ACP Pubs

Loren Faulkner

They’re At It Again…
July 21, 2008

California’s state legislators are apparently trying to rustle up money for the huge budget deficit by raiding Prop 42 funds—again. Remember Prop 42? That was the measure that was going to once and for all lock away gasoline sales tax money for highway and infrastructure projects only (unless the Governor declared a fiscal emergency).

Of course, the emergency was declared a couple of times. So, gasoline sales tax revenue continued pouring into the General Fund. Then Californians placed Prop 1A on the 2006 ballot to close loopholes and make it tougher to raid Prop 42 funds. It passed by a big margin. But, don’t hold your breath; a big hit may be coming.

Tara McGovern Director of Government Relations for The Engineering & Utility Contractors Association EUCA www.euca.com has sent out the following letter:

(EUCA) has confirmed that transportation construction funds are threatened in the latest round of state budget negotiations. A cut of $1.1 billion of the $1.4 billion available in gas sales tax revenues is being proposed by some Republican lawmakers. $300 million is spared in order to keep current projects funded through the 08/09 fiscal year, but the larger cuts will likely delay future projects from going out to bid.

Jim Earp, executive director of California Alliance for Jobs, stated, "We had been assured repeatedly that Proposition 42 was not on the table earlier on for the simple reason that it doesn't solve the problem," said Earp. "But it looks like now, from the information we are getting, that it is definitely on the table."

McGovern’s letter continues:

EUCA and other industry stakeholders are joining together to oppose these budget cuts by funding a robust media campaign to pressure lawmakers to vote against any raids on infrastructure funding. The group also fired off a letter to state legislators outlining the significant impacts that the budget proposal would have on California’s economy, employment and goods movement. The letter states, "Raiding these transportation funds is a fiscally irresponsible decision that will only make the budget situation worse in out years, hurt our economy and transportation network, and break faith with the voters," the letter said.

“It’s like they’re pulling our food right out of our mouths.” says Gary Andrews of Amos & Andrews, Inc. and EUCA Government Relations Committee Chair.

In 2006, the construction industry passed Prop. 1A, which places restrictions on borrowing gas sales tax revenues. Prop. 1A mandates the following:

--Funds can only be borrowed twice in a ten year period

--All prior loans must be paid off within three years and prior to subsequent loans being made

--Prohibits the legislature from redirecting funds away from transportation projects

EUCA is urging the industry to call their state Senator and Assembly members and tell them to vote against any cuts to transportation sales tax revenues (Prop. 42). To get the phone number of your state representatives, go to http://www.leginfo.ca.gov/yourleg.html and enter your zip code.

That is a good idea. Because otherwise, it looks as if Prop 42 and Prop 1A are going to be bypassed yet again… A cut of $1.1 billion out of $1.4 billion should just about have the tank running on vapors.

How serious would that be? Here’s what Transportation California www.transportationca.com says:

This raid would be a disaster for California.  It would undermine the economy and cost upwards of 40,000 jobs.  It would undo all of the progress made with the passage of Proposition 1B.  Diverting transportation funds is a surefire way to virtually guarantee a deep recession in California that may last for years.

Posted by Loren Faulkner on July 21, 2008 | Comments (0)