Fix Our Roads Coalition Statement in Response to Board of Equalization’s $328.2 Million Cuts to Gasoline Excise Tax

February 23, 2016

Sacramento – The Fix Our Roads coalition including, cities, counties, labor, business, and transportation advocates, issued the following statement in response to the Board of Equalization’s (BOE) vote today to reduce the excise tax on gasoline by another 2.2 cents. This brings the total reduction in the excise tax per gallon to over 11 cents over the past three years:

“The BOE’s action will reduce transportation funding by another $328.2 million and will mean continued cuts to our chronically underfunded transportation infrastructure at both the state and local level. Declining gas tax revenues have left us with tens of billions of dollars of backlogged maintenance and little funding for new congestion relief projects.

“In fact, the anticipated reduction in transportation funding is a key reason the California Transportation Commission just last month cut $754 million in project funding. This means that a total of 225 shovel-ready projects may lose funding, hitting every region of the state. Taken together, the impact of losing these projects could mean a $3.1 billion reduction in economic activity and over 16,000 jobs that would not be created statewide.

“The annual BOE action to “true up” the excise tax fluctuates wildly year to year and underscores how difficult it is to deliver transportation projects without a stable, long term funding source.

“Today’s action further underlies the urgent need for the legislature to act, now, to stabilize this revenue stream and support new, stable, long-term transportation revenues.”

Background on the BOE’s Decision Today

The BOE’s action today affects the state’s “gallonage tax” or portion of the gas tax which is intended to replace the state’s sales tax on gasoline shifted to transportation by the voters in 2002. In 2010 as the result of a series of gas tax state budget maneuvers this portion of the gas tax must equal what the sales tax on fuels would have generated and thus is adjusted by the BOE every year.

In 2014, the BOE reduced the excise tax by 3 cents; in 2015, it was reduced by an additional 6 cents; today’s action means that the reduction for this year will be an additional 2.2 cents.

Last August the Fix Our Roads Coalition laid out a set of policy principles it believes should guide the negotiations to not only stabilize this revenue stream, but also generate new revenue to maintain our existing transportation systems. First and foremost, California needs a long term funding package to address the billions of dollars of backlogged transportation needs on both the state and local systems. The Coalition’s policy principles also couple any new revenues with needed accountability provisions to ensure new transportation dollars go to transportation projects only.

The deferred maintenance on the state highway system is pegged at $59 billion. The funding shortfall to maintain the existing local streets and roads system is $78 billion. And California motorists are today spending an average of $762 annually just to fix repairs caused by poor road conditions.