Transactions Newsletter

March 1999
Funding Tops Agenda in Sacramento

As the 1999 session of the California Legislature gets under way in Sacramento, the state's leaders are hammering hard on the themes of infrastructure and investment -- with transportation at or near the top of everyone's list of funding priorities. With new funding ideas being studied by the state Legislature and the governor's office, this could be the most significant session for transportation finance since 1989, when the Legislature paved the way for a voter-approved gas tax increase to fund vitally needed transportation projects around the state. Today, a decade later and eight years into the longest-running economic expansion of the post-war era, the strains on California's transportation network are again everywhere apparent, giving rise to a widely shared sense of urgency for action among state lawmakers.

Senators Propose Bond Package

State Senate President pro Tem John Burton of San Francisco and Senate Transportation Committee Chair Betty Karnette of Long Beach set an ambitious tone for the session by introducing a three-bill package that comprises a broad, multifront attack on California's transportation problems.

Senate Bill 315: The centerpiece of the Burton/Karnette proposal, SB 315 would place before the state's voters a total of $16 billion in bond issues -- $4 billion in each of the general elections in the years 2000, 2002, 2004 and 2006. If approved by voters, the bonds would be used to finance repair and rehabilitation of the current transportation system and construction of high-priority projects of statewide significance.
Senate Resolution 8: Already passed by the Senate (on Feb. 18, 1999), SR 8 directs the California Transportation Commission (CTC), in cooperation with Caltrans and regional transportation planning agencies (like MTC), to develop a 10-year inventory of transportation needs, as a means of identifying candidate projects for funding from SB 315 bond proceeds. The results of this assessment are due to the Senate in May.
Senate Constitutional Amendment 3: Embodying MTC's number one state legislative priority, SCA 3 would lower the voter approval threshold for locally imposed transportation improvement levies (such as the 16 temporary, county-level transportation sales tax measures in effect around the state) from two-thirds to a simple majority. This measure would restore the simple-majority standard that was in effect until the passage of Proposition 218 in 1996.

Governor, Assembly Also Weigh In

Gov. Gray Davis also is addressing transportation as part of a broad review of state infrastructure issues. Davis has appointed Lt. Gov. Cruz Bustamante and Business, Transportation and Housing Agency Secretary Maria Contreras-Sweet to co-chair a "Commission on Building for the 21st Century." This broad-based coalition of business, academic and public policy leaders and government officials is charged with identifying critical infrastructure needs and developing a long-term capital investment plan to meet them. Among its members are former MTC Chair Diane McKenna of Santa Clara County, Jim Kellog of the Steamfitters and Pipefitters Union (the new Bay Area representative on the CTC), and Assemblymember Carole Migden of San Francisco. By May 1, the group will submit initial findings and recommendations for possible year 2000 bond financing for near-term infrastructure requirements. A final report with comprehensive, long-term recommendations is due to the governor by Dec. 1, 2000.

In the lower house of the Legislature, Assemblymember Tom McClintock of Granada Hills has introduced Assembly Bill 521, which would direct revenues derived from the sales tax levied on gasoline to financing construction or maintenance of general-purpose (noncarpool) lanes on state highways. In contrast to the bond measures envisioned by Sens. Burton and Karnette and Gov. Davis, AB 521 does not provide new funding for transportation. Rather, the bill proposes a major redistribution of revenues -- an estimated $16 billion over 20 years -- between the State Highway Account and the General Fund.

Assembly Bill 276 by Assemblymember John Longville of Rialto, meanwhile, would divert a small portion of the sales tax on gasoline (only the portion that is levied on the state and federal gas tax -- in other words, the part that is a tax on a tax) to finance public transit capital investments such as new railcars and buses. AB 276 would provide an estimated $1.8 billion over 10 years for this purpose.

"With all this attention to infrastructure, there is reason to be hopeful that this final legislative session of the 20th century will help us at least make a down payment on the sizable transportation funding needs of the next century," said Therese McMillan, MTC's manager of Finance, Legislation and Public Affairs.

-- Joe Curley

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