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SCA-1 Motor vehicle fees and taxes: restriction on expenditures.(2015-2016)

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CALIFORNIA LEGISLATURE— 2015–2016 1st Ext.

Senate Constitutional Amendment No. 1


Introduced by Senator Huff
(Coauthors: Senators Anderson, Bates, Berryhill, Cannella, Fuller, Gaines, Moorlach, Morrell, Nguyen, Nielsen, Runner, Stone, and Vidak)
(Coauthors: Assembly Members Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Beth Gaines, Gallagher, Hadley, Jones, Kim, Lackey, Linder, Mayes, Olsen, Steinorth, Wagner, Waldron, and Wilk)

June 19, 2015


A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by amending Sections 1, 5, 6, and 8 of, and adding Sections 11 and 12 to, Article XIX thereof, relating to transportation.


LEGISLATIVE COUNSEL'S DIGEST


SCA 1, as introduced, Huff. Motor vehicle fees and taxes: restriction on expenditures.
(1) Article XIX of the California Constitution restricts the expenditure of revenues from taxes imposed by the state on fuels used in motor vehicles upon public streets and highways to street and highway and certain mass transit purposes, and restricts the expenditure of revenues from fees and taxes imposed by the state upon vehicles or their use or operation to state administration and enforcement of laws regulating the use, operation, or registration of vehicles used upon the public streets and highways, as well as to street and highway and certain mass transit purposes. These restrictions do not apply to revenues from taxes or fees imposed under the Sales and Use Tax Law or the Vehicle License Fee Law.
Article XIX prohibits the Legislature from borrowing revenues from taxes imposed by the state on fuels used in motor vehicles, and from using those revenues other than as specifically permitted by Article XIX. Article XIX provides that up to 25% of fuel tax revenues allocated to the state may be pledged or used for the payment of principal and interest on voter-approved transportation bonds issued for street and highway purposes on and after November 2, 2010, upon voter approval and appropriation by the Legislature. Article XIX provides that up to 25% of fuel tax revenues allocated to cities and counties may be pledged or used for the payment of principal and interest on voter-approved transportation bonds issued for street and highway purposes. However, in counties where voters have approved the use of fuel tax revenues for certain mass transit purposes, Article XIX provides that the Legislature may authorize any fuel tax revenues allocated to mass transit purposes to be pledged or used for payment of principal and interest on voter-approved bonds issued for those mass transit purposes.
This measure would prohibit the Legislature from borrowing revenues from fees and taxes imposed by the state on vehicles or their use or operation, and from using those revenues other than as specifically permitted by Article XIX. The measure would also prohibit those revenues from being pledged or used for the payment of principal and interest on bonds or other indebtedness. The measure would delete the provision that provides for use of any fuel tax revenues allocated to mass transit purposes to be pledged or used for payment of principal and interest on voter-approved bonds issued for those mass transit purposes, and would instead subject those expenditures to the existing 25% limitation applicable to the use of fuel tax revenues for street and highway bond purposes.
This measure would also restrict the expenditure of revenues from taxes imposed by the state on motor vehicle fuels used other than in motor vehicles upon public streets and highways, by requiring the use of those revenues for street and highway purposes, but only with respect to the portion of the affected revenues attributable to increases in tax rates that are effective on or after July 1, 2010. This restriction on expenditures would not apply if federal law requires another use of any portion of those revenues. The measure would also prohibit the Legislature from borrowing those revenues or pledging those revenues for debt service.
(2) Article XI of the California Constitution requires the revenues derived under the Vehicle License Fee Law from a rate that does not exceed 0.65% of the market value of a vehicle to be allocated to cities and counties, and does not restrict expenditure of those revenues for a particular purpose.
This measure would require revenues derived from that portion of the vehicle license fee rate that exceeds 0.65% of the market value of a vehicle to be used solely for street and highway purposes and would prohibit the Legislature from borrowing those revenues. The measure would also prohibit those revenues from being pledged or used for the payment of principal and interest on bonds or other indebtedness.
(3) This measure would make other conforming changes.
Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

WHEREAS, Transportation infrastructure is vital to a growing and robust California economy; and
WHEREAS, In order to continue growing and remain a national economic leader, California must prioritize transportation funding; and
WHEREAS, California has 175,499 miles of public roads; and
WHEREAS, California roadways have $59 billion in accumulated deferred maintenance, and 87 percent of county roads have an average pavement rating of “at risk” or “poor”; and
WHEREAS, The average California driver pays $832 annually for the increased cost of vehicle maintenance, tire wear, and increased gas costs because California streets and roads are in such disrepair; and
WHEREAS, In 2002, the voters passed Proposition 42, with 69 percent of the vote, which purported to guarantee transportation taxes and fees would only be used for transportation purposes; and
WHEREAS, During the fiscal crisis beginning in 2009, taxes and fees being paid by California’s drivers were diverted to the state General Fund and not used to repair or maintain California streets and roads; and
WHEREAS, The state fiscal crisis has abated but the diversion of transportation taxes and fees continues; and
WHEREAS, Unmet needs caused by the diversion of certain transportation taxes and fees have created an environment of crumbling infrastructure and increased costs to repair the state’s street and highway system; and
WHEREAS, To keep the Proposition 42 promise to the voters that transportation taxes and fees shall only be used for transportation purposes and not diverted to the General Fund to pay the cost of general obligation bonds, and to ensure that any future transportation fees or taxes are used only for transportation purposes, the voters should be given an opportunity to close the Proposition 42 loophole; now, therefore, be it
Resolved by the Senate, the Assembly concurring, That the Legislature of the State of California at its 2015–16 First Extraordinary Session commencing on the nineteenth day of June 2015, two-thirds of the membership of each house concurring, hereby proposes to the people of the State of California that the Constitution of the State be amended as follows:

First—

 That Section 1 of Article XIX thereof is amended to read:

SECTION 1.
 The Legislature shall not borrow revenue from the Highway Users Tax Account, or its successor, revenues subject to Section 2, 3, 11, or 12 and shall not use these revenues for purposes, or in ways, other than those specifically permitted by this article.

Second—

 That Section 5 of Article XIX thereof is amended to read:

SEC. 5.
 Revenues allocated pursuant subject to Section 4 2 may not be expended for the purposes specified in subdivision (b) of Section 2, except for research and planning, until such that use is approved by a majority of the votes cast on the proposition authorizing such that use of such those revenues in an election held throughout the county or counties, or a specified area of a county or counties, within which the revenues are to be expended. The Legislature may authorize the revenues approved for allocation or expenditure under this section to be pledged or used for the payment of principal and interest on voter-approved bonds issued for the purposes specified in subdivision (b) of Section 2.

Third—

 That Section 6 of Article XIX thereof is amended to read:

SEC. 6.
 (a) Up to 25 percent of the revenues subject to Section 2 that are allocated to the State pursuant to Section 4 for the purposes specified in subdivision (a) of Section 2 of this article may be pledged or used by the State, upon approval by the voters and appropriation by the Legislature, for the payment of principal and interest on voter-approved bonds issued by the State on or after November 2, 2010, for such the purposes issued by the State on and after November 2, 2010. specified in Section 2, upon approval by the voters of this use of the revenues and appropriation of the revenues by the Legislature.
(b) Up to 25 percent of the revenues subject to Section 2 that are allocated to any city or county pursuant to Section 4 for the purposes specified in subdivision (a) of Section 2 of this article may be pledged or used only by any that city or county for the payment of principal and interest on voter-approved bonds issued by that city or county for such the purposes specified in Section 2, upon approval by the voters of this use of the revenues.
(c) Revenues subject to Section 2, 3, 11, or 12 shall not be pledged or used for the payment of principal and interest on bonds or other indebtedness, except as specifically provided in this section.

Fourth—

 That Section 8 of Article XIX thereof is amended to read:

SEC. 8.
 This article shall not affect or apply to fees or taxes imposed pursuant to the Sales and Use Tax Law Law, or the Vehicle License Fee Law, and all amendments and additions now or hereafter made to such those statutes, except as provided in Section 11.

Fifth—

 That Section 11 is added to Article XIX thereof, to read:

SEC. 11.
 From the revenues derived from taxes imposed pursuant to the Vehicle License Fee Law, and all amendments and additions now or hereafter made to that statute, other than fees on trailer coaches and mobilehomes, over and above the costs of collection and any refunds authorized by law, those revenues derived from that portion of the vehicle license fee rate that exceeds 0.65 percent of the market value of the vehicle shall be used solely for the purposes specified in subdivision (a) of Section 2.

Sixth—

 That Section 12 is added to Article XIX thereof, to read:

SEC. 12.
 (a) Revenues from taxes imposed by the State on motor vehicle fuels for use other than in motor vehicles upon the public streets and highways, over and above the costs of collection and any refunds authorized by law, shall be used solely for the purposes described in subdivision (a) of Section 2.
(b) Subdivision (a) applies only to the portion of the affected revenues attributable to increases in tax rates that are effective on or after July 1, 2010, and shall not apply if the applicable tax rates are reduced to be equal to or less than the rates in effect on June 30, 2010. In addition, subdivision (a) does not apply to any portion of the affected revenues that are required to be used for another purpose by federal law.