California governor dreamin’ of fuel tax revenue reroute?

May 2019

Keith Goble

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Gov. Gavin Newsom has announced a housing plan that puts transportation revenue for local governments at risk.

The Democratic governor pledged during his campaign a year ago that he would build 3.5 million new homes by 2025 to help ease rising prices and rents.

His $1.75 billion proposal unveiled in March is intended to help the state meet housing needs. The ambitious plan is designed to help develop affordable housing throughout the state.

Concerned that local governments will not do enough to help him achieve this goal, Newsom said he wants to incentivize local government to improve housing options or risk losing transportation funds. Cities and counties that fail to help him meeting his goal would lose fuel tax dollars.

“Local streets and roads funds may be withheld from any jurisdiction that does not have a compliant housing element and has not zoned and entitled for its updated annual housing goals,” the governor’s administration announced.

Starting in July 2023, failure by cities and counties to build enough housing would cost them fuel tax revenue.

The governor’s target is fuel tax revenue earmarked for local governments as part of a massive transportation funding bill – SB1 – approved two years ago.

The 10-year, $52 billion transportation funding deal increased the diesel tax by 20 cents and increased the gas tax by 12 cents. Another 7.5-cent gas tax increase is scheduled to take effect on July 1.

The excise rates on gas and diesel also will be adjusted for inflation beginning in July 2020.

In November 2018, voters rejected a ballot question to repeal the vehicle tax and fee increases.

“Our state’s affordability crisis is undermining the California dream and the foundations of our economic well-being,” Newsom said. “Families should be able to live near where they work.”

Critics say that local governments do not bare sole responsibility for failure to get housing projects complete. They point the finger at private industry for the failure to get needed work done. LL

Keith Goble

Keith Goble has been covering trucking-related laws since 2000. His daily web reports, radio news and “OOIDA’s State Watch” in Land Line Magazine are the industry’s premier sources for information regarding state legislative affairs.