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UCLA Policy and Research Symposium Series Lake Arrowhead, CA October 19-21, 2003

Finance—The Critical Link Shifting Sands The Evolution of Surface Transportation Finance The California Experience. UCLA Policy and Research Symposium Series Lake Arrowhead, CA October 19-21, 2003. Presented by Arthur Bauer Arthur Bauer & Associates, Inc. Presentation Objectives.

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UCLA Policy and Research Symposium Series Lake Arrowhead, CA October 19-21, 2003

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  1. Finance—The Critical LinkShifting Sands The Evolution of Surface Transportation FinanceThe California Experience UCLA Policy and Research Symposium Series Lake Arrowhead, CA October 19-21, 2003 Presented by Arthur Bauer Arthur Bauer & Associates, Inc.

  2. Presentation Objectives California’s Population 1900-2000 • Trace evolution of transportation finance in California • Identify/interpret the context in which transportation funding policy was made • Suggest how to interpret today’s policy environment

  3. The Beginning—1900-1920 • Primitive public finance structure • Property tax basis of state and local funding • Three state bond acts • 1909 $18M • 1915 $14M • 1919 $40M • By 1923, $42M in county bonds available for roads

  4. The Beginning—1900-1920 • Context • 1900—780 cars • 1910—44,120 cars • 1920– 604,187 cars • 1910 gross receipts tax for state; property tax for counties • By 1923, 8% of state general funds for highway debt service • In 1923, “horsepower” tax on vehicles generated $10.4 M Total state revenues=$46M • $16M in county debt service for road bonds • Cost overruns due to the decision to build 4” concrete highways • Counties paid propor-tional share of debt service • State funds were being consumed by highway program

  5. Building the Foundation1920-1940 • Road financing out of control • Benefits of high-ways easily assign-able to users • Gas tax settled on as an equitable and convenient revenue tool Registered Motor Vehicles Millions

  6. Building the Foundation1920-1940 • 1923, 2¢ gas tax • 1 ¢ to the state • 1 ¢ to counties • 1927, 1¢ gas tax increase to the state. • North/South split Billions of Gallons of Motor Vehicle Fuel Sold

  7. Cities 1/4 ¢ for state highways in cities 1/4 ¢ for major city streets 1938, Article 19 put into the state constitution Summary Related use and benefits Ensured geographic equity Shared with counties Shared with cities Segregated gas tax and motor vehicle fees from state general fund Building the Foundation1920-1940

  8. Financing the Freeways1945-1965 • $’s needed to rebuild roadway infra-structure depleted during WW II • Need to accom-modate growth in population & travel • “Let’s get out of the muddle” Growth in Key Variables

  9. 1947, 1.5¢ post WW II gas tax increase 1953, 1.5¢ increase for a total of 6¢/gal. 1963, 1¢ increase to 7¢/gal. Cities and counties get 49%; state 51% of gas tax revenues Geographic equity—county and district minimums Related Activities 1944 Congress authorizes the Interstate Highway System 1956 Federal Interstate Highway system/ Federal Highway Trust Fund established California Freeway and Expressway System 1962 3-C Planning Process mandated by Congress Financing the Freeways1945-1965

  10. Urban California Asserts Itself Growth in Vehicle Miles Traveled--1966-2000 • 1962, Baker v. Carr • 1964, Reynolds v. Sims • 1966, California elects a legislature based on “one person; one vote principle” • San Francisco’s “freeway revolt” • BART

  11. Urban California Asserts Itself • 1968—California Clean Air Act • 1970—North/Split moves to 60% South/40% North • 1970—MTC • 1970—CEQA • 1971—Transportation Development Act • County transit sales taxes • 1973—AB 69 Caltrans/ Regional Planning • 1974—Article 19 opened for rail transit • 1976—CTC/County Commissions/STIP California’s Population millions

  12. 1978–Proposition 13 1981-Last gas tax imposed by legislature 1984—Self-Help sales taxes 1990—Prop 111 doubling of gas tax by bailout Re-emergence of bonds for funding transportation 1988—Prop 78-failed 1990—Props 108/116 1992—Rail-failed 1994—Rail-failed 1996—Seismic Retrofit 1996–Proposition 218 and 2/3’s vote requirement Overview of Initiative Process 1911—76% of voters approve initiative process at a special election Between 1911 and 2000, 290 initiatives qualified Since 1978, 127 initiatives qualified for the ballot Ballot Box Policy Making

  13. Orange County toll roads Proposition 111/Local government loses Emergence of CMA’s SB 45 and the 75%-25% split between state and regions for prioritization of projects Projects must be in regional plans/flexibility encouraged CTC’s ability to prioritize limited Federal Program Supports Regions Federal statutes, ISTEA/TEA, mirrors California policy direction Flexibility Projects must be in RTP Federal air quality regulations enter into transportation planning and project prioritization Devolution

  14. Erosion of Firewalls • General fund crises of early 1990’s and early 2000’s saw concept of special funds eroded • TCRP and Proposition 42 further linked transportation funding and general fund • General fund/special fund concepts become muddy

  15. Summary of Gas Tax Increases 199418¢ 199014¢ 19637¢ 19839¢ 19536¢ 1947 4.5¢ 1927 3¢ 1923 2¢

  16. Largest Counties:1900 & 2000

  17. Summary • Transportation funding policy cannot be separated from larger political issues • Transportation funding policies meet the investment needs of the time enacted • Funding and institutional arrangements are linked • Incrementalism is a feature of the evolution of funding policy • Transportation objectives become less important as funding policies are linked to secondary objectives

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