Reporting the California Gas Tax Funding Chaos

The media needs to tell the truth about the Fuel Tax and Infrastructure Funding issue.

Transit Talking Points by: Nicholas Ventrone, Community Engagement Director

The media reportage of California's gas tax funding issue generally continues to be incomplete. While some outlets have rightly painted the entire picture, the overall thesis continues to be that the state and feds are not collecting enough revenue to pay for a backlog of infrastructure projects, therefore taxes or other fees have to be raised.

This blog has already shown that regardless how much money the state throws at the problem, that would not stop the wasteful spending or displacement of funds.

Funding: Are we really at the Crossroad?

On Monday, the Press Enterprise published this half-page diagram illustrating various facts related to fuel taxes, funding, infrastructure needs, and demands for more fuel efficient cars:

The piece raised some valid points. However, one very interesting area of the graphic was the "Declining Revenue" chart found on the lower left-hand corner, showing an overall decline of "Excise tax revenues to the State Highway Account" since 2007. The dropoff totaled $344 million between then and FY2013. Note the keyword "to" between "revenues" and "State Highway Account".

If you've been following my posts on fuel taxes, you may have noticed that an important fact was completely missing from the reportage. It is the hard fact that the state continues to receive massive sums of transportation-related cash with growing--not declining--growing fuel tax revenues. How so?

Take a look at this chart put out by the Legislative Analyst's Office:

As shown, total state transportation revenues have roughly doubled over the past 15 years—from $3.5 billion in 1999–00 to an estimated $7.2 billion in 2013–14. This revenue comes from three main sources: (1) excise taxes on gasoline, (2) vehicle weight fees, and (3) sales and excise taxes on diesel fuel.

A second chart published by the California Board of Equalization shows the same revenue streams.

The question boils down to this: Why are revenues in the State Highway Account showing a $344 million decline when total transportation tax revenues have gone up over $1 billion between FY07 and FY14? Plus, why is only a mere fraction of state revenue making its way to the State Highway Account? The state government took in over $6 billion in transportation revenue per year since FY06 and only about $1.75 billion went into the state's highway account in FY14 according to the PE...

Where has all that money gone?

It's true that some of the money may have been doled out directly to local and regional transportation agencies and never made it into the state highway kitty. However, infrastructure funding displacement still remains a serious problem. The state has got to get its act together in controlling and policing the spending of our transportation money so that 100% of it actually makes it to the infrastructure and project costs are in line with rates charged in the marketplace.

And the media needs to hold the government accountable by exposing such diversions and overspending. We the people pay into these funds and should expect them to be returned to us in the form of robust, multi-modal transportation infrastructure.

Had the reportage included the Sales and Excise Gas Tax Revenue chart in the graphic, the general public would have been made more aware of the continued chaos going on with transportation funding and not be misled into thinking the state is not collecting enough in taxes.

That was a golden opportunity to draw public attention to this growing threat.

To be fair and as I've mentioned before, both state and federal gas tax revenues are indeed threatened. The keyword here is threatened, not declining. That's because more fuel efficient cars are making their way into the marketplace and if electric cars do become the norm which I believe would be good and spell freedom from the gas pump, both the state and federal government will need to find alternative funding sources.

But regardless of how the state and feds gets transportation funds in the future, such money has to be spent on the infrastructure at the market rates and not displaced into other places.

The general public will likely not back a $52/year vehicle fee or insurance hike or a "road user charge" based on mileage unless the people are assured that such money will be spent on the infrastructure efficiently.

To add the icing on the cake, in the middle of all this madness, motorists are being caught in yet another problem.

CA Gas Prices continue to go up, and up, and up....

Sticker shock continues to plague Inland Empire gas stations as continues to show the trend of rapidly rising prices throughout the state. According to the website, some gas stations in Riverside, Hemet, Coachella Valley, and the Pass Area are all within a quarter of breaking the $4.00-per gallon mark. That includes a Chevron station in Downtown Riverside at $3.99 per gallon.

Nationwide, prices are still rising, but nowhere near the rate of California's. Despite price increases, several gas stations in both Idaho and the Salt Lake City region are still clocking in at less than $2.00 per gallon.

Last week, I posted an analysis of this troubling situation. Governor Brown and the state government certainly need to intervene before the economy takes a major hit, even if that means temporarily stopping the statewide summer blend mandate until the refinery issues are all solved. The state would give California gas stations special permission to import traditional unleaded gasoline into the state and sell it to California motorists. This is the same gasoline that the other 49 states use. The exception would be in place until the refinery issues like the explosion and labor slowdowns are fully dealt with. That would solve the statewide gas price issue in an eyeblink.

Because of these refinery issues and the fact that our state is the only one in the entire nation that has hard specific rules on motor vehicle fuel during the summer months, we're short on fuel, even though the nation as a whole has plenty of oil and the facilities necessary to convert it into gas. That just puts more money into the pocketbooks of the oil companies and the spending power of the dollar weaker.

Does that make any sense to you?