Governor’s May Revised Budget Supports Increased Transportation Funding

GOVERNOR ‘S MAY REVISED BUDGET SUPPORTS INCREASED TRANSPORTATION FUNDING 

Governor Brown announced Monday that higher sales, personal income and corporate income tax receipts will bring $6.5 billion more to the State than originally expected. With increased tax revenues and $11 billion in budget cuts enacted by the Legislature in March, the state budget gap is narrowing, but a deficit still remains. The Governor continues to push for an extension, subject to voter approval, of increased vehicle license fees, sales tax, and income taxes previously approved by voters as a temporary funding mechanism. The Governor’s Revised Budget transfers no additional money from highway construction and maintenance (gas taxes) to the General Fund than was proposed in the original budget. The original plan shifted funds from transportation to cover interest on construction bonds ($799.6 million) and moved vehicle weight fee revenues to the General Fund ($903.5 million which had supported highways in previous years).

The Governor did propose increasing the issuance of Proposition 1B bond funding, which would increase transportation Proposition 1B projects from $2.3 billion to $3.3 billion this year. Governor Brown has given Caltrans the clear message that he wants highway projects to move forward. His revised budget provides $130.9 million in additional Caltrans engineering work (hiring outside consultants to quickly move design work forward). The good news is the Governor recognizes that taxpayers expect funds collected at the gas pump to be spent on roads. He also believes voters approved Proposition 1B expecting the State to fix traffic congestion problems. The State Controller had said in January that California would run out of money in July 2011. Now the problem has been pushed back into the very last months of this year. Hopefully, our Legislature and Governor will have managed the budget process by then to have an effective balanced budget in place to allow resumption of short-term borrowing.