California spends about $20 billion a year from a combination of state, federal, and local funds to maintain, operate, and improve its highways, streets and roads, passenger rail, and transit systems. These expenditures are primarily funded on a pay-as-you-go basis from taxes and user fees.

There are two primary state tax sources that fund state transportation programs. First, the state's 18 cent per gallon excise tax on gasoline and diesel fuel (generally referred to as the gas tax) generates about $3.4 billion annually. Second, revenues from the state sales tax on gasoline and diesel fuel currently provide about $2 billion a year. Additionally, the state imposes weight fees on commercial vehicles (trucks), which generate roughly $900 million a year. Generally, these revenues must be used for specific transportation purposes, including improvements to highways, streets and roads, passenger rail, and transit systems. These funds may also be used to mitigate the environmental impacts of various transportation projects. Under specified conditions, these revenues may be loaned or used for non-transportation uses.

Since 1990, voters have approved roughly $5 billion in state general obligation bonds to fund transportation. These bond proceeds have been dedicated primarily to passenger rail and transit improvements, as well as to retrofit highways and bridges for earthquake safety. As of June 2006, all but about $355 million of the authorized bonds have been spent on projects.

In addition to state funds, California's transportation system receives federal and local money. The state receives about $4.5 billion a year in federal gasoline and diesel fuel tax revenues for various transportation purposes. Collectively, local governments invest roughly $9.5 billion annually into California's highways, streets and roads, passenger rail, and transit systems. This funding comes mainly from a mix of local sales and property taxes, as well as transit fares. Local governments have also issued bonds backed mainly by local sales tax revenues to fund transportation projects.

This measure authorizes the state to sell about $20 billion of general obligation bonds to fund transportation projects to relieve congestion, improve the movement of goods, improve air quality, and enhance the safety and security of the transportation system.

Figure 1 summarizes the purposes for which the bond money would be used. The bond money would be available for expenditure by various state agencies and for grants to local agencies and transit operators upon appropriation by the Legislature.

FISCAL EFFECTS

Bond costs. The costs of these bonds would depend on interest rates in effect at the time they are sold and the time period over which they are repaid. The state would likely make principal and interest payments from the state's General Fund over a period of about 30 years. If the bonds are sold at an average interest rate of 5 percent, the cost would be about $38.9 billion to pay off both the principal ($19.9 billion) and interest ($19.0 billion). The average repayment for principal and interest would be about $1.3 billion per year.

Operational Costs. The state and local governments that construct or improve transportation infrastructure with these bonds funds (by, for example, building roads and bridges or purchasing buses or railcars) will incur unknown additional costs to operate and maintain them. A portion of these costs would be offset by revenues generated by the improvements, such as transit fares and tolls.

SUPPORTERS Signing ballot arguments for	OPPONENTS Signing ballot arguments against:
Marian Bergeson, Chair California Transportation Commission	Michael N. Villines California State Assemblyman, 29th District
Alan C. Lloyd, Former Chair California Air Resources Board
Allan Zaremberg, President California Chamber of Commerce

The rebuttal to the opponents' argument was signed by Larry McCarthy, President, California Taxpayers' Association; Thomas V. McKernan, President, Automobile Club of Southern California (AAA); and Michael Brown, Commissioner, California Highway Patrol.

Irene Sampson, LWVC Transportation Legislative Consultant, transportation@lwvc.org

Charolette Fox, LWVC Natural Resources Director, natural_resources@lwvc.org

Jack Sullivan, LWVC Legislation Director, legislation@lwvc.org

Trudy Schafer, LWVC Program Director/Advocate, 801 12th Street, Suite 220, Sacramento 95814, 916-442-9210, Fax 916-442-7362, advocacy@lwvc.org

Let's Rebuild California, 916-448-1401, www.ReadForYourself.org

YES on Proposition 1B
Safer Roads, Less Pollution and Reduced Traffic Congestion

• California has the most congested highways in the nation--we spend 500,000 hours stuck in traffic every day. Now is the time to fast-track the rebuilding of the state's roads, highways and transportation systems.
• State government has neglected California's transportation needs for three decades. The longer we neglect the transportation system, the more costly and serious the problems become.
• Our economic future and quality of life need reliable transportation systems that will move people and goods efficiently.
• Proposition 1B will fund needed projects in every part of the state.
• With Proposition 1B funds we can begin making transportation improvements now and pay for them as we use them with current tax revenues.
• Funds are included to make safety improvements to dangerous highways, rail crossings, and seismically unsafe bridges; increase protection against security threats; and improve disaster response capabilities on transportation systems.
• Air quality will be improved through funding to replace old, polluting school buses, expanding mass transportation, and reducing congestion on freeways and roads.
• Strict accountability measures including annual audits and reports will ensure that funds are spent on intended projects.
• The California Taxpayers' Association supports Proposition 1B because they believe it is fiscally responsible.

Note: Please adapt this letter to your own community and check your local paper's word limit for a published letter.

Editor:

California's roads and highways are rated among the worst in the nation as a result of many years of insufficient funding to meet increasing demands in our growing state. Proposition 1B on the November 7 ballot is an opportunity to correct this situation by authorizing bonds to fund needed improvements.

Growing problems with traffic congestion, air pollution, unsafe roads and bridges, and inadequate public transportation will be addressed using revenues from these bonds. These funds will also be used to increase protection against security threats and improved disaster response capabilities on transportation systems.

Proposition 1B will let us begin upgrading our transportation infrastructure now and pay for them as we use them. Our economy and our quality of life need a reliable transportation system that will move people and goods efficiently.

We all want better roads, less congestion, and improved air quality. Please vote YES on Proposition 1B.

Sincerely,

(your name)

(Background, Proposal & Fiscal Effects are from the Legislative Analyst's Office).