Taxes

Capitol Alert
By David Siders and Jim Miller
dsiders@sacbee.com
July 9, 2015

  • Jerry Brown, Democratic lawmakers seek funding for roads, health care
  • Billions of dollars in unfunded maintenance plagues California roadways
  • Health funding more politically difficult than roads, but both efforts uncertain

Inheriting a budget deficit when he took office in 2011, Gov. Jerry Brown tried for months – and failed – to reach agreement with Republicans to put a tax measure on the ballot. He finally bypassed the Legislature and went directly to voters himself.

At the time, Brown said he “learned that the Republicans can’t vote for a tax.”

Four years later, Brown and Democratic lawmakers are placing taxes back on the agenda, seeking billions of dollars in new revenue to repair California’s dilapidated roadways and to fund the state’s expanding health care obligations.

Brown, who called special sessions of the Legislature last month to focus attention on the issues, wants at least $1.3 billion annually to help fund Medi-Cal and home-care services. The administration estimates the annual funding shortfall for road repairs is even higher, at about $5.7 billion.

If successful in the Legislature, Brown appears willing to consider signing tax increases without voter approval, saying recently that is an “open question.” When he ran for governor in 2010, Brown said he would not raise taxes without a vote of the people, but he declined to say during his re-election campaign if he would maintain that pledge.

“We have massive underfunding of our road maintenance program, and one way or another, we’re going to have to find some solutions,” said Brown, a fourth term Democrat.

The transportation and health care special sessions, with committees now cranking up, have breathed life into Democratic proposals to increase the gas tax or assess new fees on drivers, and – for health care – to expand a tax on managed care organizations.

But any tax increase will require at least some Republican support, because Democrats do not hold the supermajority status needed to pass a tax on their own in either the Senate or Assembly. In addition, with the growing prevalence of moderate Democrats in the Legislature, Brown cannot count on support from every member of his own party.

Roadwork funding has traditionally enjoyed broad support, both from Democratic politicians’ construction union allies and from Republican-friendly business groups that rely on the state’s roadways for commerce.

But paying to maintain California’s aging highway system has confounded Sacramento for years. The state’s gas tax last went up in 1994, and revenue has declined as vehicles have become more fuel-efficient. The Brown administration estimates the money it collects from the gas tax is now enough to fund only about $2.3 billion in road repairs each year.

Jim Earp, a member of the California Transportation Commission and executive consultant at the California Alliance for Jobs, a business and labor advocacy group, said Republicans and moderate Democrats are “nervous about voting for any kind of a tax or fee increase, but you know, I think there’s a feeling here that this is something we’ve got to do.”

“The bright side of this is that more of the Legislature and the governor … are talking about transportation funding and fixing our roads than they have in many years, so that’s a good sign,” Earp said. “I’m more hopeful now than I have been in a long time that we can get it across the finish line.”

Neither Brown nor Democratic legislative leaders have settled on a specific transportation funding proposal. They could try to increase the gas tax or vehicle registration or license fees, or they could assess a new fee on all drivers, such as Assembly Speaker Toni Atkins, D-San Diego, proposed earlier this year.

“We’re in a period of our time now when (roadwork funding) is a priority,” Assembly Transportation Committee Chairman Jim Frazier, D-Oakley, told a small crowd at a recent forum in West Sacramento. “We’re going to get something done this year.”

If Republicans can be persuaded to raise taxes or fees for transportation, it will likely require significant concessions and a guarantee restricting the use of new money to transportation projects. In their initial objections to new taxes or fees, Assembly Republicans proposed using money instead from existing sources, including the state’s cap-and-trade program, money polluters pay to offset carbon emissions.

Republicans have also said the administration should repay about $900 million in loans taken from transportation accounts to support the state’s general fund in recent years.

“We are trying to be the voice of our taxpayers and the voice of our drivers,” said Assemblyman Jim Patterson, R-Fresno. “They’re saying we pay enough.”

To read entire story, click here.