Financial Potholes Slow Work State Transportation Problems

More than roads and rails are being strained by the rising tide of travel in California. So is an obsolete finance system that must be revamped to prevent a breakdown of the state’s transportation network.

In an era of increasing project costs and limited federal and state funds, Californians will have to pay higher sales taxes and local fees for freeways and increased fares for mass transit to cope with future needs, experts say.

Worried legislators point out that California ranks 50th among all states in per-capita spending on highways and local roads. In per-capita spending on mass transit, it ranks 13th.

Even as a bigger population places more demands on the state’s transportation system, the rising cost of construction and land, especially in cities, makes many proposed projects too expensive.

It costs more just to maintain aging freeways than it did to build them a few decades ago.

$1.5-Billion Annual Cost

In 1938, the Pasadena Freeway cost $940,000 per mile--less than it now costs to spread a new layer of asphalt on an existing highway. The annual bill for upkeep of California highways has risen to $1.5 billion.

Meantime, spending limits have shackled the federal and state governments, which together built most of California’s transportation system.

Since 1979, the voter-passed Gann initiative has harnessed state and local spending to increases in inflation and population, posing a no-win paradox, a Catch-22.

Low inflation forces spending cutbacks, curtailing projects.

In periods of high inflation, the limit effectively has little impact because the spending ceiling is raised substantially. But inflation itself hinders work as project costs soar.

At the federal level, the Gramm-Rudman deficit-control act has frozen about $700 million for freeways and $300 million for mass transit in California. Nationwide, nearly $7 billion in funds are being withheld from states, and the interest on that money is being used to lower the federal deficit.

Highway Spending Static

In recent years, highway spending has remained relatively static, while support for mass transit has declined.

Those searching for a way out of the budget crunch are looking to local taxes, fees and fare hikes.

The state’s average public-transit fare, including discounts for students and the elderly, was 39.9 cents in 1983. By next year, it is expected to be 57 cents, or an increase of nearly 43%.

Officials are reluctant to say how high fares will go but predict that they will outpace inflation.

Gov. George Deukmejian said a key strategy of his second term will be “permitting local governments to raise the sales tax, subject to a vote of the people, for the . . . purpose of improving transportation.”

In a marked departure from having transportation needs funded by gasoline taxes and license fees, Deukmejian recently proposed selling $2.3 billion in general-obligation bonds that would be repaid by all taxpayers.

Seventy-five percent of the money would go for highways, with the rest for other purposes, including high-tech traffic management systems in San Francisco, Los Angeles and San Diego.

Emphasis also will be placed on increasing mass-transit fares and creating more local fees to pay for freeways, said John H. Sullivan, undersecretary of the state Business, Transportation and Housing Agency.

Sullivan says he expects more local governments to impose fees on developers to help pay for freeway interchanges that are needed to serve their projects or for additional commuters that new businesses put on the roads.

More counties are likely to follow in the path of Fresno, Alameda and Santa Clara, where voters recently approved half-cent sales tax increases for local transportation needs.

“Nobody’s eager to hike taxes,” said Ed Gerber, executive director of the California Transit Assn. “It’s only when the situation gets close to intolerable that they change their minds.”

Meantime, many mass-transit improvement projects are on hold, and bus and train service has been reduced in many areas.

Bond Fund Proposed

A bipartisan group of state senators tackled the problem with a proposal to skirt the state government spending limit with a renewable, $1.8-billion bond fund. They also want to allow all counties to propose local sales taxes of up to 1%.

The proposals could raise about $12 billion in additional highway and mass-transit funds over a five-year period if all counties take advantage of the sales tax authorization.

Such legislation is a way to relieve an overcrowded highway system that is in shambles, says Sen. Wadie P. Deddeh (D-Chula Vista), Senate Transportation Committee chairman and principal author of the proposals.

“All the major studies indicate we need more money,” Deddeh said. “Unless we do something, congestion will double, if not triple, in the next 10 years.”

State officials also say they hope to gain permission to use federal highway funds for a wider array of projects. The funds are now earmarked solely for the interstate highway system, which is due to be completed in 1992.

One approach, which would raise the state’s current 9-cents-per-gallon gasoline tax, repeatedly has been defeated in the Legislature.

But transportation experts say that approach wouldn’t have done enough anyway.

Would Get Worse

“Even if we had an 11-cent gas tax increase today that gave us an additional $13 billion over the next 10 years, the performance of our existing transportation system would continue to get worse, not better,” said Hugh Fitzpatrick, a former deputy director of finance for the state Transportation Commission.

Many planners no longer talk about getting rid of congestion in urban areas. They only talk about how to reduce the number of hours it lasts. As a result, much new construction money is earmarked for such projects as special bus and car-pool lanes as a way to move more people more efficiently.

For the 1987-88 fiscal year, the governor has proposed a 4.7% increase in the Transportation Department’s budget, bringing it to $3.2 billion.

Even so, the governor’s proposed budget calls for fewer miles of new highways and fewer new interchanges than in the current fiscal year. Under that plan, 220 miles of new freeway lanes will be built, compared to the 246 budgeted during 1986-87. Forty-three new interchanges will be built, compared to 52 this year.

Assembly Ways and Means Committee consultant Allan Lind said the budget “would essentially maintain current levels of spending for the state’s highways . . . and would continue the trend of gradual reductions in state assistance for local public transit operations . . . (which) will be at an all-time low since the inception of the state’s major transit assistance programs in 1979.”