Saturday, May 28, 2016

AASHTO Journal: California Commission Cuts, Delays $1.5B in Projects as Fuel Tax Receipts Plummet

In its latest adjustment to shrinking tax receipts tied to the price of motor fuels, the California Transportation Commission officially adopted a five-year funding plan that cuts $754 million in various modal projects that were previously approved, and delays another $755 million worth.
The commission said the impact was spread across highway, rail, transit, bicycle and pedestrian project spending, and called on state lawmakers and Gov. Jerry Brown to soon agree on a funding plan.
dollarpump.jpg"These cuts are due in large part to the steady loss of gas tax revenue over the past two years because of the drop in gasoline prices," the commission said. "It is the largest funding reduction since the current state transportation funding structure was adopted 20 years ago."
Commission Chair Bob Alvarado said it was "highly unfortunate that we had to take this action. This means that desperately needed transportation projects throughout California won't happen at all or will be significantly delayed."
And because transportation projects usually apply funds from multiple sources, he said the total economic impact of the cuts and delays would probably be much higher.
The commission had warned in January that it was facing a $754 million shortfall in its five-year projections, but its decision to also defer many projects of about the same value effectively doubled the impact of the worsened revenue outlook.
The governor has urged legislators in 2015 and this year to come up with a long-term plan to increase transportation funding, but no proposals have emerged with widespread support in a Legislature that needs two-thirds approval for any tax hikes.
Meanwhile, various other states that have at least part of their project funding tied to price-based fuel fees have acted to limit their declines.
And while pump prices for gasoline and diesel fuel have been rising steadily in recent months, the average retail gas price in California of $2.80 on May 23 was 97 cents lower than a year earlier, said the AAA motor club.
The transportation commission said the price-based excise tax on gasoline was 17.3 cents a gallon in 2010, and was already down to 12 cents after prior annual adjustments as fuel prices fell.
On July 1, that excise tax will drop again to 9.8 cents from the current 12 cents, leaving what the commission said is a $1.5 billion funding shortfall for project commitments already made for fiscal years 2016-17 through 2018-19.
"In addition to the many missed near-term opportunities to reduce congestion, improve air quality and grow jobs in virtually all areas of the state, projects that are stalled risk the loss of leveraging additional funds from state, federal and local sources and will likely cost significantly more to construct later," Alvarado said.
"All Californians are paying a big price for the woefully inadequate investment in our transportation infrastructure," he added. "In light of the urgency and scale of the problem, we need the Legislature and governor to agree on a solution quickly."


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