CSAC, along with the Legislature and multiple transportation
stakeholders, continues to analyze and understand the affects of
Proposition 26 on the transportation tax swap enacted in March
2010 (AB X8 6 and AB X8 9). Recall that the
transportation tax swap eliminated the sales tax on gasoline
(Proposition 42 and spillover) and replaced it with a 17.3-cent
increase in the excise tax on gasoline (Highway Users Tax Account
or HUTA) and a 1.75 percent rate increase in the sales tax on
diesel.
Proposition 26 has a retroactive provision on the 2/3rds vote
requirement. County counsel is concerned that this provision
invalidates the replacement taxes enacted by the transportation
tax swap, unless the Legislature validates those by a 2/3rds vote
within 12 months of the enactment of Proposition 26. Further,
they believe litigation would be required to reinstate the sales
tax that funds both Proposition 42 and the transit spillover
revenues.
The most effective path to provide certainty and avoid the risk
of losing these transportation funds is to seek re-enactment of
the taxes (AB X8 6 provisions) by a two-thirds vote of the
Legislature recognizing that Proposition 22 now precludes a
simple re-enactment of the two bill package adopted in March of
2010. Any re-enactment of the provisions that includes allocation
of these funds for General Fund relief (AB X8 9 provisions)
is now complicated by the fact that this is precluded by
Proposition 22, which prohibits the use of transportation funds
for General Fund relief or any other purpose other than for
transportation whether through temporary borrowing or a permanent
taking.
With over $2.5 billion a year in transportation funding at risk
the Legislature and stakeholders need to work together
cooperatively to enact a solution. The loss of this revenue would
jeopardize transportation projects across California, threaten
thousands of jobs, and negatively impact the overall economic
wellbeing of the State given the multiplier affects from
infrastructure investment.
For a more detailed analysis of Proposition 26 and the
transportation tax swap, please visit the
CSAC website.
