated 2016 five-year State Transportation Improvement Program (STIP).
A number of factors have impacted the overall funding situation in California, including declining gas tax revenues, increased costs because of deferred maintenance, the diversion of state transportation revenues and increasing project costs and inflation, according to the CTC.
The variable portion of California’s gas tax will drop from 12 cents per gallon currently to 9.8 cents per gallon on July 1, contributing to the projected funding shortfall for project commitments previously made for fiscal years 2016-19 as part of the 2014 STIP. The California excise tax on gasoline is composed of a base excise tax—18 cents per gallon—and a price-based tax that is adjusted annually as part of the “Fuel Tax Swap” that took effect July 1, 2010. At that time California lowered its sales tax on motor fuel, which is a percentage of the total cost of gasoline, and charged the Board of Equalization (BOE) to adjust the annual gas tax rate to ensure that the total amount collected from both taxes would be the same amount as before the swap took effect. As gasoline prices have fallen the last few years, the amount collected from the original gasoline sales tax would have also fallen. Thus the BOE has lowered the price-based portion of the gas tax to ensure that the total amount of revenue collected from both portions of the excise tax would be in line with estimated collections before the gasoline sales tax was lowered.
CTC Chairman Bob Alvarado denounced the planned cuts, claiming that “all Californians are paying a big price for the woefully inadequate investment in our transportation infrastructure”. The CTC further estimated that each $1 billion in highway and transit investment supports 13,000 jobs, and that for each penny of the gas tax lost, revenue for state and local roads will fall by about $140 million annually.