Democrats Push Tax Hikes in ‘California Rebuild’ Plan

SACRAMENTO, Calif. (CN) – After failing to produce a transportation bill despite 18 months of special-session negotiations, California Democrats pounced on the opening of the new legislative session Monday and proposed raising taxes to address the state’s deteriorating freeways.

Promising to “rebuild” the state’s massively underfunded transportation infrastructure and create affordable housing solutions, state Senate leaders introduced a series of proposals buoyed by tax increases and billion-dollar bonds.

Senate Bill 1 by state Sen. Jim Beall, D-San Jose, calls for a phased-in 12-cent tax increase on gasoline, increased vehicle-registration fees as well as an annual $100 road maintenance fee for zero-emission cars. The proposal would raise California’s gas tax for the first time since 1994, and reallocate $500 million in heavy-vehicle fees to road maintenance instead of paying down existing transportation bond debt.

Democrats say raising the gas tax is the best way to make up tax revenues lost by Californians buying electric vehicles. The state’s fuel levy is currently 27 cents per gallon.

With California facing an estimated $59 billion highway-maintenance shortfall over the next decade, Beall says the tax and vehicle registration fee hikes will fix the state’s roads and come with the added benefit of new jobs.

“The longer we wait to fix it, the more it will cost us,” Beall said in a statement. “By updating our funding system for transportation repairs now, we will restore our bridges, streets, and highways and generate thousands of good-paying jobs that will benefit families and California’s economy.’’

Beall’s 10-year plan aims to raise $6 billion for transportation maintenance and he claims it could generate $111 billion in economic activity and 570,000 jobs. The new transportation revenue would be split between state and local agencies.

Efforts to increase taxes typically require some amount of Republican support, but Democrats secured a two-thirds majority in each chamber of the statehouse on election night. Tax proposals require a two-thirds majority vote so the Democrats could in theory pass a tax increase without a single Republican vote.

Voters last gave the Democrats a supermajority in 2012, but it lasted less than three months before a Democratic state senator resigned and was replaced by a Republican.

A companion transportation bill would dedicate $1.2 billion to state programs that incentivize freight and trucking companies for reducing emissions.

While the California League of Cities is still analyzing the proposals, The Fix Our Roads Coalition applauded Democrats in the state Senate for working to find a potential solution.

“While the 2016 Legislature failed to pass a funding/reform package, we are hopeful a deal for a long-term transportation package will come together soon in the new legislative session and that 2017 will be the year the Legislature finally gets the job done,” the coalition said in a statement.

Republicans fought against Beall’s previous gas-tax proposal and claim that the Democrats have failed to manage the state’s current budget surplus.

Meanwhile, newly elected state Sen. Toni Atkins, D-San Diego, reintroduced an affordable housing solution. Senate Bill 2 would create a $75 fee on real estate transactions and the fees would be distributed to local governments and selected organizations for housing projects.

Atkins, who had a similar bill stall last year in the Assembly, predicts that the real estate fees could generate hundreds of millions of dollars annually toward building affordable housing across the state.

“California has made significant progress recently in promoting economic and social justice and fighting climate change, but serious challenges remain, and at the top of the list is our infrastructure,” Atkins said. She added that her bill will “go a long way toward improving quality of life for Californians and grow our state’s economy.”

Many of California’s largest cities, including Los Angeles and San Francisco, have struggled for years to create new affordable housing. As a result, home prices have spiked and renters have been hit with higher rates.

The Public Policy Institute of California found that as of February 2015, approximately 48 percent of renters are spending more than one-third of their household incomes on housing. Meanwhile, California’s homeless population has ballooned to an estimated 134,000.

The “California Rebuild” package also calls for a $3 billion general obligation bond to improve California’s drinking water infrastructure and state parks. Senate Bill 5, by Senate President Pro Tem Kevin De Leon, D-Los Angeles, would encourage cities to adopt stormwater-capture technology and provide grants for water projects in disadvantaged communities.

“Our families and businesses depend on affordable housing, safe and reliable roads and transportation options, and access to clean drinking water and healthy open spaces,” De Leon said of the Democrats’ package.