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Sat09192020

Last updateMon, 24 Aug 2020 12pm

California Republicans say that drivers can have smoother roads, more reliable public transit—and lower taxes.

In November, voters will get the chance to repeal a recent increase in the state gas tax and assorted vehicle fees. That tax hike—an extra 12 cents per gallon of gasoline, 20 cents per gallon of diesel, and two new vehicle registration fees—was signed into state law last year, part of a Democratic-led transportation package that directs an extra $5 billion per year toward the state’s dilapidated roads and highways.

Making voters pay more at the pump is a tough political sell, but Democrats and other defenders of the law argue that our infrastructure is long overdue for an upgrade. The gas tax hadn’t been increased in more than 20 years, while the cost of highway construction has tripled. You can’t get something for nothing, they say.

Not so, say supporters of the repeal, Proposition 6. Chief among them is John Cox, the Republican running to be California’s next governor.

“The Democrats decided to do the easy thing in their view, and that is just keep sticking their hands in the pockets of Californians,” he said, “instead of doing the hard work, which would have been standing up to the donors, standing up to the special interests, and using our money effectively and wisely.”

California, he added, “spends multiples of what other states spend on a mile of road.” In trying to sell voters on Prop. 6, which would also require voter approval for all future driving-related tax hikes, supporters like Cox make the following arguments:

• California transportation spending is out of whack compared to most other states.

• Bloated transportation agencies, public sector unions and red tape are to blame for those higher costs.

• Political leaders could cut that wasteful spending—saving taxpayers billions and rendering higher taxes unnecessary—if only they had the will and the courage.

These add up to a potentially enticing argument. The question is: Should voters believe it?

Prop. 6 skeptics are right to say that repealing the new taxes and fees will necessarily mean cutting back on something. Supporters have so far been a little vague on what that something is. Wasteful spending or vital public services? It’s entirely in the eye of the taxpayer.


The Cost of a California Highway

When asked for evidence that California can’t manage its transportation budget, the Cox campaign points to a recent report published by the libertarian Reason Foundation. According to its findings, the state government spends more than $471,000 per mile of road that it maintains. That’s nearly triple the national average of about $178,000. By this measure, California has the eighth-most-expensive state road system in the country.

Given that our roads are in such rough shape, and California also has among the highest gas taxes in the country, one might reasonably wonder whether drivers and taxpayers here are getting a raw deal.

The California Department of Transportation (Caltrans) argues that the report inflates the state’s true costs by measuring each state’s highway system simply by totaling its length. According to Caltrans, California highways have an average width of more than 3.4 lanes, compared to a national average of 2.4, which makes the same length of highway more expensive to maintain. In effect, the report treats a two-lane highway in Oklahoma the same as an equally long stretch of California’s Interstate 405—all 14 lanes of it.

The Reason report is a rare effort to compare across state agencies—because it’s difficult to do. Different state agencies are responsible for different aspects of the highway system, subject to different rules, and operate in vastly different climates, terrains and economies.

“More than 40 percent of the nation’s freight is moved through California, which has three of the nation’s top five busiest ports in Los Angeles, Long Beach and Oakland,” a spokesperson for Caltrans said in an email. That extra wear and tear adds to the state’s overall maintenance tab.

Asked if the federal government compares transportation spending across states, Doug Hecox, spokesman for the Federal Highway Administration, said different methodologies will produce wildly different estimates.

“There are many ways to bake a cookie, and everyone has a different recipe,” he said. “Welcome to my personal hell.”


What Drives the Cost?

Baruch Feigenbaum, author of the Reason report, agrees there are many reasons California roads might cost more—some within the state’s control, and some not.

Falling into the latter category: It’s more expensive to build and maintain roads in high-density urban areas, and California has some of the biggest in the country. The Sierra Nevada and a constantly eroding coastline require challenging and expensive engineering. And, yes, this is California, where wages and land values make everything cost more, transportation related or not.

“Obviously, it’s going to be more expensive to build a mile of roadway in California with labor than it is in Mississippi, regardless of some of the union issues,” said Feigenbaum.

But the high cost of labor is exacerbated by the higher levels of unionization in California, he said. Likewise, the state has tighter environmental regulations than most, which can saddle projects with delays and extra costs.

But where some see inefficiency, others see the preservation of the state’s most cherished values. And for every propeller of higher costs, there is a powerful constituency ready to defend it.

“One of the things that Californians love, that is part of our birthright, is our beautiful state with our beautiful environment,” said Russell Snyder, executive director of the California Asphalt Pavement Association, a trade group that represents road pavers and asphalt producers, and which opposes Prop. 6. “Environmental rules are easy to demonize, but they’re there for a reason.”

Other factors pushing up costs are less obvious, though no less fiercely guarded. In California, much of the major road work is done during off hours to limit the impact on commuters, said Margot Yapp, vice president at Nichols Consulting Engineers, a firm that works on transportation projects across the American West.

“Go travel in the summer in any other state, and construction—even on the interstate—happens in the daytime,” she said. But given the amount of congestion in California, shutting down highways at rush hour would spell certain gridlock and political backlash.

“As soon as you do pavings at night, every (cost) goes up—I would say, easily, by 30 percent,” said Yapp.

Feigenbaum, the Reason Foundation author, still insists Caltrans can cut costs. His suggestions: Caltrans should enter into more partnerships with private companies or take on some of the responsibilities now delegated to local and county organizations, reducing duplicative bureaucracies. In theory, he concluded, passing Proposition 6 would force the state to find those efficiencies.

But maybe only in theory.

“From a mathematical perspective, the state can do it, but from a political perspective, the state probably won’t,” he said.


Can We Cut the Fat?

Carl DeMaio begs to differ. This fall, the conservative talk-radio host—who chairs the political action committee pushing for the repeal—plans to file papers for a 2020 ballot measure, which he says would recoup the state’s budgetary losses from passing Prop 6 … without raising taxes.

The details have yet to be hashed out, but DeMaio proposes three savings: Dedicate all gas-tax revenue solely to road maintenance and improvement (right now, some goes to public-transportation projects and debt repayments); divert all car-sales-tax revenue to state transportation (now that money is treated like other sales tax and goes to general government expenses); and enact “efficiency reforms,” such as mandating that Caltrans employ more independent contractors.

But many state finance experts say finding savings is not that easy.

“It’s nonsense to the suggest that’s just money that’s laying there not being used,” said Michael Coleman, fiscal policy advisor to the League of California Cities, which opposes Prop 6. “If you’re going to be honest with the proposal, then you have to look at what the consequences of this are.”

A little more than half of sales-tax revenue from auto purchases goes to the state’s general fund, for example. If voters decide to divert that money to highway repairs, what could lawmakers cut to make up the difference?

Past ballot measures have placed spending requirements on K-12 education and budget reserves. Court orders and federal funding requirements put more restrictions on many health and social programs and corrections spending. Left on the chopping block are higher education, parks and recreation, public resources, and certain unprotected social welfare programs.

“You’re talking about a fairly small part of the budget,” said Coleman. “It’s remarkable how little discretion the Legislature actually has.”

The remaining sales-tax money that goes to cities and counties—a little less than half of the total haul—mostly goes toward local law enforcement and emergency services, jails, welfare payments and local transportation.

Those fighting against the new gas tax argue that because sales taxes on automobiles are levied on drivers, they should be spent solely on transportation.

As for the savings that DeMaio proposes to unearth by forcing state agencies to rely more on contractors, the state’s nonpartisan fiscal analyst is skeptical.

“When we’ve looked at the cost of contract versus state staff, we haven’t really been able to identify significant differences between the two,” said Paul Golaszewski, a transportation expert with the Legislative Analyst’s Office.

But DeMaio dismisses the idea that there isn’t at least $5 billion to be found somewhere in the state’s $139 billion general fund.

“I don’t think any voter out there is going to accept the notion that government is in prime efficient condition and can’t figure out how to do more with less,” he said.

He, John Cox, and the entire national Republican Party are counting on it. With many political pundits and data points projecting an electoral “blue wave” this November, opposition to the gas tax may be one of the GOP’s last breakwaters. In June, Democratic state Sen. Josh Newman was recalled from his north Orange County seat by a 16-point margin—a recall fueled by anger over his vote for the gas-tax bill. If voters turn out against Newman’s fellow Democrats in equal measure this fall, that could keep Democrats from flipping some of the most vulnerable GOP-held congressional seats in California, allowing Republicans to keep control of the House of Representatives.

“From a turnout and motivation perspective, this is a huge winner for Republicans,” said Jack Pandol, spokesperson for the National Republican Congressional Committee. “We’re going to make every Democrat in November own this tax.”

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Politics

The legalization of cannabis for medicinal and now recreational use is crashing across the country like a bong-water tsunami. That means herb is in the news lately—a lot.

Here in California, some of that news is not good.

Assembly Bill 243—part of the Medical Marijuana Regulation and Safety Act (MMRSA), which was signed by Gov. Jerry Brown in October—is causing many cities to clamp down on cannabis businesses. While the bill contains a lot of good, it has a problem: The MMRSA requires local governments to develop regulations for the cultivation and delivery of medical cannabis by March 1. Otherwise, the authority is relinquished to the state. Not wanting to give up that authority, dozens of cities around the state have been enacting all-out bans, denying their patients convenient access to prescribed medications.

This is unfortunate, especially since the provision was never meant to be included in the final legislation.

“It was never our intention to place such a short timeline on local lawmakers,” said Democratic Assemblyman Jim Wood, one of the bill’s proponents, in a news release. “The current deadline gives jurisdictions just 65 more days to consult stakeholders, learn about the industry, and write good policy; that is not nearly enough time.”

Wood is now one of the sponsors of Assembly Bill 21, which is currently in committee but is expected to pass and be signed into law without issue. AB 21 strikes the March 1 deadline, allowing local jurisdictions to regulate and enact their own laws at their own pace. “We have widespread support for this fix, including bi-partisan support from both houses, stakeholders and the governor’s office. I am hoping that AB 21 will be on the governor’s desk before the end of the month, and local lawmakers will give this complicated issue the time it deserves,” said Wood.

Despite the impending fix, the League of California Cities is recommending mass hysteria. Because, you know, caution.

“In an abundance of caution, we have been advising our member cities to enact cultivation ordinances—in this case, a ban—to make sure they preserve their regulatory authority whether the cleanup bill goes through or not,” said Tim Cromartie, the legislative representative for the League of California Cities, to the Los Angeles Times. “A ban is the quickest and cleanest way.”

Great.

So how has that affected the Coachella Valley? While some of our valley cities have been working toward their own marijuana regulations diligently for years, others believed the hype and have reacted with fear and rejection.

Palm Springs, being one of the more progressive areas in the valley, has historically been at the forefront of the cannabis movement. The city recently approved a sixth dispensary permit, and council members have said they’d be open to increasing this number in the future as public need and opinion dictate. Recent City Council meetings have also included the discussion of permitting for commercial grows, edible production and extract production. The council members made it clear they want to be prepared to reap the financial rewards of legalization of recreational use statewide—which most people believe is inevitable, perhaps as soon as this year’s election.

Cathedral City is following the example set by Palm Springs, and has issued several permits in recent months. Indicative of the hurdles involved with this emerging industry, the first dispensary in Cathedral City opened its doors in October, more than a year after the council approved the permit allowing them to operate in the city.

If Palm Springs is the tortoise in this race—carefully planning next steps and moving along at an organic pace—cash-strapped Desert Hot Springs is surely the hare: DHS wants to be a mecca of marijuana production and cultivation. It is the first city in the state to approve massive industrial-grow operations, including a recently approved 380,000-square-foot facility that will generate an estimated $3.8 million in annual tax revenues for the city. Grows of this magnitude are expected to be a rarity in the wake of AB 243’s canopy limit of 10,000 square feet for most facilities.

While Palm Springs, Cathedral City and Desert Hot Springs are working in anticipation of recreational legalization and the revenue streams that will represent, Rancho Mirage has dug its heels in like a child being dragged to the dentist. However, the city’s resistance to the green rush predates the panic caused by AB 243. The city even has a program to reimburse cannabis patients $25 per month for transportation to buy their cannabis elsewhere. It bears noting that no one has taken them up on the offer since the program’s inception. It’s doubtful any cannabis businesses of any kind will be operating in Rancho Mirage anytime soon, regardless of any state legislation.

In January, Palm Desert looked like it would pass an all-out ban on cannabis cultivation and distribution. Then, after hearing from several residents at the Jan. 14 meeting, the council changed the language to allow delivery services to operate in the city. This is great news for Palm Desert cannabis patients who are unable to travel easily.

Indian Wells doubled down on its rejection of cannabis in January, adding delivery and cultivation to its existing ban on dispensaries in the city.

La Quinta has a similar ban in place, but formed an ad hoc committee in December to examine allowing delivery services to operate in the city.

Indio has had a ban on dispensaries in place since 2007, and recently expanded that ban to cultivation. Because, you know, Indio has a reputation to uphold. The City Council is, however, considering regulations for delivery services to operate there.

Coachella recently broke from its long-time ban on all marijuana businesses by approving cultivation in areas of the city that are zoned for auto-wrecking. The approval is seen as a fairly cynical way for the city to reap the tax benefits of the cash crop, and nothing more, because the ban on delivery and storefront dispensaries remains.

AB 243 was meant to stabilize the cannabis industry in California, yet it ended up severely handicapping the cannabis movement with its errant March 1 deadline. Hopefully cities will be as willing to enact meaningful, well-planned regulation once the threat of that deadline has been removed by AB 21.

Published in Cannabis in the CV