Back in December, the Legislature passed a revenue measure that would have raised about $18 Billion. It was ultimately vetoed by Arnold in a fit of pique because he didn’t get all the business concessions he wanted.  That the changes would have helped save a bucket o’ cash in interest payments seemed a minor matter to the Governator. The Republicans promptly sued to block the measure as a violation of the 2/3 rules on taxes, but we never got an opinion from the court as the case was rendered moot by the veto.

Flash forward to this week. The Legislative Counsel released an opinion, though non-binding on any court that might happen upon the case, that says the majority vote package was legal:

The March 9 opinion from Legislative Counsel Diane Boyer-Vine, addressed to Gov. Schwarzenegger, reaffirms a 2003 opinion by her office that finds a bill that raises one tax and lowers another by an equal or greater amount only needs simple majority votes in each legislative house.

“We think that a tax bill is not subject to the two-thirds vote requirement if the cumulative effect of the ‘changes in state taxes’ … when considered in their entirety would be neutral or would produce a net decrease in state tax revenues,” her March 9 opinion states. (Capitol Weekly 4/2/09)

This might serve a valuable purpose were we to a) get a Democratic Governor or b) get Arnold over the proverbial barrel far enough so that he would sign it.  If you recall, Sen. Abel “Me, Me, Me” Maldonado got the gas tax increases cut out of the package when it was ultimately passed, resulting in a loss to the state coffers in the billions range. In theory, we could try again with a similar, though perhaps not quite as large, package to move an environmentally friendly revenue measure.

With luck, we won’t need to raise any revenue for this fiscal year. However, it is looking like we might need oh, about $8 billion for the 2009-2010 FY, and the way the polling is looking on the special election, that might not help either.  We need to pursue creative solutions to our revenue problem, and this might be one of them.

Crossposted from the California High Speed Rail Blog

One of my lingering concerns about the Obama Administration has been that they might be tempted to claim victory with the $8 billion in HSR funding added to the stimulus and not follow up on that money, which as we know merely pays for some initial costs. But Secretary of Transportation Ray LaHood made clear last week that in fact, the $8 billion in HSR stimulus really is intended as a signal to America that Obama is truly serious about building HSR:

LaHood said that for Obama building high-speed rail networks is, “if not his No. 1 priority, certainly at the top of his list. What the president is saying with the $8 billion is this is the start to help begin high-speed rail projects.” He added that the administration “is committed to finding the dollars to not only get them started but to finishing them in at least five parts of the country,” although he declined to elaborate on where these projects might ultimately be built.

And don’t worry about the right-wing freakout over the Vegas HSR project – California is in better position than any other HSR project in America to use that stimulus funding. We can begin construction in late 2010 or early 2011; no other project is anywhere close to that point.

This couldn’t be better news for us in California, where we have long known that at least $15 billion in federal aid, spread out over 10 years, will be needed to build the SF-LA line. Unfortunately the news is tempered by the fact that the Obama Administration’s support for HSR did not extend to mass transit as a whole. Here in California the state has decided to zero out the State Transit Assistance account, costing local agencies over $500 million in funding. The federal stimulus isn’t nearly enough to make up the difference. And as the San Jose Mercury News reports, that’s setting up a situation where HSR may be pit against local transit agencies:

The MTC meeting Wednesday in Oakland could turn contentious, as the current plan calls for allocating $75 million to help build the Transbay Terminal in San Francisco, which would serve as the final stopping point for a high-speed rail line and Caltrain (UPDATE: the MTC now plans to seek train box funds from the $8 billion HSR stimulus, not the general transit stimulus funds – see Transbay Blog for more info) and $70 million to build a BART spur to Oakland International Airport. Those two projects alone would take 43 percent of the $340 million headed to the area in stimulus funds for local transit.

Some want money for those new two projects scrapped or reduced – and redirected to cover the cost of paying for day-to-day transit needs.

But MTC officials counter that building the Transbay Terminal now will save millions of dollars in later costs, and combined with the $8 billion in stimulus funds set aside for high-speed rail could accelerate that program.

I support using that money for the Transbay Terminal, although I’m less certain about whether BART to OAK is all that necessary; the AirBART buses work pretty well (I used them on numerous occasions when I was an undergrad at UC Berkeley, although that was 10 years ago).

But I really hate it when HSR pitted against other forms of transit. I have said it before and I will say it again – HSR and other mass transit need each other to be successful. It should not and must not be an either/or choice. I don’t blame the MTC for being stuck in this position – that blame lies in Sacramento and Washington DC. But we transit advocates need to not fall out along modal lines.

I’d like to propose a solution, one that I don’t even know is possible under state law but makes a ton of sense to me. The nine-county SF Bay Area region should implement its own gas tax, which will solely be used to fund public transit. I haven’t penciled out the numbers so I don’t know exactly what the tax amount should be, but it should be indexed to the price of gas, and not a fixed cent number.

This money would initially be used to backfill the loss of STA funds, and allow the federal stimulus money to go to new transit infrastructure such as Transbay Terminal or BART to OAK. Ultimately the STA funds must be restored by a statewide gas tax increase, but it is much more politically possible to implement a gas tax in the Bay Area first than to try and get the Central Valley and the Southern California exurbs to buy into this (they can be brought on board later, once the 2/3 rule is eliminated).

It’s very difficult for folks living in the nine counties to evade the tax, with the possible exception of Gilroy residents who might drive to Hollister to fill up. Most folks will simply pay the increase rather than drive far out of their way to get a cheaper gallon of gas.

I’m not sure if this option has been explored by the MTC and the member counties, but it ought to be. It’s a sensible solution that would not only help spare transit agencies from “Armageddon” but would itself be a long overdue policy shift that would give a real boost to transit efforts in the SF Bay Area.

That’s the claim from the American Road & Transportation Builders Association, which has a study showing how the gas tax cut will affect jobs in each state.

The assumption the AR&BTA is using is that the tax cut would blow a $9 billion hole in the federal transportation budget. Based on FY 07-08 expenditures CA’s share of that would be $664,406,924. The association then estimates that 23,107 jobs would be lost here in California – roughly equivalent to the proposed school layoffs – over the next three years.

No wonder then that local transportation agencies across the state are denouncing this foolish proposal. From Santa Cruz:

“It would deplete an already oversubscribed highway trust fund, making a bad situation worse,” commission Executive Director George Dondero said. “We’re trying to get the government to generate more money for transportation, not less.”

Dondero said he didn’t know how much the county could lose, just that “future projects would have to wait.”

Critics of the gas-tax break, including Clinton opponent Barack Obama, say it would have little impact on consumers, saving the average driver an estimated $30 over the course of the summer, and instead create a $10 billion gap in the federal highway trust fund, used for highway construction and maintenance.

Calling the proposal an “election pandering” tactic, commissioner and county Supervisor Ellen Pirie said it would benefit oil companies.

“There will be a lot of harm in terms of infrastructure projects and maintenance people want taken care of,” Pirie said. “It would be great if there were a way to reduce the price of gas. I know a lot of people are struggling with this, but I don’t think [the tax break] is an effective way to do this.”

Thanks to Daily Kos diarist Jimmy Crackcorn you can see just how much this pander will be worth to you with an online calculator. Plugging in my expected summer driving (75 mi per week) and car mileage (33 mpg) I get…$16!

Wow. A whopping $16. That’s maybe a dollar a week. And at the low, low cost of 23,107 jobs in our state during a recession and stalled transportation projects that if completed would help drivers save on gas for years to come. Of course, the lost jobs have a ripple effect on both state budgets (lost income tax revenue, lost sales tax revenue) and the state economy.

The real solution is, as I explained at my high speed rail blog last night, investment in things like trains. Thank god someone in this race is talking about that:

The irony is with the gas prices what they are, we should be expanding rail service. One of the things I have been talking bout for awhile is high speed rail connecting all of these Midwest cities — Indianapolis, Chicago, Milwaukee, Detroit, St. Louis. They are not that far away from each other. Because of how big of a hassle airlines are now. There are a lot of people if they had the choice, it takes you just about as much time if you had high speed rail to go the airport, park, take your shoes off.

This is something that we should be talking about a lot more. We are going to be having a lot of conversations this summer about gas prices. And it is a perfect time to start talk about why we don’t have better rail service. We are the only advanced country in the world that doesn’t have high speed rail. We just don’t have it. And it works on the Northeast corridor. They would rather go from New York to Washington by train than they would by plane. It is a lot more reliable and it is a good way for us to start reducing how much gas we are using. It is a good story to tell.

That was Barack Obama, giving impromptu remarks to an Indiana couple a few days ago.

It’s not a new idea: Raise the gas tax as a method of both funding public transportation, as well as encouraging people to use it instead of their cars. Discussions of climate change, peak oil, and sustainable development usually always at some point or another emphasize a gas tax as a particularly effective carbon tax. And as the San Francisco Chronicle notes today, the SF Bay Area is starting give the idea serious consideration:

Regional officials are taking a close look at trying to increase the Bay Area’s gasoline tax by as much as 10 cents a gallon and believe voters might agree to it as a way to help combat global warming, The Chronicle learned Thursday.

Although the regional Metropolitan Transportation Commission has been able to ask voters for a higher gas tax since 1997, a decade of polls indicated there was little chance such an unpopular idea would ever secure the necessary two-thirds approval in the nine Bay Area counties.

Now, however, with public concern building over climate change, the electorate might not be so opposed to a new gas tax as long as voters see it as a way to help the environment, officials said.

A 10-cent-a-gallon increase in the Bay Area could generate an estimated $300 million a year or more to pay for transportation-related projects. Although the money could be used for roads, the emphasis probably would be on public transit and efforts to reduce auto pollution.

But is this a workable plan – workable in both policy and political terms?

As we are well aware, any tax increase in California must get 2/3 approval, whether in the state legislature or at the ballot box. The Metropolitan Transportation Commission, which plans and helps fund transportation in the Bay Area, has found that it’s difficult to meet such a high threshold.

But apparently, linking the tax to global warming makes some difference:

The Bay Area Council, a business-backed public policy group, favors the fee approach, council spokesman John Grubb said. His organization last polled Bay Area voters three years ago about their feelings on raising the gas tax. Support then was around 50 percent. Tying the issue directly to global warming would help boost support, he said.

Whether it would boost support to 66.6% is another question entirely. One option is to charge a gas “fee” instead of a “tax” – it only requires a simple majority but, as the article notes, is much more restricted as to how funds raised can be spent.

Still, a gas tax brings with it significant costs as well as benefits.

The first is affordability. Although some opponents claim “this is probably the wrong time to raise the gas tax, given how high the cost of gas is now,” the fact is gas prices are not coming down anytime soon – if ever. Not only is peak oil a factor – increasing demand + finite supply = higher costs, but the devaluation of the US dollar is also pushing prices higher. Neither trend is going to ease anytime soon.

Because of the volatility of gas prices, I do not believe voters and drivers would actually notice the tax increase – especially if it is implemented in phases. In 2005 Washington State enacted a 9.5 cent gas tax, implemented via 3 3-cent increments between 2005 and 2007. Drivers barely noticed this, especially at a time when prices were swinging 40-50 cents a gallon.

Those who WOULD be most hurt by a gas tax are those hurt by any tax increase – the poor, the lower-income. Their neighborhoods have tended to be those least served by public transportation, although recent projects such as SF’s T-Third line have begun to address this.

That leads into my second point, which is that for a rise in the gas tax to have its intended effect of causing a shift away from single-occupancy internal combustion commuting toward public, mass transit, those alternatives need to already be in place. London has had dramatic success with a congestion charge, but it also already had the Underground, frequently rated as one of the world’s best public transit systems.

The Bay Area is better off as a whole than Southern California in terms of transit availability, but the remain both large gaps (especially in the Santa Clara Valley, but also in the East Bay) as well as places where current capacity needs significant rehabilitation (as in much of SF). This has not been helped by Arnold’s penurious funding of public transportation, evidenced by his $1.3 billion cut of mass transit funds from this year’s budget.

A gas tax, I believe, should be Step 2 of a comprehensive program to encourage sustainable, environmentally responsible transportation. Step 1 needs to be state-funded investment in public transportation to extend its reach. If there aren’t usable alternatives already in place, Californians will simply wind up paying more in gas taxes without making behavioral changes.

Also, a higher gas tax would also make sense paired with other methods to encourage public transportation and discourage driving, such as the congestion charge that SF has been considering.