The Board of Equalization (BOE) on Tuesday, took action to
decrease the gas excise tax by 6 cents on Monday—a less severe
decrease than was initially proposed. This reduction will result
in a $191 million reduction in gas tax subventions to counties in
the next fiscal year from the Highway User Tax Account (HUTA).
HUTA funds are some of the most flexible transportation dollars
available for maintenance and improvement of local streets and
roads.
Pursuant to the so-called gas tax swap, the BOE is required to
adjust the gas excise rate each year in March for the upcoming
fiscal year to ensure that it raises as much revenue as the
former Proposition 42 sales tax on gasoline. The BOE also has to
consider and make adjustments based on revenue raised in the
prior fiscal year.
CSAC and other transportation stakeholders wrote to the BOE last
week to outline the difficulties created by the then proposed 7.5
cent cut (see attached). The BOE’s final action to adopt a
slightly less onerous cut than previously expected was due
largely to the recent refinery shut down and increases in the
cost of gasoline after several months of decreasing prices.
The volatility of the gas tax swap revenues is a significant
concern for county budgets and public works project planning.
CSAC is currently analyzing Senate Bill 321 by Transportation and
Housing Committee Chairman, Jim Beall. SB 321 is urgency
legislation that would take effect prior to the 2015-16 fiscal
year if it is adopted. It seeks to smooth out revenue adjustments
required under the swap to decrease volatility. CSAC understands
the need for more predictable revenues, but we are actively
analyzing the bill to determine if there could be unforeseen
consequences.
Separately, we continue to work with coalition partners to
participate in the statewide conversation about increasing
revenue for transportation. 2015 promises to be a busy year for
transportation. We look forward to engaging our members to
advocate for new revenues to chip away at the nearly $80 billion
ten-year shortfall for local streets and roads maintenance, as
well as ensuring that counties receive an equitable share of any
new revenue.
