Breaking down how gasoline tax is spent

More than $16 billion is expected to be generated for road repairs, services

With a measure to repeal California’s recently enacted gas taxes and registration fees heading to the November ballot, many drivers want to know, just where does all that money actually go?

“It’s extremely complicated,” said Asha Agrawal, the director of the National Transportation Finance Center at San Jose’s Mineta Transportation Institute. It’s also a big campaign issue, with tax opponents arguing that politicians can’t be trusted to spend these new dollars on the road and rail improvements they’re promising.

We’ll try to break it down for you.

Q

How much am I paying to fund highways, bridges, roads and public transit in the state?

A

The Legislative Analysts’ Office, which provides non-

partisan fiscal and policy advice, estimates drivers pay, on average, $750 per year in transportation taxes and fees at the state and federal level. This includes the taxes targeted for repeal, the 12 cents tax increase on a gallon of gas, the 20 cents added to a gallon of diesel and the new registration fees. It doesn’t include the 1 cent or half-cent transportation sales taxes that residents in Alameda or Santa Clara counties, for example, pay to fund local improvements. Nor does it include money for special districts, such as the property taxes in Alameda, Contra Costa and San Francisco counties that help pay for BART.

Q Where do those taxes and fees go?

A In the state budget for the fiscal year, which begins today, gas and diesel taxes, as well as the weight fees truck drivers pay and registration and license fees, are expected to drum up just more than $16 billion. Nearly 59 percent of those funds go to highway maintenance, road repairs and public transit, according to the Department of Finance. Slightly more than 22 percent pays for the DMV, CHP and other state agencies in charge of regulating and enforcing traffic laws.

A small portion, just less than 3 percent, helps the state pay the administrative costs of collecting, distributing and auditing the gas taxes and fees. An even smaller portion helps reduce the negative impacts of vehicle emissions on the environment, fund research and workforce development related to transportation and pay for bicycle and pedestrian amenities.

Roughly 7.5 percent pays off transportation-related debt.

There are two types of taxes or fees, representing about 7.5 percent, the state and the DMV collects from motorists that don’t fund transportation services directly.

A portion of those funds is redistributed to local law enforcement agencies and another portion is split between the state’s general fund and the departments of Food and Agriculture and Parks and Recreation.

Q How can I be sure that money from the gas tax and fees is protected?

A The short answer is that gas and diesel taxes have historically been restricted under the state constitution to fund transportation services. But, the legislature has been allowed to borrow from those funds from time to time, as long as the money was repaid, said Michael Coleman, a fiscal policy adviser to the League of California Cities.

Over the years, and especially when the state was facing a fiscal crisis, the legislature did just that. And voters responded by approving at least a half dozen measures to ensure fuel taxes were used only for transportation, including the passage of Prop 69 earlier this month. The measure restricts money raised from SB 1, the new gas taxes and fees, for transportation-related purposes only, with few exceptions.

The result is that it’s now much more difficult to divert transportation revenues, Agrawal said. As an expert on transportation financing in the state, Agrawal said she hasn’t seen evidence that large sums of money are being redirected to the general fund at the expense of highway maintenance, road repairs and public transit upgrades.

“It’s a convenient red herring for people who, for whatever reason, don’t want to see the tax rates go up,” she said.

The real problem? “The gas tax is not a percentage of anything. The gas tax, because it was set up as a per-gallon tax, requires a very visible vote,” she said. “And, it’s pitifully behind what it would be, if it had been raised regularly.”

Q What would the gas tax be now if it had been raised regularly with inflation?

A California’s gas tax was first implemented in 1923 at 2 cents per gallon. According to the U.S. Department of Labor’s consumer price index calculator, when adjusted for inflation, that 2-cent per-gallon tax would be 30 cents now.

The last time the gas tax was increased was 1994, when it reached 18 cents per gallon. SB 1 increased the tax by another 12 cents, bringing the state’s tax on gasoline to 30 cents per gallon.

Other sources: Martin Wachs, Professor Emeritus of Urban Planning, UCLA; Paul Golaszewski, Legislative Analyst’s Office; Mark Monroe and Steve Wells with the California Department of Finance; Melissa Figueroa, spokeswoman for CalSTA; Matt Rocco, spokesman for the Caltrans.

Contact Erin Baldassari at 510-208-6428.