California
Legislative Analyst’s Office January 2007
Financing Our Transportation
Travels
California Travels
Introduction
In the past year, transportation has been a central issue in
the discussions on the condition of the state’s infrastructure.
About 60 percent of Californians view traffic congestion as
a major problem. This dissatisfaction is probably because the
state’s transportation capacity has not kept pace with growth in
population and travel demand. Even with the funding provided
by the Traffic Congestion Relief Act ( 2000) and Proposition 42
( 2002), many feel that the state’s transportation system suffers
from underinvestment. In November 2006, voters approved
two measures to increase the state’s investment in transporta-tion:
Proposition 1A to enhance the reliability of certain funds
and Proposition 1B to provide a one- time infusion of $ 20 bil-lion
in bond revenues for transportation.
These measures will help to improve the state’s transporta-tion
infrastructure. Nonetheless, issues remain regarding how
the state can meet transportation demands on an ongoing basis.
For instance, the state’s highways and roads require increasing
maintenance and rehabilitation. Additionally, there are emerg-ing
issues, such as goods movement and transportation security,
which the state is just beginning to address.
What is being done to address these problems? How should
the state ensure Proposition 1B funds effectively address con-gestion
problems and provide mobility to facilitate the state’s
growing economy? What other fund sources are available for
transportation? How are these funds distributed? This publi-cation
seeks to answer these and other related questions in an
effort to help those interested in finding solutions to our trans-portation
challenges.
Legislative Analyst’s Office
Contents
Traveling in California: Trends and Mobility............................. 5
Transportation Revenues and Expenditures............................ 15
The Transportation System:
How Decisions Are Made................................................... 35
Issues for Legislative Consideration....................................... 55
Acronyms and Definitions........................................................ 67
California Travels
This report was prepared by Kendra Breiland under the supervision of
Dana Curry. This report and others, as well as an E- mail subscription
service, are avaiable on the LAO’s internet site at www. lao. ca. gov. For
information about this report call Ms. Breiland at ( 916) 319- 8342. The
LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814.
Legislative Analyst’s Office
Traveling in California:
Trends and Mobility
California Travels
Travel Increasing Steadily…
➢ Demand for Highway Travel Outpaced Population
Growth. From 1990 to 2003, California’s population
increased by almost 21 percent. Meanwhile, travel on the
state highway system as measured by vehicle- miles traveled
( VMT) increased by 26 percent.
➢ Population Growth Concentrated in Inland Areas. Popu-lation
growth has been uneven throughout the state. Be-tween
1990 and 2003, population grew most in the follow-ing
regions: Sacramento ( 50 percent), Bakersfield ( 47 per-cent),
and Riverside- San Bernardino ( 37 percent).
➢ Inland California Also Sees Largest Gains in Total Driv-ing.
Beyond the state highway system, demand for travel on
local roads also increased between 1990 and 2003 with the
largest gains in noncoastal regions. The regions with the
largest increases between 1990 and 2003 included: Fresno
( 61 percent), Bakersfield ( 51 percent), and Riverside- San
Bernardino ( 45 percent).
5
10
15
20
25
30%
90 92 94 96 98 00 02
Growth in Vehicle- Miles Traveled
Growth in Highway Lane- Miles
Growth in Population
Legislative Analyst’s Office
… But Only Marginal Growth
in State Highway Capacity
➢ Highway Lane- Miles Increased Minimally. Between 1990
and 2003, highway lane- miles only increased by about
3 percent. Today, California has about 50,500 lane- miles
of highways, maintained and operated by the California
Department of Transportation ( Caltrans). An additional
327,000 miles of local roads are maintained and operated
by local cities and counties.
➢ Growth in Highway Capacity Uneven Across State. The
most significant expansion in highway capacity over this pe-riod
occurred in Orange, Los Angeles and Ventura Coun-ties,
and the Bay Area. Capacity increases were much less
noticeable ( or even nonexistent) in other parts of the state.
➢ Carpool Lane- Miles Increased Considerably. In 2000, the
state highway system included 925 miles of high occupancy
vehicle ( HOV) lanes. As of 2005, California’s highway
system included 1,268 miles of HOV lanes, a 37 percent
increase. In most cases, use of HOV lanes is restricted to
vehicles with two or more occupants in order to encour-age
carpooling. In some cases, three or more occupants are
required for vehicles using HOV lanes.
➢ Toll Roads Remain a Small Fraction of Highway System
Capacity. There are about 120 miles of tolled transporta-tion
facilities in California. This includes eight toll bridges
in the Bay Area ( seven are state owned) and about 85 miles
of toll roads in San Diego and Orange Counties. Some of
these facilities offer variable tolls which set toll prices by
level of congestion and time of day.
California Travels
California’s Roads More Crowded
Than Other States
➢ Urban Roads Are Heavily Used. California regions lead the
nation with the most crowded roads, measured in terms of
the number of miles driven on each lane- mile of highway.
Los Angeles tops the list, with Riverside- San Bernardino
and San Francisco- Oakland placing second and third.
➢ Trends of Road Usage in Urban Areas. While Los Ange-les
has the nation’s most crowded roads, other California
regions are catching up. Between 1990 and 2003, miles
driven per highway lane- mile increased considerably in
Sacramento ( 35 percent), Riverside- San Bernardino ( 28 per-cent),
and Oxnard- Ventura ( 27 percent).
➢ Supply Has Not Kept Pace With Demand. One reason why
California’s roads are more crowded than those in the rest
of the country is that the state’s transportation infrastruc-ture
has not expanded enough to keep pace with growth in
travel demand ( measured in VMT).
Rank
( 2003) Urban Area
Miles Driven
Per Highway Lane- Mile
1 Los Angeles- Long Beach- Santa Ana, CA 23,248
2 Riverside- San Bernardino, CA 21,429
3 San Francisco- Oakland, CA 20,242
4 Chicago, IL- IN 19,516
5 San Diego, CA 19,460
6 Sacramento, CA 19,303
7 Atlanta, GA 19,077
8 Miami, FL 19,057
9 Houston, TX 18,970
10 Oxnard- Ventura, CA 18,873
Legislative Analyst’s Office
Congestion Paid for in Delay, Fuel, and
Excess Emissions
➢ Hours of Delay Have Risen. Because of the imbalance
between road supply and travel demand, delay on urban
freeways has nearly doubled from about 262,000 vehicle-hours
per day in 1992 to 512,000 vehicle- hours per day in
2002.
➢ Increased Congestion. In 2002, 43 percent of the state’s
urban freeways were congested. Congestion is defined as
occurring when vehicles are traveling at 35 miles per hour
or less during peak commute periods on a typical work day.
This is up from 32 percent in 1992.
➢ Costs of Congestion. Congestion on urban freeways costs
Californians at least $ 16 million per day ( or $ 5.9 billion per
year) in wasted time and excess fuel.
➢ Environmental Impacts. This delay also has negative en-vironmental
consequences, resulting in an estimated 512
additional tons of emissions per day.
92 93 94 95 96 97 98 99 00 01 02
500
1,000
1,500
2,000
2,, 500
100
200
300
400
500
600
Congested Urban Freeway Miles
Daily Vehicle- Hours of Delay
Congested
Miles
Urban Freeways
Daily Delay
( 1,000 Vehicle- Hours)
California Travels
10
Are Californians Really in Love With Their Cars?
➢ While the conventional wisdom is that Californians are in-fatuated
with their automobiles, some data suggest that this
is not the case.
➢ For instance, when compared to the average American,
Californians tend to drive fewer miles.
➢ Californians do have slightly more vehicles than the average
American.
Lowest State Highest State
California U. S. Average
Miles Driven ( x 10,000) per Capita
Motor Vehicles per Capita
0.0 0.5 1.0 1.5 2.0
Legislative Analyst’s Office
11
Bus Riders Make Up the Bulk of
Transit Ridership
2003- 04
➢ Transit Ridership.
In 2003‑04, almost
1.3 billion passenger trips
were made on various
modes of transit, includ-ing
bus, rail, and ferry.
➢ Most Transit Pa-trons
Ride the Bus.
About 70 percent of
these trips were on bus-es.
Most of the remain-ing
trips ( 27 percent)
were made on commuter
and urban ( light) rail systems. Intercity rail, paratransit, and
ferry systems carried less than 3 percent of all trips.
➢ Increasing Number of Trips by Train. Since the late 1990s,
the number of transit trips made by rail has significantly
increased. In 2003‑04, about 347 million trips were made
by train compared to only 287 million in 1997‑98.
➢ Bus Ridership Down. In contrast to rail, the total num-ber
of annual bus trips in California has actually declined
slightly. In 2003‑04, 881 million trips were made on buses,
down from 889 million in 1997‑98.
➢ While Auto Travel Grows, Transit Ridership Stagnates.
While auto travel on state highways has increased by 26 per-cent
since 1990, transit ( bus and rail) ridership overall has
experienced almost no growth. Again, this is due to the
slight drop in bus trips ( the mode representing the bulk of
transit ridership), offset by growth in other transit modes,
such as intercity, commuter, and urban rail which have ex-perienced
considerable ridership growth.
Bus
Intercity Rail
Urban and
Commuter Rail
Demand Response
and Othera
Total Ridership
1.3 Billion
aIncludes trips made on paratransit ferries and
other forms of transit.
California Travels
12
Intercity Rail Ridership Grows, but
So Do State’s Costs
➢ The state’s
passenger rail
system includes
intercity rail that
serves trips be-tween
regions in
California and to
other parts of the
country.
➢ Currently,
Amtrak operates
all intercity rail
service in the state. The state funds service in three corridors:
• Capitol Corridor serving San Jose, Oakland, Davis,
Sacramento, and Auburn.
• Pacific Surfliner serving San Diego, Los Angeles, Santa
Barbara, and San Luis Obispo.
• San Joaquin serving Oakland, Sacramento, Fresno, and
Bakersfield.
➢ Between 1994‑95 and 2004‑05, ridership on the three cor-ridors
has nearly doubled from 2.3 million to 4.4 million
annual passengers, an average annual rate of 6.6 percent. The
Capitol Corridor has experienced the largest increase in rider-ship,
which resulted mainly from the expansion of service in
the number of daily round- trip trains available to riders.
➢ State costs ( funded mainly by the Public Transportation
Account) to operate and maintain intercity service nearly
doubled over that period from $ 55 million to almost
$ 100 million annually, an average annual growth rate of
5.8 percent.
Passengers
( In Millions)
Total State Costs
( In Millions)
Costs
1
2
3
4
5
94- 95 99- 00 04- 05
20
40
60
80
$ 100
Capitol Corridor
Passengers
San Joaquin
Pacific Surfliner
Legislative Analyst’s Office
13
Urban and Commuter Rail Ridership
Concentrated in Bay Area
➢ Urban and commuter rail are the components of the state’s
passenger rail system that primarily serve local and regional
transportation needs.
➢ These services are generally planned and administered by
local or regional transportation agencies, with funding pro-vided
by a combination of local, state, and federal sources.
➢ The bulk of urban and commuter rail ridership has histori-cally
been in the Bay Area. However, most of the recent
growth in rail ridership has been outside of the Bay Area.
➢ Ridership gains since the late 1990s on rail systems in the
Los Angeles ( 73 percent) and Sacramento- San Joaquin
( 42 percent) regions are at least partially attributable to
major system expansions over that period.
Passengers
( In Millions)
100
200
300
400
97- 98 99- 00 01- 02 03- 04
Sacramento- San Joaquin
San Diego
Los Angeles
Bay Area
California Travels
14
Legislative Analyst’s Office
Transportation
Revenues and
Expenditures
California Travels
16
Local Funds Account for Almost One- Half of
Ongoing Funds for Transportation
2005- 06
Transportation in California is funded by a variety of state,
local, and federal fund sources. Together, these revenues pro-vide
roughly $ 20 billion a year for transportation purposes.
State Funds
➢ Ongoing state funds consist primarily of the state excise tax
on gasoline and diesel fuels, weight fees, as well as most of
the state sales tax on motor fuels.
➢ Additional state funding sources can include bond revenues
and appropriations from the General Fund.
➢ In 2005‑06, state revenues provided about 30 percent
($ 6.1 billion) of total funds for transportation.
State
Federal Local
Total: $ 20 Billion
Legislative Analyst’s Office
17
Local Funds
➢ Local funds for transportation are derived from a variety of
revenue sources. These sources include ( but are not limited
to) a statewide 0.25 percent tax on the sale of all goods and
services, additional ( optional) local sales taxes, property
taxes, and transit fares.
➢ In 2005‑06, we estimate that local funds constituted
47 percent ($ 9.4 billion) of all revenues for transportation.
Federal Funds
➢ These funds are generally apportioned to California based
on the state’s contribution of federal excise taxes on motor
fuels to the federal Highway Trust Fund.
➢ In 2005‑06, California received about $ 4.6 billion in fed-eral
transportation funds. This accounted for 23 percent of
total funding to the state’s transportation system.
California Travels
18
Price of Motor Fuel Includes
Taxes for Transportation
➢ A large portion of transportation revenues in California are
collected at the pump, with Californians paying the follow-ing
taxes:
• 18 cents in state tax for each gallon of gasoline and die-sel
fuel ( generally referred to as the “ gas” tax).
• 18.4 cents in federal tax for each gallon of gasoline.
• 24.4 cents in federal tax for each gallon of diesel fuel.
• 7.25 percent uniform state and local sales tax, plus op-tional
local sales taxes for transportation or other pur-poses
varying by county. ( The statewide average sales
tax level is approximately 7.9 percent once local optional
taxes are considered.)
➢ The state also collects weight fees on commercial vehicles
( trucks) based on either the truck’s unladen weight ( for
trucks lighter than 10,000 pounds) or its gross weight ( for
trucks in excess of 10,000 pounds).
Pump Price: $ 3.09 Per Gallon Pump Price: $ 3.14 Per Gallon
Gallon of Diesel Fuel
Base Pricea
($ 2.50)
Federal Excise
Tax ( 18.4¢)
State Excise
Tax ( 18¢)
Sales Taxb
( 23¢)
Base Pricea
($ 2.50)
Federal Excise
Tax ( 24.4¢)
State Excise
Tax ( 18¢)
Sales Taxb
( 22¢)
aAssumes base price of $ 2.50 for illustration purposes.
bAssumes average sales tax of 7.9%.
Gallon of Gasoline
Legislative Analyst’s Office
19
State Transportation Funding Comes Primarily
From Fuel Taxes. . .
2005- 06
Revenues: $ 6.1 Billion
Expenditures: $ 6.6 Billiona
Fuel Excise Tax
Fuel Sales Tax
Other
Weight Fees
Highways
Local Streets
and Roads
Planning, Administration,
and Other
Transit
aIncludes expenditures of carryover balances from the prior year.
. . . And Goes Primarily for Highways
California Travels
20
Key State Transportation Funding Accounts
State Highway Account ( SHA)
➢ Revenues— state gas tax and weight fees.
➢ Expenditures— generally used for highway maintenance
and operation, highway rehabilitation and reconstruc-tion,
and Caltrans administration. Can also be used
for capital improvements ( highways and certain transit
facilities).
Transportation Investment Fund ( TIF)
➢ Revenues— state sales tax on gasoline.
➢ Expenditures— provides funds directly for local road
improvements, as well as for capital projects ( highway
and transit) selected by regionals and Caltrans in the
State Transportation Improvement Program. Also funds
traffic congestion relief projects and transit indirectly
through transfers to the TCRF and PTA ( see below).
Traffic Congestion Relief Fund ( TCRF)
➢ Revenues— state sales tax on gasoline ( from TIF).
➢ Expenditures— provides funds for 141 statutorily speci-fied
transportation projects.
Legislative Analyst’s Office
21
Public Transportation Account ( PTA)
➢ Revenues— state sales tax on diesel, and a portion of
state sales tax on gasoline including:
• Sales tax on 9 cents per gallon of gasoline ( referred
to as Proposition 111 revenue).
• Net revenue from 4.75 percent sales tax on gasoline
in excess of 0.25 percent sales tax on all other goods,
over and above the Proposition 111 revenues ( re-ferred
to as spillover).
• A portion of state gasoline sales tax revenue from
TIF.
➢ Expenditures— provides funds for transit capital im-provement,
as well as operating assistance for local tran-sit
systems. Also funds capital improvement and ongoing
support of the state’s intercity rail program. Funds are
restricted to expenditures for transit and planning only.
California Travels
22
Use of Gas Tax and Weight Fees Is Restricted
➢ The State Constitution ( Article XIX) restricts how state
gas tax and weight fee revenues are spent. These monies
may only be used to plan, construct, maintain, and operate
public streets and highways, as well as to plan, construct,
and maintain transit/ rail tracks and related facilities ( such as
stations). These revenues cannot be used to operate transit
systems or to purchase rolling stock ( trains, buses, or fer-ries).
➢ In 2005‑06, these sources provided about $ 4.3 billion,
including $ 3.4 billion from the gas tax. A portion of gas tax
revenues— roughly $ 1.1 billion in 2005‑06— is allocated
to cities and counties to plan, construct, and maintain local
streets and roads.
➢ The remaining $ 3.2 billion state gas tax and weight fee
revenues, along with federal transportation funds, finance
various state highway purposes. Together, these revenues
totaled about $ 6 billion in 2005‑06. Current law sets pri-orities
for expending these funds as follows:
• Highway maintenance and operations, and local assis-tance.
• Highway rehabilitation and safety projects in the State
Highway Operations and Protection Program.
• Capital improvements ( including capacity expansion
projects such as additional highway lanes and new transit
facilities) in the State Transportation Improvement Pro-gram
( STIP).
Legislative Analyst’s Office
23
Sales Tax on Motor Fuel Used for Broad Range
of Transportation Purposes
Statewide, there is a uniform sales tax rate of 7.25 percent
on most purchases. Five percent of that rate goes to the state,
with the remainder dedicated to local uses. ( Due to additional
local optional taxes, the average sales tax rate in California is
closer to 7.9 percent.)
Sales Tax on Gasoline
➢ Before 2002, most revenues generated from the sales tax
on gasoline were deposited into the General Fund and used
for various nontransportation purposes. Only a small share
of state gasoline sales tax revenues ( spillover and Proposi-tion
111 revenues) was used for transit purposes.
State Sales Tax
on Gasoline
( 5% Rate)
Transportation
Investment Fund
( Proposition 42)
State Transportation
Improvement Program
Local Streets
and Roads
State Sales Tax
on Diesel
( 4.75% Rate)
Public
Transportation
Account
95% a
40% 40% 20%
5% a
aPercentage represents average share of gasoline sales tax revenues in recent years.
Actual distribution of gasoline sales tax revenues ( between the TIF and PTA) varies
from year to year. Amount includes Proposition 111 revenues, but not spillover.
California Travels
24
➢ Since 2002, Proposition 42 constitutionally requires that
the portion of gasoline sales tax revenues that previously
went to the General Fund be transferred to transporta-tion
purposes. The funds can be used for a broad range of
projects— highways, streets and roads, and transit ( includ-ing
rolling stock). After 2007‑08, 40 percent of these funds
will be used for STIP projects, 40 percent will be used for
local street and road improvements, and 20 percent will go
for transit purposes. ( Through 2007‑08, a portion of the
annual Proposition 42 transfer first will be used to fund
projects in the Traffic Congestion Relief Program.)
• Proposition 42 allowed the transfer to be suspended
under certain conditions. This occurred in 2003‑04 and
2004‑05. Proposition 1A, passed in November 2006,
limits the conditions under which suspensions may occur.
➢ In 2005‑06, Proposition 42 provided almost $ 1.4 billion
for transportation. Another $ 67 million in gasoline sales
tax revenues went to the PTA for transit purposes. In total,
gasoline sales tax revenues accounted for 23 percent of state
funds for transportation in 2005‑06.
Sales Tax on Diesel
➢ Most of the revenues from the state’s portion of the sales
tax on diesel fuel ( 4.75 percent rate) go to the PTA for
transit purposes. This revenue, about $ 271 million in
2005‑06, accounts for about 4 percent of state funds for
transportation. Revenues from the remaining 0.25 percent
rate are retained in the General Fund.
Legislative Analyst’s Office
25
Most Highway Expenditures Are for
Capital Projects
2005- 06
Most state highway
program expenditures
are for capital improve-ment
on the state and
local road system, as
well as to fund plan-ning
and engineering
activities supporting
these improvements.
➢ Capital improve-ments—
one- third of
Caltrans’ highway expenditures, funds highway and bridge
rehabilitation, expansion, right- of- way acquisition, and
safety improvements.
➢ Capital project support— 24 percent of highway expendi-tures,
includes project design, engineering, and environ-mental
review activities.
➢ Local assistance— 19 percent of highway expenditures,
primarily federal funds, the state passes through to local
agencies, which finance highway and roadway improvements,
bridge replacement and seismic retrofit, as well as transit and
nonmotorized ( bicycle and pedestrian) facility enhancements.
Remaining funds ( one- quarter) are for noncapital uses:
➢ Highway maintenance— about 19 percent of spending, funds
roadway repairs, landscaping, and snow and litter removal.
➢ Other support activities make up the remaining 5 percent
of highway expenditures. These include spending for traffic
management centers, new technology research, legal costs,
costs related to scheduling and tracking projects, as well as
various Caltrans administrative expenses.
Total: $ 4.5 Billion
Capital Outlay
Capital Outlay Support
Highway
Maintenance
Other
Local Assistance
California Travels
26
State Transit Expenditures Primarily for
Local Assistance
2005- 06
Most state transit expenditures provide assistance to local
and regional agencies to make capital improvements to rail and
bus equipment and facilities, and to support transit operations.
➢ Transit capital improvements account for over one- half of
these expenditures ( 55 percent). These expenditures are in
the form of project grants to local jurisdictions.
➢ State Transit Assistance constitutes about 29 percent of
total state expenditures for transit. These funds are distrib-uted
by formula statewide to transit operators to support
the operations and maintenance of transit systems, and for
capital acquisition purposes.
➢ Support for intercity passenger rail service accounts for
about 15 percent of total state transit expenditures.
➢ Transit planning and administrative support make up
1 percent of state expenditures for transit purposes.
Total: $ 686 Million
Transit Capital
Improvements
State Transit
Assistance
Planning
And Support
Intercity Rail Service
Legislative Analyst’s Office
27
State Bond Funds Will Provide Substantial
One- Time Infusion to Transportation
Proposition 1B
Uses of Bond Funds
( In Millions)
Amount
Congestion Reductions, Highway and Local Road
Improvements $ 11,250
Reduce congestion on state highways and major access
routes
$ 4,500
Increase highways, roads, and transit capacity 2,000
Improve local roads capacity, safety, and operations 2,000
Enhance State Route 99 capacity, safety, and operations 1,000
Provide grants for locally funded transportation projects 1,000
Rehabilitate and improve operation of highways and roads 750
Transit $ 4,000
Improve local rail and transit capital $ 3,600
Improve intercity rail capital 400
Goods Movement and Air Quality $ 3,200
Improve movement of goods on highways, rail, and in ports $ 2,000
Reduce emissions from goods movement activities 1,000
Retrofit and replace school buses 200
Safety and Security $ 1,475
Improve transit system security and disaster response $ 1,000
Improve railroad crossing safety 250
Seismically retrofit local bridges and overpasses 125
Improve security and disaster planning in ports, harbors, and
ferry facilities
100
Total $ 19,925
California Travels
28
➢ In November 2006, voters approved Proposition 1B, the
Highway Safety, Traffic Reduction, Air Quality, and Port
Security Bond Act of 2006. This act allows the state to sell
$ 20 billion in general obligation bonds to fund transporta-tion
projects to relieve congestion, improve air quality, and
enhance the safety and security of the state’s transportation
system.
➢ These bond funds are one- time in nature. However, they
constitute a major infusion of state funds into the state’s
transportation system that will be spent over multiple years.
Legislative Analyst’s Office
29
About One- Half of Local Transportation
Revenues Comes From Sales Tax
2005- 06
Collectively, local revenues generated an estimated $ 9.4 bil-lion
from various sources in 2005‑06 for transportation.
➢ Optional local sales taxes represent an important source
of local transportation funding, generating approximately
$ 3.1 billion annually. These revenues fund improvements to
highways, local streets and roads, and transit systems.
➢ Quarter- percent tax on all sales provided almost $ 1.4 billion
in 2005‑06. The funds are generated under the Transporta-tion
Development Act of 1971 and are deposited into the
Local Transportation Fund. They provide a major source of
support for transit operating assistance and capital projects.
➢ Transit fares provided about $ 1.2 billion to local transit
systems in 2005‑06.
➢ Property tax and other local funds collectively provided
an estimated $ 3.8 billion in 2005‑06. These funds include
property taxes, developer fees, bond proceeds, as well as
fines and forfeitures. These funds are spent mainly on main-tenance
and improvements of local streets and roads.
Total: $ 9.4 Billion
Optional Local
Sales Tax
Quarter- Percent
Sales Tax
Property Taxes and
Other Local Funds
Passenger Fares
California Travels
30
Optional Local Sales Taxes Contribute
Significant Transportation Funding
Agency
Tax Rate
(%)
Year
Established
Year
Expires
Annual
Revenue
( Millions)
Permanent Measures
BARTa 0.5% 1970 None $ 238
LACMTAb 1.0 1981 and 1991 None 1,300
San Mateo County 0.5 1982 None 61
Santa Clara VTAc 0.5 1976 None 150
Santa Cruz
Metropolitan 0.5 1979 None 16
Subtotal ($ 1,765)
Fixed- Term Measures
Alameda 0.5% 2002 2022 $ 106
Contra Costa 0.5 1989 2009 66
Fresno 0.5 1987 2007 46
Imperial 0.5 1990 2010 8
Marin 0.5 2005 2025 20
Orange 0.5 1991 2011 226
Riverside 0.5 1989 2009 104
Sacramento 0.5 1989 2009 93
San Bernardino 0.5 1990 2010 104
San Diego 0.5 1988 2008 213
San Francisco 0.5 2004 2034 66
San Joaquin 0.5 1991 2011 38
San Mateo 0.5 1989 2009 61
Santa Barbara 0.5 1990 2010 29
Santa Clara 0.5 2006 2036 150
Sonoma 0.25 2005 2025 23
Subtotal ($ 1,353)
Total $ 3,118
a Bay Area Rapid Transit.
b Los Angeles County Metropolitan Transportation Authority.
c Valley Transportation Authority.
Legislative Analyst’s Office
31
➢ History of Local Optional Sales Taxes. Optional local
sales taxes for transportation originated in 1970, when the
Legislature authorized several counties served by the BART
District to impose a regional sales tax. Since 1987, state law
has authorized counties to impose special sales taxes for
transportation purposes, subject to voter approval. Cur-rently,
a two- thirds vote is required for approval of any local
optional sales tax for transportation purposes.
➢ Current Use. In most cases, counties proposing to impose
local option sales taxes must provide voters with an expen-diture
plan that specifies how the funds would be used.
As of 2006, 17 counties have optional local sales taxes for
transportation. ( Starting in early 2007, two additional
counties— Madera and Tulare— will levy a local sales tax for
transportation.)
California Travels
32
Fares and Local Funds Comprise the
Bulk of Transit Revenues
2003‑04 ( In Millions)
➢ Transit services are funded by a combination of passenger
fares and local, state, and federal funds.
➢ For the state’s largest transit operators, local funds ( such
as local sales tax and property taxes) tend to provide the
largest source of revenues. For 2003‑04, VTA reported
the highest proportion of total revenues met through local
funds ( 76 percent). At the low end, BART reported that lo-cal
funds constitute 53 percent of total revenues.
➢ Passenger fares also provide an important source of revenues
for operators. For instance, passenger fares made up 47 per-cent
of BART’s revenues in 2003‑04. However, passenger
fares represented a much smaller proportion ( 10 percent) of
total revenues for VTA.
➢ The proportion of total revenues from state and federal
funds varied among transit operators. These revenues are
estimated to range from 0.2 percent of BART’s total rev-enues
to 18 percent of revenues for AC Transit.
$ 100 300 500 700 900
Los Angeles County Metropolitan
Transportation Authority ( LACMTA)
Bay Area Rapid Transit
District ( BART)
San Francisco Municipal
Railway ( MUNI)
Santa Clara Valley
Transportation Authority ( VTA)
Alameda Contra- Costa County
Transit ( AC Transit)
Orange County
Transportation Authority ( OCTA)
Southern California Regional
Rail Authority
Sacramento Regional Transit ( RT)
Passenger Fares
Local Funds
State and Federal Funds
Legislative Analyst’s Office
33
Federal Transportation Act and
Its Impact on California
The Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for Users
( SAFETEA- LU)
Major Provisions
General:
• Maintains overall structure of previous transportation act ( TEA- 21),
but increases emphasis on safety.
• Continues TEA- 21’ s flexibility allowing up to 50 percent of most pro-gram
formula funds to be redirected.
Funding Nationwide:
• Provides 42 percent increase in average annual funding over TEA-
21. Authorization of $ 241 billion for fiscal years 2005 through 2009
includes $ 190 billion for highways, $ 45 billion for transit, and
$ 5.7 billion for safety enhancements.
• Earmarks over $ 26 billion worth of congressionally specified projects,
including $ 14.8 billion for High Priority Projects and $ 1.8 billion for
Projects of National and Regional Significance.
Highways:
• Guarantees “ donor states” a minimum of 90.5 percent return on state
fuel tax contributions in 2005 and 2006, 91.5 percent in 2007, and
92 percent in 2008 and 2009.
• Provides incentives for private sector participation in construction of
major transportation facilities.
• Pilots include: federal delegation of environmental review responsi-bilities
to states and toll programs on interstate highways.
Transit:
• Most discretionary funds remain available for competitive project ap-plications.
• Provides capital funding for smaller transit projects requiring less
than $ 75 million in federal funds.
California Travels
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Federal Transportation Act Provides Funding
Through 2009
➢ Source of Federal Funds. The federal government levies a
fuel excise tax— 18.4 cents per gallon of gasoline and
24.4 cents per gallon of diesel. These revenues are deposited
in the federal Highway Trust Fund— the primary account
for federal transportation spending. Annually, California
receives a share of these funds via the federal transportation
program ( SAFETEA- LU), which authorizes $ 241 billion to
be invested in highways, transit, and transportation safety
projects nationwide from 2005 through 2009.
➢ Funding to State. The federal act authorizes $ 23.4 billion
for California through 2009, including about $ 18 billion
for highways, $ 5 billion for transit, and $ 452 million for
safety improvements. Roughly 15 percent of this funding
($ 3.7 billion) is earmarked for specific projects. For 2005-
06, federal funds provided about $ 4.6 billion for Califor-nia’s
transportation system.
Authorized Funding for California
( In Billions)
Formula Earmarks Totals
Highway $ 15.4 $ 2.4 $ 17.8
Transit 3.9 1.3 5.2
Safety 0.4 — 0.4
Totals $ 19.7 $ 3.7 $ 23.4
Legislative Analyst’s Office
The Transportation
System: How Decisions
Are Made
California Travels
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The Key Players:
Who Decides What Gets Built and When?
State
Legislature • Sets overall transportation policies, including estab-lishing
revenue sources and expenditure priorities.
• Appropriates lump sum for capital improvements
through annual budget and provides oversight on
implementation of the state transportation program.
• In general, delegates the authority to select
specific projects to Caltrans, regional and local
agencies, as well as CTC.
• Occasionally designates transportation projects
statutorily. In 2000, selected 141 projects to be
funded through the Traffic Congestion Relief
Program.
Department of
Transportation
( Caltrans):
• Implements the state transportation program in
general through 12 districts and headquarters in
Sacramento.
• Owns, operates, maintains, and repairs the state
highway system.
• Plans and designs capital improvement projects
on the state highway system.
• Selects projects for the interregional portion of
the five- year State Transportation Improvement
Program ( STIP).
• In 2006- 07, 22,352 authorized positions in
department.
California
Transportation
Commission
( CTC)
• Consists of nine members appointed by the
Governor.
• Recommends policy and funding priorities to the
Legislature.
• Adopts estimates ( prepared by Caltrans) of
available transportation funds for capital projects.
• Reviews and adopts STIP and State Highway
Operation and Protection Program to ensure
compliance with statutory guidelines.
• Allocates state and federal funds to projects
nominated by Caltrans and regional agencies.
• Provides oversight on Caltrans and local project
delivery.
( Continued)
Legislative Analyst’s Office
37
Regional
Regional
Transportation
Planning Agency
( RTPA)
• Currently, there are 48 RTPAs statewide.
• Formed by specific legislation. These RTPAs are
usually in the form of council ( or association) of
governments, and local transportation
commissions.
• Administers state funds and allocates federal
and local funds to projects.
• Selects projects for the regional portion of the
STIP.
Metropolitan
Planning
Organization
( MPO)
• Currently, there are 17 MPOs in California.
• Federally required planning bodies; typically the
same as an urban region’s RTPA.
• Prepares the 20- year Regional Transportation
Plan and selects projects.
• The Governor designates an MPO in every
urbanized area with a population over 50,000.
Other
Other Players • County transportation authorities develop expen-diture
plans for voter- approved local option sales
tax measures and administer funds.
• Federal transportation agencies— such as the
Federal Highway Administration and the Federal
Transit Administration— oversee the use of fed-eral
transportation funds.
• Environmental agencies at the local, state, and
federal level review transportation projects and
issue permits to ensure transportation improve-ments
comply with environmental laws.
• Cities and counties set land- use policy and
nominate transportation projects for funding by
the RTPA.
• Transit agencies— such as the Bay Area Rapid
Transit and Los Angeles County Metropolitan
Transportation Authority— nominate projects for
funding and deliver transportation services and
improvements.
California Travels
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Four Major Programs Guide
State Capital Spending
Currently, there are four major programs which guide state
capital spending for transportation in California:
➢ The State Transportation Improvement Program ( STIP)
funds new construction projects that add capacity to the
transportation system. These projects include capital im-provements
to highways, streets and roads, and transit
systems. Funding comes from a mix of the state gas tax
and sales tax on motor fuels, as well as federal funds. This
program is ongoing.
➢ The State Highway Operations and Prtecton Program
( SHOPP) funds capital projects to improve existing high-ways.
Projects include pavement rehabilitation ( reconstruc-tion),
as well as projects to enhance highway safety and
operations. Funding comes from state gas tax, truck weight
fees, and federal funds. This program is ongoing.
➢ The Traffic Congestion Relief Program ( TCRP) funds 141
capital projects specified in the Traffic Congestion Relief
Act of 2000 ( AB 2928, Torlakson). The TCRP includes
mainly highway and transit projects located in urban areas.
Funding comes primarily from gasoline sales tax revenues
provided each year through 2007- 08. However, TCRP will
likely receive revenues into the next decade from repayment
of loans it made to the General Fund in past years.
➢ Proposition 1B Bond Program funds projects to relieve con-gestion,
facilitate goods movement, improve air quality, and
enhance the safety and security of the transportation system.
Specific projects have yet to be selected, but will include
projects that add capacity to highways and transit systems,
improve major trade infrastructure ( including highways with
high truck volumes, ports, and freight rail lines), as well as
enhance the safety of existing transportation infrastructure.
These projects are to be funded by almost $ 20 billion in
general obligation bonds sold by the state.
Legislative Analyst’s Office
39
Availability of Funds Determines What Gets
Built and When in the STIP
How Are State Transportation Dollars Estimated?
➢ Fund Estimate. Caltrans estimates biennially all federal and
state transportation funds that would be available over a
five- year period. These funds include mainly revenues from
state and federal excise tax on motor fuels, sales tax on mo-tor
fuels, and truck weight fees.
• The estimate projects the amounts to be committed to
various purposes over the period. Priority is given to
highway maintenance and operations, local assistance,
and SHOPP projects. Any remaining funds would be
available for STIP projects.
California
Transportation
Commission
Regional
Transportation
Planning Agencies
Caltrans
Adopts Five-
Year Fund
Estimate
Adopts/ Rejects
Project Lists
Adopts STIP
Prepare/ Submit
Regional Plan
With Project List
Prepares/ Submits
Interregional Plan
With Project List
Allocates Funds
75% Regional
25% Interregional
California Travels
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➢ The fund estimate, when adopted by CTC, provides the ba-sis
for determining how many STIP projects can be funded
over the five- year period.
How Are STIP Funds Distributed?
➢ 75 percent of STIP funds are designated for the Regional
Transportation Improvement Program ( RTIP) to fund
projects chosen by the RTPAs.
➢ 25 percent of funds are designated for the Interregional
Transportation Improvement Program ( ITIP) to fund proj-ects
chosen by Caltrans.
➢ Projects may also be jointly funded by ITIP and RTIP.
How Are Regional Funds Programmed?
➢ Funds for the RTIP are geographically divided by the
“ north- south split.” Specifically, the north- south split al-locates
60 percent of funds to the 13 southern counties and
allocates the remainder to the 45 northern counties.
➢ These funds are further divided into county shares based on
a statutory formula allocating 75 percent of funds based on
population, and 25 percent based on highway lane- miles.
How Are Projects Chosen in the Regional Program?
➢ Projects are selected for funding by RTPAs based on re-gional
priorities, as defined in 20- year regional transporta-tion
plans. Projects are selected from a large pool of projects
proposed by cities, counties, and transit agencies. The RT-PAs
then submit their respective lists to CTC for approval.
➢ The CTC can either adopt or reject an individual RTIP in
its entirety, but cannot delete or add specific projects. To-gether,
the 48 regional proposals form the statewide RTIP.
Legislative Analyst’s Office
41
How Are the Interregional Funds Distributed?
➢ Of the ITIP funds, 40 percent may be spent in either urban
or nonurban areas subject to the north- south split. The re-maining
60 percent must be spent on improvements outside
of urban areas.
➢ About 10 percent of ITIP funds must be programmed for
intercity rail projects, while the remainder may be pro-grammed
for highway improvement projects.
California Travels
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Expenditures During the 2006 STIP Period
For the 2006 STIP period ( from 2006- 07 to 2010- 11),
Caltrans estimates that available transportation funds total
$ 45 billion. ( This estimate does not include bond funds
available under Proposition 1B.)
➢ Non- STIP Expenditures. Most available funds will not
go to STIP projects ( new construction). About $ 39 bil-lion
will be spent on other priorities:
• About $ 18 billion for noncapital expenditures ( in-cluding
highway maintenance and operations) and
local assistance.
• Almost $ 12 billion for SHOPP projects to rehabilitate
highways and improve highway safety and operations.
• About $ 9 billion for other purposes, including oper-ating
assistance for local transit systems, local streets
and road improvements, TCRP projects, and the
state’s intercity rail program.
➢ STIP Expenditures. About $ 5.9 billion— the remaining
amount after other requirements have been funded—
will be available for new construction projects.
• Historically, most of the funds available for STIP
projects came from the SHA ( state gas tax and
weight fees) and federal funds. In recent years,
however, growing highway rehabilitation and main-tenance
expenditures have consumed an increasing
proportion of these revenues, leaving fewer funds for
STIP projects.
• For the 2006 STIP period, most of the funds avail-able
for STIP projects will come from TIF and PTA
( primarily sales tax on motor fuels).
Legislative Analyst’s Office
43
Most STIP Funds Used for Roads
2006 Through 2011
➢ Funding for Proj-ects
in the 2006 STIP.
The 2006 STIP pro-vides
about $ 5.9 billion
over a five- year period
for capital improve-ments.
Of this amount,
65 percent is for high-ways
and roads, 29 per-cent
is for transit, and
6 percent is for trans-portation
enhancements
( including roadway
beautification, as well as bicycle and pedestrian facilities).
➢ Many STIP Funds Are Restricted to Specified Uses. Proj-ects
funded in STIP are constrained by the types of funds
available. For instance, funds from PTA may only be used
for transit projects, whereas funds from TIF are more flex-ible
in their use. Thus, there could be a mismatch between
available funds and the projects proposed to be funded over
a STIP period.
• For instance, there were considerably more highway and
road projects proposed in the 2006 STIP than dollars
available for these types of projects ( TIF, SHA, and fed-eral
funds). Because most of the funding available for new
projects was from PTA, the adopted 2006 STIP includes
additional funds only for transit projects.
➢ Funding Provided for Discrete Project Development Phas-es.
These phases include engineering and design ( known as
capital outlay support), environmental review, right- of- way
acquisition, and construction.
Total: $ 5.9 Billion
Streets and
Transit Highways
Transportation
Enhancements
California Travels
44
The SHOPP Includes Primarily
Highway Pavement and Safety Projects
2006 Through 2010
➢ The SHOPP
primarily funds
pavement reha-bilitation
and
projects that
improve roadway
safety. It also
funds road-side
preserva-tion
( including
rest areas and
freeway plant-ings),
operational improvements ( such as ramp metering),
upkeep of facilities ( including office buildings and equip-ment
shops), construction of railroad grade crossings, and
hazardous waste mitigation.
➢ The SHOPP is based on a ten- year plan prepared by Cal-trans.
Caltrans develops this plan by periodically inspecting
the state highway system to identify areas in need of reha-bilitation,
safety, or operational improvements. The SHOPP
is updated every two years.
➢ Projects are selected by Caltrans based on statewide need,
rather than a geographic formula, such as percentage of pop-ulation
or highway lane- miles. Available funds also constrain
the number of projects included in the four- year SHOPP.
➢ For the four- year period from 2006 to 2010, CTC ad-opted
a SHOPP of about $ 7.9 billion. Most of this amount
($ 6.7 billion) has been programmed for specific projects.
( This amount does not include the support costs to design
and engineer projects.) The remainder is left unallocated for
unanticipated needs.
Total: $ 7.9 Billion
Roadway and
Bridge Preservation
Safety
Othera
Roadside
Preservation and
Minor Repairs
Mobility Enhancement
aOther costs include upkeep of facilities, railroad grade crossings,
and hazardous waste mitigation.
Legislative Analyst’s Office
45
SHOPP and STIP Allocations by County
( In Millions)
SHOPP ( 2006- 2010) STIP ( 2006- 2011)
Alameda $ 461 $ 152
Alpine 7 29a
Amador 21 a
Butte 35 18
Calaveras 26 a
Colusa 31 3
Contra Costa 159 65
Del Norte 46 2
El Dorado 245 16
Fresno 84 84
Glenn 17 5
Humboldt 138 27
Imperial 36 46
Inyo 34 55
Kern 118 155
Kings 62 18
Lake 69 14
Lassen 34 12
Los Angeles 994 874
Madera 20 9
Marin 11 32
Mariposa 2 4
Mendocino 113 47
Merced 137 12
Modoc — 5
Mono 18 31
Monterey 81 97
Napa 38 11
Nevada 159 22
Orange 231 327
Placer 208 83
Plumas 44 9
Riverside 245 153
Continued
California Travels
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SHOPP ( 2006- 2010) STIP ( 2006- 2011)
Sacramento 137 72
San Benito 2 1
San Bernardino 639 287
San Diego 219 174
San Francisco 35 41
San Joaquin 114 42
San Luis Obispo 68 53
San Mateo 175 78
Santa Barbara 78 95
Santa Clara 187 53
Santa Cruz 42 28
Shasta 286 30
Sierra — 3
Siskiyou 40 19
Solano 237 60
Sonoma 99 78
Stanislaus 54 65
Sutter 23 21
Tahoe RPA N/ A 3
Tehama 101 8
Trinity 13 17
Tulare 43 53
Tuolumne 24 6
Ventura 62 78
Yolo 95 25
Yuba 13 7
Subtotals ($ 6,710) ($ 3,812)
Interregional Program N/ A 1,361
Unallocated Funds 1,185 730
Totals $ 7,895 $ 5,904
a Shared by Amador, Alpine, and Calaveras Counties.
Legislative Analyst’s Office
47
➢ While STIP funds are distributed according to a formula
based on population and highway lane- miles, SHOPP funds
are distributed according to need.
➢ As a result, some counties— such as Marin and Orange—
receive substantially more STIP funds than SHOPP funds,
while the reverse is true for other counties, including Ne-vada
and Del Norte.
➢ Counties often have the opportunity to advance their STIP
funding. This means that counties can borrow from future-year
STIP shares in order to fund a project sooner. Because
some counties, like Fresno, advanced funds in prior years,
these counties will receive less new funding in the 2006
STIP than the formula would otherwise provide.
California Travels
48
Traffic Congestion Relief Program:
Projects Defined by Statute
➢ Projects Defined by
Statute. The TCRP is
a multiyear transporta-tion
funding program. In
2000, the Traffic Conges-tion
Relief Act committed
$ 4.9 billion ( largely in
gasoline sales tax revenues)
to fund 141 projects speci-fied
in statute. Because
TCRP projects are speci-fied
in statute, rather than programmed by CTC, the proj-ect
selection process for TCRP is very different from STIP
and SHOPP.
➢ Large Share of Funds for Transit and Rail. Over one- half
of TCRP funds ( 62 percent) are provided for transit and
rail projects. Most of the remaining funds are for highway
projects, with a small share of funds dedicated to other pur-poses,
including local road enhancements, seismic retrofit,
and air quality improvement.
➢ Program Ends, but Projects Not Yet Delivered. Due to the
state’s fiscal condition, many TCRP funds were loaned to
the General Fund during the early years of the program.
Under current law, most of these loans will be repaid to
TCRP by June 30, 2016. Because of these loans, as well as
other delays related to specific projects, many TCRP proj-ects
will not be delivered until after 2010.
• Through 2005- 06, 26 projects have been completed
which received about $ 300 million in TCRP funds. So
far, almost $ 1.7 billion ( 35 percent of the total fund-ing
amount) has been expended on development of all
TCRP projects.
Highway Transit/ Rail
Other
Total: $ 4.9 Billion
Legislative Analyst’s Office
49
Proposition 1B: New Funding Programs
Guide Project Selection
In 2006, voters approved Proposition 1B, which provides
almost $ 20 billion in general obligation bonds to fund a variety
of transportation purposes. These bond funds are subject to ap-propriation
by the Legislature before they can be expended.
➢ Unlike TCRP, only a small portion of these funds are des-ignated
for specific projects ( such as $ 1 billion designated
to enhance State Route 99). Many projects funded by the
bonds will be selected through a competitive process based
on performance criteria, as highlighted below.
➢ Proposition 1B creates several new transportation funding
programs. The major programs include:
• Corridor Mobility— provides $ 4.5 billion for conges-tion
relief projects on the state highway system and local
roads connecting to highways. These projects will be
selected by CTC based on performance criteria and abil-ity
to commence construction by December 31, 2012.
• Public Transit— provides $ 4 billion for capital improve-ments
to transit infrastructure, including intercity rail,
urban and commuter rail, and bus rapid transit. Most of
these funds ($ 3.6 billion) will be allocated by formula to
local transit agencies ( who will select their own projects),
with the remainder going to Caltrans.
• Trade Corridors— provides $ 2 billion for projects to
improve the movement of goods on highways and rail
systems, through ports, and between Mexico and Cali-fornia.
These projects are to be selected by CTC, in
consultation with state and regional goods movement
infrastructure plans.
California Travels
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• Air Quality— provides $ 1 billion for projects to reduce
emissions and improve air quality related to goods move-ment.
The Air Resources Board will select projects that
can achieve emissions reductions beyond that required
by current law.
• State- Local Partnership— provides $ 1 billion in match-ing
funds for locally funded transportation projects.
Projects will be selected by CTC over a five- year period
from projects nominated by local transportation agen-cies.
• Transit Security— provides $ 1 billion for projects that
protect transit systems against a security threat or which
make these systems better able to move people or goods
in the aftermath of a disaster. The Legislature will desig-nate
the entity charged with project selection.
➢ In addition to providing funding for new transportation
programs, Proposition 1B provides an additional $ 2 billion
for STIP projects and $ 750 million for SHOPP projects.
The bonds would also augment funding for local street and
road improvements by $ 2 billion.
Legislative Analyst’s Office
51
From Planning to Construction:
How a Project Gets Built
In order to develop a transportation project from a con-cept—
through design, engineering, and construction— to a
useable facility, a number of steps have to be taken and require-ments
met. The key steps and processes are highlighted below.
Long- Term Transportation Planning to Identify Projects
➢ Federal and state law require that every region with a
population of 50,000 or more prepare and regularly update
a 20- year Regional Transportation Plan ( RTP). This plan
identifies the transportation needs of the region based on
projections of growth and travel demand, coupled with
projections of estimated funding levels.
Identify Need
For Projects
Acquire
Rights of Way
Prepare Initial
Document
Estimate and
Secure Funding
Perform
Environmental
Studies and
Obtain Permits
Construct
Project
Prepare,
Advertise, and
Award Contract
Complete
Design
California Travels
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➢ Any project that is expected to have a negative air quality
impact must be included in the RTP. This ensures that the
project’s air quality impact is considered in the evaluation
of the region’s ability to meet state and federal air quality
standards.
➢ The RTP must be approved by the Federal Highway Ad-ministration
( FHWA), the Federal Transit Administration,
and must be consistent with the State Implementation Plan
for air quality conformity with the federal Clean Air Act
before a project is eligible for federal funds.
Prepare Initial Document
➢ To begin a transportation project, Caltrans prepares a proj-ect
initiation document to define the project and describe
its cost, scope, and schedule.
Secure Funding for Project
➢ Once a project has been included in the RTP, its sponsor
( such as a city, county, or transit agency) must secure fund-ing
for the project. Funding may come from any combina-tion
of state, federal, local, or private sources.
➢ For projects built with state funds, funding is generally
secured when a project is programmed in the STIP; for
projects built with federal funds, but no state funds, proj-ects
must be included in the federal equivalent, known as
the Federal Transportation Improvement Program.
Environmental Review
➢ Before extensive design or construction can begin, the project
must comply with state and federal environmental laws. The
two major laws affecting transportation projects are the Cali-fornia
Environmental Quality Act and the National Environ-mental
Policy Act ( NEPA). These laws require that various
alternatives be examined in order to meet the needs of the
project while minimizing its negative environmental impact.
Legislative Analyst’s Office
53
➢ Typically, environmental review is the longest and most
unpredictable phase of the project delivery process. Proj-ect
evaluation and permit approval by as many as 15 to 20
agencies on certain projects takes considerable time.
➢ The federal act, SAFETEA- LU, allows five states, including
California, to takeover FHWA’s NEPA review duties on a
pilot basis. Chapter 31, Statutes of 2006 ( AB 1039, Nuñez)
allows Caltrans to use this delegation of authority through
January 1, 2009. The law requires Caltrans to report on the
costs and time savings realized through the pilot, so that
California can assess the benefits of NEPA delegation.
Design
➢ Since the passage of Proposition 35 in 2000, both Caltrans
and local transportation entities have the authority to con-tract
out the design of transportation projects, including
STIP projects. Prior to 2000, the State Constitution required
that most state highway projects be designed by state staff.
➢ Although preliminary design must be done in order to con-duct
environmental review, final design work is not com-pleted
until the project has received environmental approval
by the various state and federal agencies.
Construction
➢ Generally, once rights- of- way have been purchased and
design completed, Caltrans and local agencies advertise the
project for construction by the private sector.
➢ Recently, alternative contracting methods, such as design-build
and design- sequencing, have been proposed as ways to
reduce project delivery times by integrating the design and
construction processes. Local agencies ( such as the Orange
County Transportation Authority) have used design- build,
which awards both the design and construction of a project to
a single entity. In design- sequencing, the public agency con-tinues
to design the project; however, the private sector begins
construction when design is roughly 30 percent complete.
California Travels
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Legislative Analyst’s Office
Issues for
Legislative Consideration
California Travels
56
Implementing the Transportation Bond
In November 2006, voters approved Proposition 1B, which
allows the state to sell $ 20 billion in general obligation bonds
to fund transportation projects that relieve congestion, facilitate
goods movement, improve air quality, and enhance safety and
security. These bond funds, when appropriated by the Legisla-ture,
will be available for expenditure over multiple years for a
number of existing as well as new transportation programs.
In order to achieve the objectives of Proposition 1B, the
bond funds should be allocated to effective projects that can be
constructed and open to users in a timely manner. We recom-mend
that the Legislature take the following actions relating to
Proposition 1B implementation to ensure that the bond act’s
objectives are met.
Adopt Additional Project Eligibility, Evaluation Criteria.
Proposition 1B establishes a number of new funding programs,
but provides only general guidelines for the use of the funds.
This leaves fund recipients with broad discretion. For example,
in allocating $ 1 billion for Transit Security grants, the bond act
language is very open- ended— conceivably these funds could
be used either for projects that specifically address a security
threat or for projects that more generally increase a transit
system’s capacity. Such a lack of specificity may allow projects to
be funded that do not best align with state priorities. We think
that the Legislature should adopt additional project eligibility
and evaluation criteria for five new programs with funding to-taling
$ 5.1 billion. These include Trade Corridors, Air Quality,
Transit Security, State- Local Partnership, and Port Security.
Ensure Timely Project Delivery. Projects must be complete
and open to users before offering any mobility, air quality, or
economic benefits. To create incentives for timely delivery of
projects and avoid bond funds remaining available indefinitely
for projects that show no signs of progressing ( as has occurred
in the Traffic Congestion Relief Program [ TCRP]), the Legis-
Legislative Analyst’s Office
57
lature should adopt project delivery deadlines, as well as mecha-nisms
to remove funds from lagging projects so they can be
allocated elsewhere.
Provide Adequate Resources to Deliver Projects, Including
Increased Use of Contracting. Considerable personnel resources
will be necessary to plan and construct the multitude of trans-portation
projects funded by these bonds. Given Caltrans’ cru-cial
role in delivering bond- funded projects, the department’s
project delivery capacity will likely need to be expanded sig-nificantly
for a number of years. The Legislature should ensure
that Caltrans, in its annual budget request, has an adequate
combination of support resources— including both state staff
and contracted services— that would enable the department to
provide timely delivery of all transportation projects.
Provide Ongoing Program Oversight. Transportation
projects often take five or more years to plan and construct. It is
therefore important for the Legislature to monitor on an ongo-ing
basis how well the bond- funded programs are delivering
projects that cost- effectively relieve congestion and meet other
objectives. Given the number of programs and fund recipients,
we recommend that the Legislature designate one agency, such
as California Transportation Commission ( CTC), to oversee
the entire transportation bond program and provide an annual
report to the Legislature with specific information, includ-ing
progress in delivering projects on time and on budget. We
further recommend that the policy committees and budget
subcommittees of the Legislature hold periodic joint hearings
in which CTC, Caltrans, and other key implementing entities
report on the use of bond funds and the timeliness of project
delivery.
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Measures to Streamline and
Enhance Project Delivery
Expeditious delivery of transportation projects is important
to meet Californians’ increasing travel demand and to relieve
congestion. The administration should identify and imple-ment
measures to streamline steps in the project development
process, which may reduce state staff workload and improve
delivery times. There are also measures that we recommend the
Legislature adopt to expand the state’s capabilities to deliver
projects. Below, we list a few examples of various strategies.
Design- Build Contracting. The design- build contracting
method awards both the design and construction of a project to
a single entity. The use of design- build to construct projects seeks
to reduce project delivery times by integrating the design and
construction processes. Under SAFETEA- LU, virtually any trans-portation
project is eligible to be built using this method. Current
state law, however, authorizes the use of design- build only for spe-cific
transportation projects ( for example, I- 405). Thus, Caltrans
has little experience using this contracting method. While there
are advantages to using design- build, including potential shorten-ing
of project delivery time, there are also pitfalls to avoid.
➢ We recommend that the Legislature authorize a design-build
pilot program similar to that proposed by AB 143
( Nuñez) in 2006 and SB 56 ( Runner) in 2007. Both bills
propose a demonstration program that allows Caltrans and
regional agencies to deliver a set number of projects using
design build. These bills also require that transportation
agencies report on their experiences so that the state can
use the information in deciding whether to pursue future
design- build projects.
Streamlining Environmental Review. As environmen-tal
clearance is typically one of the longest and least predict-able
phases of the delivery process, streamlining measures to
minimize redundant steps or uncertainty in the environmental
review phase may offer significant benefits.
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➢ Chapter 31, Statutes of 2006 ( AB 1039, Nuñez), stream-lines
environmental review by exempting certain earth-quake
safety projects from state reporting requirements and
permitting Caltrans to prepare one master environmental
impact report ( EIR) for projects on Highway 99, rather
than multiple EIRs for projects along the corridor. The
statute also allows Caltrans to take over federal environ-mental
reporting duties on a pilot basis through January
1, 2009. By allowing Caltrans to communicate directly to
involved federal agencies, rather than doing so indirectly via
the Federal Highway Administration staff, the pilot seeks to
reduce project delivery times.
➢ Caltrans estimates that per- project time- savings gained
from taking over federal reporting duties will range from
a few weeks on the simplest projects to over six months on
large projects requiring a federal EIR. If these estimates
hold, the Legislature may want to extend this pilot for
several more years, subject to federal approval. We further
recommend the Legislature direct Caltrans to identify ad-ditional
streamlining measures to improve delivery times for
specific bond- funded programs.
Increase Use of Contracting- Out for Design Services. Un-der
the State Constitution, Caltrans has the authority to con-tract
for design and engineering services. To date, the depart-ment
has annually contracted out about 10 percent of its design
and engineering work. As Caltrans becomes responsible for the
timely delivery of more projects under Proposition 1B, the de-partment
will likely need a significantly higher level of support
resources to deliver these projects than it currently has. How-ever,
it will be difficult for Caltrans to hire and train within a
short time frame the necessary level of state staff to handle the
workload. In order for projects to be open to users in a timely
manner, we recommend the Legislature direct Caltrans to ex-pand
its use of private consultants to deliver projects.
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Leveraging Additional Transportation Dollars
While the transportation bond provides a substantial one-time
infusion of state funds for transportation, there is still a
substantial, ongoing funding shortfall in order to provide con-tinuing
capital improvements to meet Californians’ travel de-mand.
In our view, the state should leverage other fund sources
to supplement state sources.
Public- Private Partnerships. Public- private partnerships
( P3) provide a means to generate private investment for trans-portation
facilities. These partnerships often take the form of a
state or local government entering into a lease agreement with
a private entity to design, construct, maintain, and operate a
facility for a period of time. The federal act encourages the use
of these partnerships to generate private sector investment in
transportation.
➢ Chapter 32, Statutes of 2006 ( AB 1467, Nuñez), allows
Caltrans and regional agencies to pursue four P3 projects
on goods movement facilities. Because P3s may also work
well for other types of projects, for example highway toll
facilities, we recommend that the Legislature authorize P3
projects around the state on a broader range of facilities.
Encourage Local Investment. Most urban counties have ad-opted
local option sales taxes with revenues dedicated to trans-portation.
Because the benefits of transportation investments
are felt most at the local level, the state should encourage more
local investment.
➢ Proposition 1B provides $ 1 billion in State- Local Partner-ships
( SLP) grants to match local funds for transportation
projects over the next five years. The measure also allows
the Legislature to add conditions and criteria to the pro-gram
through statute. The CTC proposed guidelines that
would provide funding to local jurisdictions that have
adopted local sales tax measures or developer fees for trans-
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portation. These guidelines, however, do not set aside any
of these funds to create incentives for new local revenues to
be pursued in the future. In order to spur new local fund-ing
for transportation, we recommend that the Legislature
adopt guidelines that would set aside a portion of SLP
grants for cities and counties that establish new fees or tax
measures for local transportation purposes.
Tolling. In recent years, there has been a growing public ac-ceptance
of charging tolls for road usage, particularly when tolls
can finance new facilities or offer congestion relief. While many
observers have equity concerns regarding access to tolled facili-ties
across socioeconomic groups, recent research shows that it
is not just high- income travelers who choose to pay a toll when
pressed for time.
➢ Chapter 32 also authorizes regional agencies, in cooperation
with Caltrans, to create four high- occupancy toll ( HOT)
lanes. Given increasing public acceptance of tolls and the
revenue generated by these projects, we recommend the
Legislature authorize Caltrans and the regions to build ad-ditional
HOT and toll lane projects.
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Funding Highway Maintenance and
Rehabilitation Over the Long Haul
While travel on the state’s highway network continues to
increase, many of California’s highways have surpassed their
design life. As a result, maintenance and rehabilitation costs
have grown considerably in recent years. While Proposition 1B
provides some one- time additional funding for highway reha-bilitation
projects, it does not address the long- term issue that
maintenance and rehabilitation needs are growing faster than
the revenues which pay for these activities.
Existing Gas Tax Inadequate to Cover Maintenance and
Rehabilitation Costs. Growing maintenance and rehabilitation
demands consume increasing portions of state gas tax revenues,
which traditionally have been the state’s primary source to fund
capacity expansion on state highways. In its 2006 annual re-port,
CTC projects that annual gas tax and weight fee revenues
are insufficient to address highway maintenance and rehabilita-tion
needs. This is because:
➢ Gas Tax Has Not Increased in Over a Decade. The cur-rent
state gas tax rate ( 18 cents per gallon) has been in place
since 1994. Since then, inflation has eroded the value of per
gallon gas tax revenues by 29 percent, so that 18 cents is
worth less than 13 cents today ( in constant dollar terms).
➢ Eroding Revenues. The figure ( see next page) shows that
between 1991 and 2006, travel on California’s roads
increased by an estimated 35 percent. Meanwhile, gas tax
revenues ( in constant dollar terms) have not increased. As
a result, revenue generated per vehicle- mile traveled has
declined by more than 20 percent over the period.
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Several alternatives are available to the Legislature to in-crease
maintenance and rehabilitation funding.
➢ Indexing for Inflation. We estimate that the current 18
cent per gallon state gas tax will generate $ 37 billion over
the next ten years. We recommend that the gas tax be
indexed to inflation. Doing so could generate up to $ 42 bil-lion
from this funding source over the next decade—$ 5 bil-lion
more than would be generated if the gas tax was not
indexed to inflation.
➢ Indexing for Fuel Economy. Similarly, the increasing
popularity of hybrid vehicles could result in a corresponding
reduction in gas tax revenues as total gas consumption de-clines.
For example, if the increasing market share of hybrid
vehicles lead to a doubling in fuel economy, the Legislature
could consider doubling the gas tax to ensure that total gas
tax revenues remain at their current level into the future.
➢ Taxing Alternative Fuels. Many alternative fuels ( such as
ethanol and natural gas) are taxed at a lower rate than gaso-line
and diesel fuel. Thus, if alternative fuels become a more
20
40
60
80
100
120
140
160%
91- 92 93- 94 95- 96 97- 98 99- 00 01- 02 03- 04 05- 06
Inflation- Adjusted Gas
Tax Revenue
Vehicle- Miles Traveled
Inflation- Adjusted Gas
Tax Revenue Per
Vehicle- Mile Traveled
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prevalent energy source for transportation, the Legislature
should consider taxing these fuels at a comparable rate to
conventional motor fuels to ensure that revenues for uses
like highway maintenance and rehabilitation do not decline.
➢ Mileage- Based Fees. Mileage- based fees offer an advantage
over gas taxes in that their revenues are not eroded by increas-ing
fuel economy or use of alternative fuels. Rather, the fees
would closely match the extent motorists use highways and
roads. There are privacy and technical obstacles to overcome
in implementing a mileage- based approach to fund transpor-tation.
However, the state of Oregon is currently testing the
feasibility of implementing a mileage- based fee in Portland.
Similarly, we recommend that the Legislature examine the
policy and implementation issues that must be addressed if
mileage- based fees were to be imposed in California.
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Addressing Issues in the TCRP
In 2000, the Traffic Congestion Relief Act committed
$ 4.9 billion in General Fund and gasoline sales tax revenues to
141 specified projects between 2000‑01 and 2005‑06. Due to
the state’s fiscal condition, much of this funding was delayed
or loaned to the General Fund. Current law extends funding
for TCRP through 2007‑08 and establishes that most of the
loaned funds are to be repaid by June 30, 2016. Because of the
loans, as well as other delays related to specific projects, there
are TCRP projects that will not be completed until after 2010.
Given this timeline and the problems with a number of
TCRP projects, the Legislature should consider actions such as
the following to ensure that TCRP funds are used effectively.
➢ Establish Project Delivery Deadlines. Many TCRP projects
have fallen behind schedule. Current law allows funds to re-main
available indefinitely to these projects. The Legislature
should consider directing CTC to establish a final project
delivery deadline in order to ensure that funds are used to
construct projects in a timely manner.
➢ Identify Projects That Are No Longer Viable. If there are
stalled projects that are not progressing, the Legislature may
want CTC to identify these projects so that funds may be put
to other projects in the near term.
➢ Redirecting Funds From Failed Projects. For projects that
miss their construction deadline or which CTC deems as
no longer viable, the Legislature should redirect remaining
TCRP funds to other transportation projects. The Leg-islature
has a number of options in how it reallocates the
freed- up funds. Funds could go to projects statewide that
offer congestion relief benefits ( in keeping with the goals
of TCRP), projects which are similar in type to the failed
project ( to maintain the original level of investment in tran-sit
or highways), or other projects in the original region ( to
maintain the level of investment in a single region).
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Legislative Analyst’s Office
Acronyms and Definitions
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AC Transit ( Alameda Contra- Costa County Transit)— The
transit authority serving Alameda and Contra Costa Coun-ties.
BART ( Bay Area Rapid Transit District)— A commuter rail
system serving the San Francisco Bay Area.
Caltrans ( California Department of Transportation)— The
state agency responsible for building, maintaining, and op-erating
the state highway and intercity rail system.
CEQA ( California Environmental Quality Act)— State law es-tablishing
environmental reporting requirements that apply
to all transportation projects using state funds.
CTC ( California Transportation Commission)— A nine- mem-ber
board appointed by the Governor to oversee and ad-minister
state and federal transportation funds and provide
oversight on project delivery.
FHWA ( Federal Highway Administration)— The federal agency
responsible for administering federal highway funds.
FTIP ( Federal Transportation Improvement Program)— A
three- year list of all transportation projects proposed for
federal transportation funding within the planning area of
an MPO.
ITIP ( Interregional Transportation Improvement Program)—
The portion of STIP that includes projects selected by
Caltrans ( 25 percent of STIP).
HOT lane ( High Occupancy Toll lane)— An HOV lane, which
also allows for use by single occupant vehicles that pay a
toll.
HOV lane ( High Occupancy Vehicle lane)— A lane restricted
to vehicles with two ( and in some cases three) or more oc-cupants
to encourage carpooling.
LACMTA ( Los Angeles County Metropolitan Transportation
Authority)— RTPA for the Los Angeles region.
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MPO ( Metropolitan Planning Organization)— A federally
required planning body responsible for transportation plan-ning
and project selection in the region. In many cases, is
the same as the RTPA.
NEPA ( National Environmental Policy Act)— Federal environ-mental
law establishing environmental reporting require-ments
that apply to all projects funded with federal funds or
those requiring review by a federal agency.
P3 ( Public- Private Partnership)— Partnership between state or
local government and a private entity to design, construct,
maintain, and operate a transportation facility for a period
of time.
PTA ( Public Transportation Account)— The major state ac-count
for transit purposes. Revenues include a portion of
the sales tax on gasoline and diesel fuels.
RTIP ( Regional Transportation Improvement Program)—
Share of capital outlay improvement funds controlled by
regional agencies ( 75 percent of STIP funds).
RTP ( Regional Transportation Plan)— Federally required 20-
year plan prepared by metropolitan planning organizations,
updated every three years. Includes projections of popula-tion
growth and travel demand, along with a specific list of
proposed projects to be funded.
RTPA ( Regional Transportation Planning Agency)— Planning
bodies established by statute to administer state, local, and
federal funds to projects in a region.
SAFETEA- LU ( Safe, Accountable, Flexible, Efficient Transpor-tation
Equity Act: A Legacy for Users)— Federal transpor-tation
act covering the period from 2004 through 2009.
SHA ( State Highway Account)— The major state transportation
account for highway purposes. Revenues include the state
excise taxes on gasoline and diesel, and truck weight fees.
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SHOPP ( State Highway Operation and Protection Program)—
A four- year capital improvement program for rehabilitation,
safety, and operational improvements on state highways.
SIP ( State Improvement Program)— State air quality plan to
ensure compliance with state and federal air quality stan-dards.
In order to be eligible for federal funding, projects
must demonstrate conformity with the SIP.
Spillover— A source of revenue for the PTA, which is equal to
the amount that gasoline sales tax revenues at the
4.75 percent rate exceed the amount generated from the
sales tax on all other goods at the 0.25 percent rate.
STA ( State Transit Assistance)— State funding program for
mass transit operations and capital projects. Current law
requires that STA receive 50 percent of PTA revenues.
STIP ( State Transportation Improvement Program)— A four-year
capital outlay plan that includes the cost and schedule
estimates for all transportation projects funded with any
amount of state funds. The STIP is approved and adopted
by the CTC and is the combined result of the ITIP and
RTIP.
TCRF ( Traffic Congestion Relief Fund)— A state account
which funds 141 projects specified in the Traffic Conges-tion
Relief Act ( 2000). Funded largely through transfers
from the TIF ( gasoline sales tax revenues).
TCRP ( Traffic Congestion Relief Program)— The program cre-ated
to fund 141 projects between 2000- 01 and 2007- 08,
as specified in the Traffic Congestion Relief Act ( 2000) and
subsequent statute. Funded largely through transfers from
the TIF ( gasoline sales tax revenues).
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TIF ( Transportation Investment Fund)— A state account which
funds projects in STIP and improvements to local streets
and roads, also transfers funds based on formula, to TCRF
( through 2007- 08) and PTA. Revenues include state por-tion
of sales tax on gasoline.
VMT ( Vehicle Miles Traveled)— Common measurement used
for tracking demand for driving.
VTA ( Valley Transportation Authority)— The transportation
authority serving Santa Clara County.