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 revenues are 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, micro-surface, overlays), road reconstruction, bridge maintenance, local bridge inspections, illegal dumping clean-up, clean water treatment facilities, and guardrails.
• 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.
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, and public assistance.
• Road Administrative Functions – The gas tax funds several 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, and Public Assistance.
What’s currently going on with the gas tax?
Two parts to the gas tax exist: 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 (gallon) 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 economy 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.
The Governor called for a special session of the California Legislature to address transportation funding; however, there has been limited progress in finding a solution. There are currently three proposals to address transportation funding: SBX1 1 (Beall), AB 1591 (Frazier), Governor’s Plan as of September 6, 2015. These proposals would generate $24 million (SBX1 1), $27 million (AB1591), and $12.6 million (Governor’s Plan). These amounts are in addition to the revenues currently being received. A detailed description of the three proposals is attached.
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, 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 is proposing a project delay strategy that delays the construction of several projects for one to two years in anticipation that the State Legislature will agree on a transportation funding fix. However, if the State Legislature fails to act within the two year window, 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:
- 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. 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.
- Delay the Byron Main Street Sidewalk Improvement Project, Pomona Street Pedestrian Safety Enhancements, and Tara Hills Pedestrian Infrastructure Project one year. Continue funding the completion of the design of the project, but delay construction funding.
- Eliminate seed money for Vasco Road Safety Improvement Project Phase II.
- Delay the Bay Point Asphalt Rubber Cape Seal project. The bids were recently opened for the project. However, with the new gas tax revenue projections, we did not have the $1.7 million funding to move this project forward. We will move forward with the ADA Curb Ramp Upgrades Project in the same Bay Point neighborhood in preparation for when the delayed Rubber Cape Seal project will be put out to bid in the next couple of years if the State Legislature finds a transportation funding fix.
- Reduce the gas tax allocation for Orwood Bridge Construction Engineering overage reserve. Caltrans has been disputing project expenditures for both the Construction Engineering and Environmental expenditures. At this moment, it appears only $600,000 in Environmental expenditures are in dispute. If the Environmental expenditures dispute is resolved, that would free up the $600,000 reserve.
- Reduced insurance reserve to $500,000. This amount is difficult to predict and in the recent past has come in at $1.6 million and $1.8 million.
- Holding off on back-filling vacated positions supported by the State gas tax.
- Will be shifting some County Road Crews from gas tax supported road work to Flood Control District facilities to reduce gas tax expenditures. Gas tax allocation to Road Maintenance has been reduced by $2.5 million from historic levels.
- Reduce grant match funding and forego applying for some upcoming grants.
• The actions summarized above are the main highlights. With these actions along with other minor budget adjustments, we have balanced the current fiscal year road budget. We are currently short approximately $700,000 for the fiscal year 2016/17 road budget. We will continue to seek additional budget adjustments and funding to make up the difference.
• 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.
[Note from TWIC Staff: Information regarding transportation funding proposals at the state are also addressed under Item 7: Report on Local, State, and Federal Transportation Related Legislative Issues]
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