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A faulty `fix'

October 06, 2006

OF THE PACKAGE OF MEASURES, from 1A to 1E, that the Legislature placed on the November ballot, Proposition 1A is the odd man out. All the others are multibillion-dollar bond issues intended to shore up the state's crumbling infrastructure; 1A is a tweak to the Legislature's budgeting authority and a "fix" to a similar initiative from four years ago. It would tie Sacramento's hands and ensure that future fiscal emergencies cut more deeply into vital state services. Californians should vote no on Proposition 1A.

The measure is the latest of many misguided efforts to dedicate state revenue toward a specific use -- in this case, transportation. This is almost never a good idea. Such earmarks restrict the government's flexibility and leave the Legislature unable to react when the money is needed for something else.

At issue is the gasoline sales tax. There are several different taxes on gasoline -- the federal government takes 18.4 cents a gallon; the state charges another 18 cents in excise tax and then adds 6% in sales tax to the total purchase price. The 18-cent excise tax is a straightforward user fee, rightly charging drivers for the cost of building and maintaining roads and public transit. The sales tax is a different matter.

Until 2002, it was treated much like the sales tax on any other product -- most of the revenue raised went into the general fund. Then voters passed Proposition 42, which dedicated the funds to transportation while allowing legislators the safety valve of dipping into the till with a two-thirds vote and approval from the governor. This turned out to be a low hurdle; the Legislature, citing revenue shortfalls, raided the gas sales tax twice in the last three years.

Proposition 1A makes that more difficult. It specifies that any gas sales tax money shifted out of the transportation fund has to be repaid, with interest, within three years, and that such raids be allowed only twice in a decade. It also specifies that the money already taken has to be paid back by 2016.

The underlying problem is that California's spending on transportation infrastructure isn't keeping up with demand. The 18-cent gas excise tax hasn't been raised in more than a decade, hasn't kept up with inflation and hasn't been supplemented adequately by general budget funds. The legislative analyst's office estimates that between the 1998-99 fiscal year and today, inflation-adjusted gas tax revenues declined 8% while the number of vehicle miles traveled in the state rose 16%. This will only worsen over time as vehicles get more fuel efficient.

Proposition 1A does nothing to solve this. Instead of taking sensible steps, such as gradually raising the gas excise tax, indexing it to inflation or mustering the legislative will to direct more money to transportation, Proposition 1A simply puts a straitjacket on the Legislature. Voters should reject it.

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