State gas tax is the primary funding source used by Contra Costa County to fund the operations, maintenance, and improvement of the unincorporated transportation network.
What does it pay for?
- Operations and Maintenance – Gas tax used to operate and maintain pavements, road drainage (underground and above ground facilities), culvert inspection and replacement, signs, striping, vegetation control, bike lanes, pedestrian facilities, trails, traffic signals, safety lighting, shoulder grading, slope maintenance, storm response (clean-up, downed trees, clogged drains, etc), hydrauger maintenance, curbs, bike lane sweeping, storm drain debris removal, pothole repair, surface treatment program (slurry seal, chip seal, cape seal, microsurface, overlays), road reconstruction, bridge maintenance, local bridge inspections, illegal dumping clean-up, clean water treatment facilities, guardrail.
- Capital Projects – Used to construct capital transportation projects such as bike lanes, pedestrian facilities, curb ramps (ADA compliance), safety improvements, shoulder improvements, complete streets, green streets (green infrastructure), traffic calming, and bridge replacement. Local gas tax is also used to leverage local, state and federal grant funds. Last year for every $1 dollar we spent on staff time to prepare grant applications, we were able to get $17 dollars in return. This resulted in successfully securing $5,080,000 at a cost of $300,900. Not only do we use gas tax to secure grants, gas tax is used as required matching funds for various grant programs. For example, we currently have 22 active projects that are grant funded. With a $5.6 million gas tax match, we were able to secure $22.1 million in various grant funds. Without having gas tax as required local match money to go after grants, the County would miss an opportunity to obtain additional outside funding to help construct much needed safety, maintenance, and multi-modal transportation improvements.
- Traffic Operations – Gas tax fully funds the Traffic Operations Section. This section is responsible for traffic safety investigations, traffic operational improvements, traffic signal timing, traffic signal maintenance and upgrades, traffic data collection, Neighborhood Traffic Calming Program, traffic collision evaluations, encroachment investigations, speed surveys, traffic resolutions, parking restrictions, traffic impact evaluations from new development, CHP coordination, truck restrictions, permit load requests, State coordination, public assistance.
- Road Planning and Administrative Functions – The gas tax funds several planning and administrative functions that support the County’s road program. These include the Development Impact fee program, self-insurance (Risk Management), Road Finance Functions, Transportation Planning (Department of Conservation and Development), Utility Undergrounding Program (Rule 20A Funds), transportation planning studies, interagency coordination, state coordination, public meetings, project development, alignment studies, Road Records, County Counsel, claim investigations, Public Assistance.
What’s currently going on with the gas tax?
Two parts to the gas tax: Gas Excise Tax (volume based) and Price-Based Excise Tax (price based)
- Gas Excise Tax (volume based) – has not been raised since 1993. The Construction Cost Index has increased 71% from 1993. The purchasing power of the 18 cent gas tax in 1993 has been reduced to 9 cents in 2016 due to inflation. The gas excise tax is based on the amount of gas purchased and is not based on the price of gas. Although there are more vehicles on the road, the gas tax generated has remained relatively flat due to the improvement in fuel efficiency in vehicles and more electric vehicles on the road. Electric vehicles are essentially using the road network for free. Although great for the environment, this trend has had a major impact on agencies responsible for properly maintaining and improving the transportation network.
- Price-Based Excise Tax – This part of the gas tax is dependent on the price of gas. If the prices are high, the sales tax generated increases. When gas prices drop, so does the sales tax portion of gas tax. So if gas prices have only dropped 50%, why is the County’s gas tax show a decline of 81%? This inequality comes from the gas tax swap agreed to several years ago. From the sales tax based gas tax, the State takes $1 billion off the top to pay for General Obligation Transportation Bonds. During the tough economic times, the State was looking for General Fund relief and switched the obligation for paying these General Obligation Transportation Bonds from the General Fund to Gas Tax. When gas prices are high, the impact of removing $1 billion off the top is minimal, but when gas prices are low, the pot of money is small and is even made smaller by continuing to take the $1 billion off the top. The $1 billion is a fixed amount for bond debt service.
In 2014, the Governor called for a special session of the California Legislature to address transportation funding. The Special Session on Transportation Funding closed with no action on November 30, 2016.
Legislators took the oath of office on December 5 for the 2017-18 session, which began on January 4. Senators and Assembly Members also took the opportunity to introduce legislation, including Assembly Member Jim Frazier and Senator Jim Beall who both reintroduced versions of their previous transportation funding and reform measures – AB 1 and SB 1, respectively. In addition, the Governor released the State Budget on January 10 that also addressed transportation funding.
While the Governor’s plan has grown to $4.3 billion (compared to about $3.6 billion in September 2015), the funding for local streets and roads has barely budged.
The Governor’s plan would allocate just over $1 billion/year in additional revenues to Local Streets and Roads.
Accordingly, the Governor’s plan would provide about half as much revenue as the $2.2 billion in new annual local streets and roads revenue that would be generated by AB 1 and SB 1.
What are the impacts to unincorporated County roads?
- The County has seen a significant reduction in State gas tax used to operate and maintain our local unincorporated road network. Although we have seen a slight increase in the volume based gas tax and anticipate a slight increase in the price-based gas tax for 2017/18, this increase is far short of the drastic reduction we have seen in the sales tax portion of gas tax.
- To address the gas tax revenue reduction, the Public Works Department last year proposed a project delay strategy of one to two years in anticipation that the State Legislature would agree on a transportation funding fix. In last year’s budget, we needed to close a large, but manageable, funding gap. We proposed delaying several projects and did not backfill certain staffing positions funded with gas tax to close the budget gap. Unfortunately, with no action during the Legislative Special Session on Transportation, the project delays rolled over and other budget obligations for fiscal year 2017/18 created a $7 million shortfall that we need to address. We again propose to strategically delay certain projects and programs to avoid loss of grants or previous work. We were also fortunate that the East Contra Costa Fee and Financing Authority is able to accelerate payments of approximately $5.1 million that will help fund some east county projects (Camino Diablo at Byron Highway Intersection Improvements and Byron Main Street Sidewalk Improvements) and avoid losing federal grant funds and momentum of the projects. However, to close the budget gap, we are proposing to delay our annual surface treatment program. The proposed list of projects and program delays are listed below. However, if the State Legislature fails to act this session, the County will likely need to indefinitely delay several projects and lose the already secured grant funds associated with those projects.
- The following are the main projects and road program activities impacted by the proposed project delay strategy for fiscal year 2017/18:
- Cancel the 2017/18 Surface Treatment Program.
- Continue to delay the construction phase of the Tara Hills Drive Pedestrian Infrastructure Project, Bay Point Cape Seal Project, and the Pomona Street Pedestrian Safety Enhancements Project. Continue funding the completion of the design of the project, but delay construction funding. (These projects were to be constructed last year and were delayed. We propose to continue to delay these projects)
- Delay the construction phase of the Pedestrian Crossing Enhancements – Central & East County Project and the Blackhawk Road Bikeway Project. Continue funding the completion of the design of the project, but delay construction funding. (These projects were scheduled to be constructed this year and are proposed to be delayed)
- Maintain a reduced insurance reserve at $500,000. This amount is difficult to predict and in the recent past has come in at $1.6 million and $1.8 million.
- Hold off on backfilling vacated positions supported by the State gas tax.
- Reduce gas tax allocation to road maintenance by $2.2 million from historic levels.
- Reduce grant match funding and forego applying for some upcoming grants.
- Reduce capital project contingency by $300,000.
- Replace gas tax funds with Stormwater Utility Fee funds to construct clean water green infrastructure project ($300,000).
- Increase Measure J Return to Source funds from $1.4 million to $1.9 million.
- Use Area of Benefit funds (AOB) in place of gas tax on AOB eligible projects, totaling $630,000.
- Delay construction of Kirker Pass Road Northbound Truck Lanes one year with work beginning in 2019. Reduce gas tax allocations for local match starting this fiscal year and next. The gas tax allocations were to be used to cover the local share of the project cost (approximately $6.2 million). If State Transportation Improvement Funds (also gas tax) are permanently cut by the California Transportation Commission for this project, the County will not have the capacity to make up the difference and the project will be delayed indefinitely and we potentially lose grant funds and Measure J Regional funds.
- The actions summarized above are the main highlights. With these actions along with other minor budget adjustments, we have balanced the proposed fiscal year 2017/18 road budget.
- We realize that these actions will have an impact to motorists, cyclists, pedestrians, transit operations, and goods movement and we will continue to look for efficiencies and strategic allocations of the limited gas tax to keep the unincorporated County road network operating safely, efficiently, and reliably
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