Transportation and Infrastructure Funding

2020 Business Issues Guide

Transportation and Infrastructure Funding

Long-Term Stability, Spending Oversight Important to Keep State Moving

Each year, Californians drive an average of 14,000 miles, increasing the wear and tear on the state’s aging roads, highways and freight routes. Californians use roadways to travel to work and school, vacation at the state’s abundant parks and entertainment destinations, and move trillions of dollars of goods through and around the state. California’s roads, bridges, freight, and public transit systems require annual maintenance, much of which has been deferred for the better part of a decade. State transportation leaders must tackle a significant backlog of repairs, modernization, and expansion to keep pace with advances in technology, such as autonomous vehicles and rapid transit, as well as expand roadways to accommodate additional drivers.

The Basics

The California Transportation Commission’s most recent Needs Assessment, last updated in 2012, found that 58% of the state’s roadways require rehabilitation or pavement maintenance and 26% of its bridges require major or preventive maintenance or complete replacement. The Federal Highway Administration estimates that California will need approximately $70 billion to modernize and fix its highway systems, and another $118 billion to widen its highways to keep up with growth.

California receives approximately $3.5 billion annually from the Federal Highway Administration, mostly from fuel taxes on gasoline and diesel.

The 2019 Urban Mobility Report published by the Texas A&M Transportation Institute shows congestion data for various cities. The research shows that commuters in the Los Angeles/Long Beach/Anaheim area wasted 117 hours, and commuters in San Francisco wasted 103 hours sitting in traffic in 2017. These congestion delays resulted in economic loss of approximately $17.8 billion and $4.8 billion per year, respectively.

When surveyed, Californians regularly rank transportation and infrastructure concerns, including traffic congestion and commuting time, as issues of high importance, and most support more spending and efficiencies to improve roads, highways and bridges.

Increased Spending in 2019–2020 Budget

The Legislative Analyst’s Office notes a $1.3 billion net increase in transportation spending for 2019–2020 when compared to the 2018–2019 budget, largely as a function of increases in overall revenues due to the passage of SB 1 (Beall; D-San Jose; Chapter 5, Statutes of 2017). California Chamber of Commerce-supported SB 1 survived a ballot measure attack in 2018.

SB 1 imposed a tax on the use of gasoline, and was necessary to address long-deferred infrastructure and concerns over a growing lack of mobility in the state, evidenced by the Urban Mobility Report.

Policy Concerns

Long-term modernization of California’s system of roadways and transportation infrastructure requires a long-term plan, given the high costs estimated for repair, modernization, and expansion to accommodate continued economic and population growth. Transportation bills are highly interrelated. For example, the California Legislature in 2018 and 2019 considered a bill to ban combustion engines in the state by 2040, despite the transportation system being reliant on gasoline excise taxes to fund infrastructure maintenance and expansion.

Targeting transportation emissions solely by increasing reliance on electric vehicles can cause upheaval in the funding arena, as SB 1 imposes only a set $100 fee per electric vehicle. Proposals like these must consider funding impacts, as electric vehicles impose the same wear and tear on roads and bridges as fuel-powered vehicles.

To that end, as Californians drive ever-increasingly fuel-efficient vehicles, rely more on public transportation, and drive more zero-emission cars, relying on these fuel excise taxes will divorce funding from the actual vehicular use of the roads. The Legislature recognized this phenomenon in 2016, creating an advisory committee (including a member from CalChamber) to develop a new transportation finance system based on miles driven, rather than gallons of fuel consumed. Any new mileage fee would replace the current fuel tax, not add to it. The advantage of such a system would be to assess drivers for exactly how much they use the roads, without regard to how efficient their engines may be or if they use petroleum fuels at all. The committee and state officials are evaluating this new finance regime for possible rollout after 2020.

California must be cognizant of the interrelationship between funding and vehicle miles traveled (VMT), increase efficiencies in the use of funds, and ensure it maintains sufficient oversight and accountability in the use of funds while allowing flexibility for technological development and advancement of California’s transit system.

Legislative Activity in 2020

The CalChamber expects that Governor Gavin Newsom and the Legislature will continue funding investments in transportation infrastructure at a pace similar to recent years. Bills could include appropriations of funding traditionally used for roads and infrastructure being diverted for climate or other goals.

CalChamber Position

The CalChamber supports reasonable and necessary funding to ensure long-term stability of California’s roads, bridges, and infrastructure, all of which are needed to move California-made goods and support the state’s vibrant economy.

California should reject fees unrelated to infrastructure improvement or which otherwise make it more difficult for Californians to commute or businesses to move their goods in order to ensure a robust economy.

The Legislature should encourage policy that maintains adequate oversight over use of transportation dollars and implements measurable benchmarks and performance-based outcomes for the use of funds.

January 2020

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Staff Contact

Leah B. SilverthornLeah B. Silverthorn
Policy Advocate
Climate Change, Energy, Environmental Regulation, Transportation