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HIGHWAY SAFETY, TRAFFIC REDUCTION, AIR QUALITY, AND PORT SECURITY BOND ACT OF 2006
Legislative Bond Act

QUESTION

Should the state sell $19.9 billion in general obligation bonds to fund state and local transportation improvement projects to relieve congestion, improve movement of goods, improve air quality, and enhance safety and security of the transportation system?

BACKGROUND

California spends about $20 billion a year in combined state, federal and local funds to maintain, operate and improve state highways, streets and roads, passenger rail and transit systems. The money comes from state gas taxes ($6.3 billion), federal gas taxes ($4.5 billion), local sales and property taxes and transit fares ($9.5 billion). Since 1990, $5 billion in state transportation bonds have been approved. Of those funds, $355 million remains.

PROPOSAL

On May 16, 2006, Governor Schwarzenegger signed SB 1266 (Perata/Nunez), placing a $20 billion transportation infrastructure bond on the November ballot.

Proposition 1B bonds would finance a variety of transportation and related projects:

• Congestion reduction, highway and local road improvements: $11.3 billion to increase capacity on state highways, local roads and public transit.
• Public transportation: $4 billion to improve local transit services and state intercity rail services; purchase buses and rail cars and improve transit safety.
• Goods movement and air quality: $3.2 billion to improve freight movement through ports, on state highway and rail systems and between California and Mexico; improve air quality by reducing emissions related to freight movement, and replace/retrofit school buses.
• Safety and security: $1.5 billion to increase protection against security threats or improve disaster response on transit systems; improve rail crossing safety, seismically retrofit local bridges, ramps and overpasses; improve security and disaster planning in publicly owned ports, harbors and ferry terminals.

Bond funding for all programs would be provided over ten years, subject to annual appropriation by the Legislature.

Annual funding for three new programs--Corridor Mobility, Trade Corridors and State Route 99 funding --is tied to the annual budget bill and would therefore require approval by two-thirds of lawmakers, while annual funding for other remaining categories would require a simple majority approval by legislators.

A noteworthy policy change in Prop. 1B is the reinvigoration of the California Transportation Commission (CTC). Following passage of SB 45 in 1997, the CTC's role lessened considerably, with project selection responsibilities shifted to regional agencies, such as the Metropolitan Transportation Commission. Under Prop. 1B, however, the CTC would be granted sole discretion over the selection of Corridor Mobility projects, Trade Corridor projects, and a new State-Local Partnership Program, among others.

FISCAL EFFECT

The Legislative Analyst estimates the total cost for the bonds at $38.9 billion over 30 years. The state and local governments that construct or improve transportation infrastructure with these bond will incur unknown additional costs to operate and maintain them. Revenues generated by the improvements, such as transit fares and tolls, would offset a portion of these costs.

WHAT A YES OR NO VOTE MEANS

A YES vote means the state could sell $19.9 billion in general obligation bonds for state and local transportation improvements.

A NO vote means the state could not sell $19.9 billion in general obligation bonds for these purposes.

SUPPORTERS SAY

• California has the most congested highways in the nation. We spend 500,000 hours stuck in traffic every day.
• California's population will reach 50 million in 20 years, twice what our infrastructure was built for. We have to start now to rebuild.
• Prop. 1B jump-starts traffic relief, mass transit and safety improvements throughout the state without raising taxes.
• It will build more lanes on congested highways, expand carpool lanes, fix local streets, roads, and intersections, make bridges seismically safe, and replace old school buses.
• It includes annual accountability measures, such as audits and reports, to ensure funds are spent as intended.
• It is part of the Rebuild California Plan, which uses taxes we're already paying to build roads, housing and schools needed to sustain our economy and quality of life for the long term.

OPPONENTS SAY

• California cannot afford to continue borrowing its way into a false sense of economic security.
• More borrowing means worsening budget deficits.
• A no vote will force the Legislature to focus on paying for our transportation needs with existing funds in a fiscally responsible manner--a "pay as you go" approach to fund much needed transportation improvements.
• Paying for infrastructure improvements through the General Fund will allow California to borrow less money to meet annual obligations.
• The Legislature failed to include time and cost saving measures, such as "Design Build" that would streamline the construction process, completing more projects with the same amount of money.
• Within 3 weeks of voter approval of 1B, the California Transportation Commission (CTC) is required to "develop and adopt guidelines" to fund all outlined transportation programs, which does not allow time for public oversight and review.

SUPPORT AND OPPOSITION

Official ballot arguments in support are signed by: Marion Bergeson, Chair, California Transportation Commission; Alan C. Lloyd, Former Chair California Air Resources Board; Alan Zaremberg, Chair, California Chamber of Commerce; Larry McCarthy, President, California Taxpayers' Association; Thomas V. McKernan, President, Automobile Club of Southern California (AAA); Michael Brown, Commissioner, California Highway Patrol

Official ballot arguments in opposition are signed by: Michael Villines, California State Assemblyman, 29th District

FOR MORE INFORMATION

Supporters

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

Opponents

California Taxpayer Protection Committee, 916-991-9300, www.protecttaxpayers.com

Web Resources

Analysis by the Legislative Analyst's office

Voter Information Guide (ballot pamphlet)

Reports of campaign expenditures for ballot measures