Description

Significant investments will be required to maintain, operate, upgrade, and expand California's transportation infrastructure if the state is to retain its economic position in the global economy and accommodate a projected near doubling of the current population by 2040. At the same time, available funding for transportation will decline significantly over the next 15 years if the current transportation finance system remains unchanged. This report analyzes a range of alternative sources of revenue, as well as different finance options. The research is based upon reviews of existing literature, interviews with key stakeholders, and two statewide phone surveys. The facility-based sources considered were toll roads and lanes, truck-only toll lanes, privatized rest areas, and public-private partnerships (PPPs). The taxes and fees evaluated were increasing fuel taxes by a fixed amount, indexing fuel taxes to inflation, mileage-based fees, vehicle registration fees, vehicle license fees, weight-mile taxes for trucks, a statewide sales tax, and state general fund revenues allocated either for current expenditures or to pay off general obligation bonds. Each of the revenue and finance options was evaluated according to five criteria: (1) revenue generation; (2) ease of implementation; (3) transportation system performance; (4) equity; and (5) political feasibility. California needs a multiphased approach that considers near-, medium-, and long-term options. In the near term, state leaders could look to options with relatively strong political appeal that require no new administrative apparatus to implement. Of the tax and fee options evaluated, voters were most supportive of raising annual vehicle registration fees if the rate varied according to the vehicle's emissions or fuel economy. In both the near and medium term, public private partnerships and tolled facilities have strong potential to help fund new infrastructure in certain locations. Likely voters were open to the idea of private companies building and operating toll facilities, particularly with state oversight. Also, despite general antitax sentiments, 43% of voters supported increasing the gas tax by 1¢ per year over ten years. General obligation bonds could be a source of funds in the near term, though they do not generate any new revenues for the state, and they reduce the level of funds the government will have to spend for other state programs. Long-term solutions that address fundamental changes in our transportation system and vehicle fleet will likely require significant shifts in attitudes and approaches.

Publication Date

10-1-2006

Publication Type

Report

Topic

Transportation Finance

MTI Project

2427

Keywords

Government funding; Highway user taxation; Revenues; Toll roads

Disciplines

Transportation

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