Gov. Jerry Brown on Friday, April 28, signed into law 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.
The Democratic governor and leading lawmakers of his party have championed the funding plan to raise an estimated $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.
“Our roads will be safer and our cities and towns will be better connected to each other – finally bringing our transportation infrastructure into the 21st century,” Senate President Pro Tem Kevin de Leon said in prepared remarks.
Previously SB1, the new law is estimated to raise nearly $3.8 billion annually mostly via increases in the gas and diesel tax rates.
Currently, the excise components making up the tax rates are 27.8 cents for gas and 16 cents for diesel.
Effective Nov. 1, 2017, the excise rate on gas will increase by 12 cents to 39.8 cents. The increase is estimated to raise $2.4 billion annually.
Another round of increases will take effect in July 2019. At that time, the gas rate will be raised 7.5 cents to 47.3 cents.
Also on Nov. 1, the excise rate on diesel will jump by 20 cents to 36 cents. The increase is estimated to raise $1.08 billion each year. The diesel money will be designated for freight, trade corridors and goods movement.
The excise rates on gas and diesel will also be adjusted for inflation beginning in July 2020.
In addition, the 1.75 percent sales tax applied to diesel purchases will be increased by 4 percent to 5.75 percent. The increase is estimated to raise $3.5 billion over the next decade.
Revenue from the diesel sales tax increase, however, will not directly benefit trucking. The money will 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 increase annual vehicle registration fees up to $175 and apply an annual $100 fee for zero-emission vehicles. The fees will raise $1.3 billion.
All fee rates will be indexed to inflation to allow for increases in future years.
In an effort to appease truckers, another provision restricts future regulations on emissions related to commercial vehicles.
Sen. Jim Beall, D-San Jose, previously said the provision would “do no harm.” He said it is merely intended to help an industry that is 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 will 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.
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