California $52 billion transportation deal includes fuel tax overhaul

[kscarbel2]

Keith Goble, Land Line (OOIDA)  /  April 5, 2017

A long-awaited deal to fund transportation work in California is nearing reality.

Gov. Jerry Brown and leading Democrats have unveiled a transportation funding plan to raise $5.2 billion annually over the next decade for state and local roads, trade corridors, and public transit. Professional drivers are eyed as major contributors for the funding plan.

“California has a massive backlog of broken infrastructure that has been neglected far too long,” Brown said in prepared remarks. “Fixing the roads will not get cheaper by waiting – or ignoring the problem.”

Sen Jim Beall, D-San Jose, said his bill would split $30 billion equally between state and local needs.

The funding package includes a mix of higher taxes and fees is described as a “first step” toward making roadways safer and providing a boost to the state’s economy.

SB1 awaits a final Senate floor vote before it advances to the Assembly. Changes called for by the governor and Democrats in both chambers would raise nearly $3.8 billion annually mostly via increases in the gas and diesel tax rates.

The Democratic governor’s administration says the plan is guided by the principles set forth by Ronald Reagan. The Republican president increased the federal fuel tax in 1982.

The state’s current tax rates are about 38 cents per gallon, according to the American Petroleum Institute. The excise components making up the tax rates are 27.8 cents for gas and 16 cents for diesel.

Beall’s bill would increase the excise rate on gas by 12 cents to raise $24.4 billion. The increase would be phased-in over three years. The tax would be raised by 6 cents the first year, and another 3 cents each of the next two years.

Not to be outdone, the excise rate on diesel would be increased by 20 cents to raise $7.3 billion. The money would be designated for freight, trade corridors and goods movement.

In exchange for collecting more in excise taxes, California’s current collection method for fuel taxes would be abandoned. No longer would the state Board of Equalization annually adjust the fuel tax rates. Instead, price-based tax rates would be restored.

In addition, the 1.75 percent sales tax applied to diesel purchases would be increased by 4 percent to 5.75 percent. The increase is estimated to raise $3.5 billion.

Revenue from the diesel sales tax increase, however, would not directly benefit trucking. The money would be deposited into an account for transit and intercity rail projects.

The Owner-Operator Independent Drivers Association supports efforts to raise revenue for transportation work in the state. However, the group opposes any plan that calls for truckers to foot more of the responsibility to help bail the state out of its funding hole.

Additional components in the funding plan would increase annual vehicle registration fees up to $175 and apply an annual $100 fee for zero-emission vehicles. The fees would raise $1.3 billion.

All tax and fee rates would be indexed to inflation to allow for increases in future years.

Beall says all new revenues will provide a significant benefit for business in the state.

“Businesses will benefit from improved transportation corridors that will cut down their shipping costs and bring more Pacific Rim tonnage through California ports, making them indispensable in a highly competitive race with Pacific Northwest ports.”

Senate President pro Tempore Kevin de Leon, D-Los Angeles, said legislators cannot afford to keep kicking the can down the road.

“Californians are tired of the constant traffic jams and crumbling roads, and they expect us to find solutions,” de Leon stated.

Another provision in the bill would exempt certain trucks from the recent Air Resources Board decision to strengthen rules on indirect emission sources.

Critics say that exempting trucks from clean air rules has no place in a package to fix roads and improve transit.

Also included in the bill is reference to SCA2 – a constitutional amendment to be included on the 2018 ballot for voters to ensure all revenue is spent for transportation purposes.

SB1 is expected to be approved at the statehouse by Thursday, April 6 – when the Legislature’s spring break begins.

To view other legislative activities of interest for California, click here.

[Quickfarms]

Great higher fuel prices and more taxes to slow the economy down.

I have noticed that when fuel prices get over $3.00 a gallon my work slows down.

[kscarbel2]

California Strikes Deal with Truckers to Hike Fuel Tax

Heavy Duty Trucking  /  April 7, 2017

A bill to raise fuel taxes that could bring in $5.2 billion a year has advanced through the California legislature and needs only to be signed by Gov. Jerry Brown (D) before going into effect.

The base excise tax will jump 12 cents per gallon for regular gasoline and 20 cents per gallon for diesel fuel. In addition, the sales tax on diesel fuel will increase by four percentage points, according to the Los Angeles Times. The money will be used to support California’s aging transportation infrastructure.

To pass the bill, the governor tried to garner support from the trucking industry because the diesel tax will mostly impact transportation companies. The diesel tax alone will generate at least $10 billion in revenue over the next ten years.

Gov. Brown was able to strike a deal with lawmakers that will restrict the state from requiring owners to retire or retrofit trucks to meet new greenhouse gas regulations before they're 13 years old or reach 800,000 miles. Truck owners could keep vehicles as long as 18 years in some cases, according to the U.S. News and World Report. 

That move that was predictably unpopular with environmental groups, which contend the provision will delay the impact of clean air regulations and harm California residents, particularly around busy ports and in areas with heavy truck traffic.

The bill also includes an increase in license and registration fees based on the value of the vehicle. The taxes and fees will increase over time with inflation.

The fuel tax hikes will take effect on Nov. 1 and the vehicle fee increases will start on Jan. 1, 2018.

The bill was contentious, with Republican lawmakers arguing against the increase in a state that already pays the highest fuel prices in the nation.

This is the first gas tax increase in 23 years for California. It comes on the heels of a recent New Jersey bill that increased fuel taxes in that state for the first time in 28 years.

Aging infrastructure is a hot topic both nationally and locally, with multiple states voting in favor of infrastructure reform during the election season late last year.

President Trump has indicated that one of his priorities is to increase infrastructure funding by as much as $1 trillion through public and private investment.

[1941 ED]

What a joke....already the most taxed in the Nation. They said the lottery crap was going to fix the roads, they take a large portion there or did everyone forget about that already...maybe the roads to the politicians homes are nice but not mine. And with the budget this is another hot topic for me...wasted funds everywhere you look, but they want more money and more money...I pay my fair share of taxes but this is ridiculous, fuel is literally cheaper in New Mexico than here but shipped into the Long Beach ports by me...go FIGURE. 

I do not usually voice my opinion on this but the way the article is posted it seems like the State of California should fix their spending sprees before taxing the People more. California has been going the wrong direction for far too long and I do not wonder why people and businesses are leaving. Higher fuel will slow the economy period.

Edited April 8, 2017 by 1941 ED

[grayhair]

On 4/5/2017 at 8:12 PM, kscarbel2 said:

Senate President pro Tempore Kevin de Leon, D-Los Angeles, said legislators cannot afford to keep kicking the can down the road.

“Californians are tired of the constant traffic jams and crumbling roads, and they expect us to find solutions,” de Leon stated.

Gee, traffic jams and crumbling roads.  Maybe the traffic would be bearable if some of California's 2.4 million illegal aliens went home.

[kscarbel2]

California fuel taxes are headed up, way up

Keith Goble, Land Line (OOIDA)  /  April 7, 2017

The California Legislature voted on Thursday, April 6, to approve a 10-year, $52 billion transportation funding deal. Professional drivers are pegged as major contributors for the plan via a 20-cent diesel tax increase.

By a one-vote margin the Senate voted last night to approve the bill. The 27-11 vote cleared the two-thirds supermajority necessary to advance.

Assembly lawmakers followed suit shortly thereafter. The chamber needed 54 favorable votes to secure passage to the governor’s desk. The final tally was 54-26 to adopt.

Democratic Gov. Jerry Brown and leading lawmakers of his party unveiled the funding plan in the past week. The deal is estimated to raise $5.2 billion annually for state and local roads, trade corridors, and public transit.

The funding package includes a mix of higher taxes and fees. It is described as a “first step” toward making roadways safer and providing a boost to the state’s economy.

Assemblyman Rudy Salas Jr. of Bakersfield was the lone Democrat to vote against the bill. He cited concerns about additional tax burdens on his constituents.

“The families I represent drive too far to jobs that pay too little.”

Assemblyman Mike Gipson, D-Carson, acknowledged the bill is not perfect. However, he said it ensures the state is moving forward.

“Senate Bill 1 passes the smog test,” Gipson commented following the vote.

Republicans at the statehouse, including Sen. Ted Gaines of El Dorado, said funds already available to the state were a better option.

“And how are the people supposed to believe that this money will actually go to transportation? This state is already diverting a billion dollars in weight fees away from our roads every year.”

SB1 would raise nearly $3.8 billion annually mostly via increases in the gas and diesel tax rates.

The state’s current tax rates are about 38 cents per gallon, according to the American Petroleum Institute. The excise components making up the tax rates are 27.8 cents for gas and 16 cents for diesel.

The bill from Sen Jim Beall, D-San Jose, would increase the excise rate on gas by 12 cents to raise $24.4 billion. The excise rate on diesel would be increased by 20 cents to raise $7.3 billion. The diesel money would be designated for freight, trade corridors and goods movement.

In exchange for collecting more in excise taxes, California’s current collection method for fuel taxes would be abandoned. No longer would the state Board of Equalization annually adjust the fuel tax rates. Instead, price-based tax rates would be restored.

In addition, the 1.75 percent sales tax applied to diesel purchases would be increased by 4 percent to 5.75 percent. The increase is estimated to raise $3.5 billion.

Revenue from the diesel sales tax increase, however, would not directly benefit trucking. The money would be deposited into an account for transit and intercity rail projects.

The Owner-Operator Independent Drivers Association supports efforts to raise revenue for transportation work in the state. However, the group opposes any plan that calls for truckers to foot more of the responsibility to help bail the state out of its funding hole.

Additional components in the funding plan would increase annual vehicle registration fees up to $175 and apply an annual $100 fee for zero-emission vehicles. The fees would raise $1.3 billion.

All tax and fee rates would be indexed to inflation to allow for increases in future years.

In an effort to appease truckers, another provision in the bill would restrict future regulations on emissions related to commercial vehicles.

Critics say that exempting trucks from clean air rules has no place in a package to fix roads and improve transit.

Beall said earlier in the week at a hearing that the provision would “do no harm.” He said it is merely intended to help an industry that would be heavily taxed.

Also included in the bill is reference to SCA2/ACA5 – a proposed constitutional amendment to be included on the June 2018 ballot. Voters would decide whether to ensure all revenue is spent for transportation purposes.

The Legislature approved the constitutional amendment question after adding language to include truck weight fees in the protection.

Since 2011, weight fees have been diverted from roads to the state’s general fund to pay down transportation-related general obligation bonds. The fees collected top out at $2,271 per truck.

 

[grayhair]

Amazing, This is typical liberal tax and spend.  Their planning always assumes there will be no behavioral change by the people or entities they are taxing.  They assume people  will just bend over and live with it, i.e. no companies will relocate, no jobs will be lost, no ships will unload at a different port in a different state.  Their revenue projections are bogus because they ignore the spending behavior changes that are sure to happen.

This from a CNBC article in 2012 described what happened when the State of Maryland jacked income taxes on the wealthy.  So the wealthy just moved to a different state.  Duh, who'd a thunk that could happen? 

"A new report says wealthy Maryland residents may be moving out due to recent tax hikes – a finding that is sure to escalate the battle over taxing the American rich.

The study, by the anti-tax group Change Maryland, says that a net 31,000 residents left the state between 2007 and 2010, the tenure of a "millionaire's tax" pushed through by Gov. Martin O'Malley. The tax, which expired in 2010, in imposed a rate of 6.25 percent on incomes of more than $1 million a year.

The Change Maryland study found that the tax cost Maryland $1.7 billion in lost tax revenues. A county-by-county analysis by Change Maryland also found that the state’s wealthiest counties also had some of the largest population outflows.

In total, Maryland has added 24 new taxes or fees in recent years, Change Maryland says. Florida, which has no income-tax, has been a large recipient of Maryland's exiled wealthy."

“Maryland has reached the point of diminishing returns. We're taxing people too much and people are voting with their feet," said Change Maryland Chairman Larry Hogan. 

Full article here in which some liberals argue it ain't so.  I say it is.  Once again they ignore some facts like manufacturers choosing lower-tax states for new plants and distribution centers.  Spending foolishly and then raising taxes to cover the shortfall always, eventually, ends badly.

http://www.cnbc.com/id/48120446

Edited April 9, 2017 by grayhair