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HomeMy WebLinkAboutNB 2 REVENUE MEASURES 3-16-81DATE: March 6, 1981 NEW BUSINESS No. 2 3-16-81 Inter-Corn TO: HONORABLE MAYOR AND CITY COUNCIL FROM: DAN BLANKE~SHIP, CITY ADMINISTRATOR SUBJECT: ~E MEASURES A variety of revenue issues are arising on the State or County scene with ~ahich the City Council should be aware. In some cases, the Council may wish to take a specific position in support or opposition. Increase in State Gasoline Tax. Attached is a newspaper article in regard to SB 215 (Foran) which was introduced to try to reverse the trend of inadequate gasoline taxes for street and highway maintenance, let alone for new construction. It has been over 12 years since the gasoline tax was increased since it was a tax based on cents per gallon (per vol~T~ of fuel dispensed), the amount of money bas remained static while the purchasing power of the money has nose dived. In the early years, the amount of mmney increased somewhat due to increased population, increased vehicles, increased driving, and heavier cars with low fuel efficiency. However, in recent years the trend has reversed and more fuel efficient cars traveling fewer miles have reduced the volume of fuel consumed. Although the City Council has traditionally bc~n opposed to new taxes, the time is appropriate to carefully examine each new proposal. Proposition 13 and 4 were efforts on the part of the public to make government mmre cost conscious and economical, but were not a demand to eliminate essential services. The construction and maintenance of streets and highways are essential and the gasoline tax is a user fee directly related to the use of the road system. Also attached is a letter and resolution from the City ~gineers Association of Orange County supporting SB 215. RECOMMENDATICN: It is recorwaended that Council authorize the Mayor and Staff to write letters to the City's legislators in support of SB 215 (Foran) and its basic concept. DAN BI2LNYd3NSHIP, ~ City Administrator ~ DB:dmt d, OADS: New Taxes mtinued from Third Page ~,~e already deteriorating condition of the state trans- portation system could drastically worsen. -- IS'oran's plan would raise a total of about $2.7 billion vcr five years with roughly $800 million going back to .~cal governments. An estimated $1 billion of the new revenue would go for highway construction. _2 lq'unds would be raised by increasing the cost of a :iver's license from the present $3.25 every four years ., $8 in 1982, $10 in 1983 andS12 in 1984. ~lr~ addition, the current $11 annual vehicle registra- --~On fee would be hiked to $19 in 1982, $21 in 1983 and 2'2 !n 1984. .:lde~!tification cards issued by the Department of Mo- tor .Vehicles to non -drivers would rise from the present -~ t056 next year, but senior citizens would continue to :Commercial trucks, generally considered to cause the most highway wear and tear, would have their fees _hiked 40% next year, 50% in 19&3 and 60% in 1984. Driver license fees have not been raised since !953, · chicle registration fees since 1968 and commercial truck weight fees since 1963, although some adjust- _C, nents were made in the trucking schedule in 1974. Beginning in 1983, Foran also is proposing a' 2-cent' ~crease in the present 7-cent per gallon state tax on gas-'~nc. Currently, each gallon of gasoline carries a 4- ce~ deral tax and the 7-cent state tax. California's 6% ales tax then is added to the combined to~al. Gas station owners have unsuccessfully tried to have die sales tax removed because part of the revenue it rain:es goes into the state's general fund, not for highway -",urposes. Of the approximately $627 million the gasoline s/iles tax is expected to bring in this year, about $147 million will go to the general fund to help finance education and ~ '~ther programs. ?oran's bill would phase out the general fund use of that money over an unspecified period of time, begin- ning next year. -' He said the sales tax, first imposed on gasoline in 1971, lever should have been even partially diverted to the general fund. Most of the sales tax income from gasoline purchases gees to state and local mass transit projects. · 'Phc %cent tax on each gallon of gasoline has not been ~aised since 1963. Of the proposed 2-cent per gallon ~reaso, Foran said one cent would go to the state high- way fund and the other penny to cities and counties, ---which, for the first time, also would receive a share of ;he revenue from diesel fuel sales. Late last year, a legislative analyst's report said driv- er license fees should be raised only to $8 to have the --Orogram pay for itself while truck weight fees could be aiked anywhere from 89% to 245% to keep up with in- flation. Foran said the analyst's driver license figur, es were _.~utdated and too Iow. Auto, Gas Tax Hikes Asked for Highway Construction SACRAMENTO--A major legis- la,/ye effort to forestall an estimat- ed'S1.4 billion deficit in state high- w~i]y construction funds by raising driver license and vehicle registra. tion .fees and the gasoline tax, was introduced Wednesday by Senate Transportation Committee chair- man John r'. Foran (D-San Fran- cisco. ) ' The measure, also. backed by the .,Assembly Transportation Commit- tee chairman, Assemblyman Bruce Young (D-Norwalk) and other Related story in Part II, Page 1. lawmakers, was presented as the key. consensus bill to stave off the financial problems of~ the deficit pl~agued highway and mass transit p~?grams. .Some provisi[~s, such as the gas ta~ increase, have been previously rejected by Coy. Edmund G. Brown J,r.,~who generally has opposed tax increases. Foran told a news con- feFehce he has not yet discussed the bill with the governor. He said he also has not talked with the power- ful trucking lobby. "The purpose of the bill is to meet the emergency--the crisis," Foran said. "This is not a major capital outlay paving program. It's de- signed to maintain the level of ser- vice and the level of construction and the level of maintenance and the level of rehabilitation..." California highway construction projects~including 8uldeways for mass transit--are scheduled in five- year increments. State financiai ex- perts have predicted at least a $I ,billion deficit in the highway con- struction fund by 1986. Foran said some projections indicate the over- all highway construction and mass transportation deficit could be as high as $2.4 billion, depending on the inflation rate. The deficit is caused by inflation and a general decline in gasol!ne sales. Without a major infusion of funds to handle current projects and fi- nance maintenance of existing streets 'and highways, Foran said Please s~e ROADS, Page 28 March 4, 1981 Mr. Dan Blankenship, City Administrator City of ?ustin 300 Centennial Way Tustin, California 92680 Dear Mr. Blankenship: The City Engineers Association of Orange County is vitally concerned with the future of our transportation system in Orange County. Our primary concern is that sufficient revenues do not presently exist to adequately maintain and improve our streets and highways. Enclosed is a Resolution that was recently approved by our Association supporting legislation that will provide the necessary financing for our streets and highways. Specifically, the City Engineers Association of Orange County is supporting Senate Bill 215 (Foran). The major features of SB 215 are summarized below: Increases in Revenue Driver's license fees, vehicle registration fees, and other mis- cellaneous user fees are increased to a level sufficient to fully support the activities funded by the Motor Vehicle Account; truck weight fees are increased with all the revenue deposited in the State Highway Account for State highway and guideway pur- poses (truck weight fees are currently deposited in the Motor Vehicle Account); gasoline fuel taxes are increased by 2C/gallon, with 1¢ for state highway/guideway purposes and 1~ for local streets and roads purposes; diesel fuel taxes arc increased by 2~/gallon with all 9¢ shared with cities and counties for local streets and roads purposes; Re: Senate Bill 215 (Foran) March 4, 1981 Page 2 Equitable Allocation 70% of all state highway funds for construction purposes (excluding rehabilitation) are to be allocated to counties through a formula based on the county's contribution to the State Highway Account. The 60-40 South-North split would not be changed though. Transportation Tax Capture Gasoline sales tax revenue is dedicated for transportation purposes, recapturing that amount currently going into the General Fund gradually over a five-year period. Local Option A local option fuel tax is authorized with voter approval. Present estimates indicate that this proposed legislation would increase revenue to Orange County cities as follows: Fiscal Year Revenue(Millions) 1982/83 5.43 1983/84 9.0 1984/85 9.2 1985/86 9.7 On behalf of our Association, I would earnestly urge your City to endorse and actively support SB 215. Very truly yours, Gary E.'~'Uohnson Presid.ent, C.~ty Engineers Association of Orange County GEJ/gkb Enclosure cc: Hr. Robert Ledendecker, Director of Public Works/City Engineer RESOLUTION NO. 81-1 A RESOLUTION OF THE CITY ENGINEERS ASSOCIATION OF ORANGE COUNTY SUPPORTING SENATE BILL 215 WHEREAS, California's gasoline tax was last increased in 1963; and WHEREAS, as a result of rampant inflation and despite a sixty percent increase in gasoline consumption Statewide since 1963, the purchasing power of the revenues generated by California's seven cents per gallon Excise Tax is about one-third of what it was then; and WHEREAS, only seven states, including California, have not increased their gasoline tax since 1963; and WHEREAS, the last comprehensive needs study for local streets and roads in 1978 indicated that a 63 percent revenue increase was needed to meet the revenue shortfall; and WHEREAS, California cities and counties have been required to supplement gas tax revenues with substantial amounts of rapidly diminishing local funds in order to provide a reasonable level of maintenance and improvement to streets and highways; and WHEREAS, WHEREAS, California cities and counties are in desperate need of funds to maintain their streets and highways in a safe condition; and the City Engineers Association of Orange County does endorse legislative proposals that will provide the necessary financing for streets and highways; and WHEREAS, one such legislative proposal, Senate Bill 215, would increase the driver's license fee and other incidental fees to make these services self-supporting, would recapture that portion of sales tax on motor fuel that is now being used for General Fund purposes and would increase fuel taxes by two cents per gallon. NOW, THEREFORE, BE IT RESOLVED that the City Engineers Association of Orange County does support in concept Senate Bill 215, recognizing that it represents only a partial solution to our transportation funding needs. Gary E. ~o'hn§o'n~'~re~iden~ Cit{. Engineers A~ociation of Orange County Date