GOP Unveils Plan for User Fees to Fund RoadProjects

Assembly Republicans chose Costa Mesa Friday to unveil a proposal to divert $1.3 billion over the next five years to the state’s deteriorating road and highway system in a plan that capitalizes on the state’s $900-million-and-growing budget surplus.

The plan, designed to avert massive projected shortfalls in the state’s transportation budget and head off a proposed increase in automobile gas tax, calls for transferring that portion of gasoline and diesel sales taxes historically diverted to the state general fund back into the transportation fund for construction and maintenance of freeways and highways.

The proposal, contained in legislation introduced this week by Assemblyman William Baker (R-Walnut Creek), would also guarantee cities and counties $100 million a year for local street and highway improvements.

Called Honest Approach

“This is a simple, honest approach. The people who pay the taxes will benefit. They won’t be asked to pay any new taxes. We don’t need a 1-cent-a-gallon or a 5-cent-a-gallon tax hike. We need to apply highway user taxes to highway maintenance programs,” said Huntington Beach Assemblyman Nolan Frizzelle, vice chairman of the Assembly Transportation Committee, at a press conference near the terminus of the still-uncompleted Costa Mesa Freeway in Orange County.

Completion of the freeway, a vital measure in reducing traffic congestion in central Orange County, will be delayed for at least a year because of a shortage in state construction funds. Frizzelle said legislators decided to announce the funding plan in Orange County because the county’s congested and deteriorating roadways are the worst in the state and funds are critically needed for freeway expansion and repair.

Diversion to General Fund

The proposal to divert existing highway-generated funds back into transportation is similar to a compromise proposal which Senate Republicans are preparing to introduce, and it is one which has won at least conceptual approval from the Democratic chairman of the Assembly Transportation Committee, Richard Katz of Sepulveda.

“There seems to be general agreement to pursue something in this direction,” Katz said Friday. “Before you can go to the public and say you ought to pay more in gas tax, we need to make sure that every cent that is paid through state road and highway uses is going to roads. Since 1970, we have lost over $1.1 billion in transportation dollars that have gone to the general fund out of other funds for transportation.”

However, support from the governor will be crucial for any Republican-backed transportation funding proposal, and Gov. George Deukmejian--who has strongly opposed legislation now stalled in the Senate for a 5-cent-per-gallon gas tax increase--has been noncommittal on diverting general fund revenues to transportation.

“We feel there are other alternatives and other ways to go without raising taxes . . . but we’re really not sure yet about the proposals that have been made by the Republicans,” said deputy press secretary Bob Taylor.

A key issue in the current debate is the state’s existing $900-million surplus, which grew by an additional $614 million last week when new figures were released by the governor’s office, though Taylor said Friday that only $414 million of that will actually be available for spending.

Not Dependent on Surplus

Frizzelle, accompanied at Friday’s press conference by Assemblymen Gil Ferguson of Newport Beach and John Lewis of Orange, said the Republican Caucus’s plan for transportation can capitalize on the surplus, but it is not dependent on it.

“It makes it easier to make a transition, obviously, during a year when there are a few surpluses, but this program is sustainable even without a surplus,” he said.

The proposal diverts an increasing amount of money each year for transportation, corresponding with the increasing financial needs identified in the State Transportation Improvement Program for the next five years.

It would allocate only the basic $100-million-a-year appropriation for local streets during the 1985-86 fiscal year, launching the diesel and gasoline sales tax diversions for the state highway system in 1986-87 at an additional $100 million. State highway fund diversions would increase to $250 million by 1989-90, for a total program cost of $1.3 billion over five years.

Redirection of Funds

“This is a redirection of current funds that we feel should have always been directed to transportation,” said Lewis, who said Republican leaders were “shocked” when they learned of the amount of fuel-tax money currently being diverted to the general fund.

Though many Democrats will undoubtedly oppose diverting any general fund money away from other programs to transportation--perhaps mounting enough opposition to kill the proposal--Lewis said a statewide initiative is another option for assuring use of the funds for transportation should the attempt fail in the Legislature.

A bill by state Sen. Marian Bergeson (R-Newport Beach), scheduled for hearing in the Senate Transportation Committee on Tuesday, would divert $70 million a year in diesel fuel tax out of the general fund for transit projects and provide an additional $1 billion over the next three years for local street and road improvements.

Local Improvement Fund

Senate Republicans are likely to decide on an amendment Monday that would set up a $300-million-a-year local transportation improvement fund out of money currently diverted to the general fund, equivalent to a 3-cent-per-gallon gas tax increase, said caucus chairman John Seymour, state senator from Anaheim. However, that proposal, still tentative, would not provide any money for improvements to the state highway system.

Orange County Supervisor Bruce Nestande, chairman of the California Transportation Commission, said a compromise approach, perhaps combining general fund transfers with limited tax increases, is most likely to win approval from Democratic legislators and the governor. But Nestande said he supports any move to recover transportation money now being diverted to the general fund.

“To me, the gasoline tax and the sales tax on gasoline is the ultimate philosophical user tax, and when you have a user tax, I really believe that you owe it to the people to put that money to work for what it’s being collected for,” he said.

Another key roadblock to the Assembly Republican proposal may be a provision requiring cities and counties to use all of their existing motor vehicle license fees for road and highway improvements before they receive any allocation from the proposed new $100-million-a-year general fund diversion.

No Restrictions

The license fees, which this year total $1.26 billion, are currently returned to local government with no restrictions on how they are spent.

Steve Rhodes, Baker’s aide, said many cities and counties are likely to oppose requirements to put up substantial new local allocations for transportation simply to qualify for new state allotments.

The goal of the requirement is to avoid rewarding cities and counties with state funds when they have not made any local effort to pay for road improvements, Rhodes said. But the requirement that 100% of license fee revenues be spent for roads “will probably go down,” he said. “This is intended as a starting point for negotiations.”