Proposed California initiative to divert billions from state, kill bullet train faces uphill climb

Key Points
  • A proposed new initiative seeks to divert tens of billions of dollars from state coffers to local governments for highway construction and maintenance.
  • The proposed initiative also would kill the state's $77 billion high-speed rail project from San Francisco to Los Angeles.
  • Unions, local government groups and others have vowed to fight the proposed measure, which was proposed by an anti-tax crusader in Southern California.
Evening traffic leaving Los Angeles on the 405 freeway North.
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A backer of California's failed gas tax repeal measure is proposing an initiative to shift tens of billions of dollars from state coffers to local governments for highway construction and maintenance. It also would spell an end to the state's $77 billion high-speed rail project.

The California secretary of State's office announced Friday the proposed measure was cleared to begin circulating. Yet backers face an uphill battle since unions, local government groups and others have vowed to fight it.

"The proposed initiative that's been approved for circulation is short-sighted and would ultimately hurt California residents," said Graham Knaus, California State Association of Counties' executive director.

"It would raid existing funding for vital programs such as police and fire departments, children's programs, health and social services, as well as other services for our most vulnerable populations," he said in a statement. "It would also create a major hole in the state general fund, as the state is required by the Constitution to backfill the loss of revenue to many of these programs. Californians just overwhelmingly rejected this type of vicious attack on services. California can do better than this initiative."

Proponents have until late May to collect nearly 586,000 signatures of registered voters for the proposal to qualify for the statewide ballot.

The initiative would divert revenue collected from state motor vehicle fuel taxes to local governments for road construction and repair by private, nongovernmental entities. The proponent of the measure is former San Diego City Council member Carl DeMaio, an anti-tax crusader who helped lead the fight for California's Proposition 6 — a gas tax hike repeal initiative that failed to pass last month.

Republicans such as House Speaker Paul Ryan and Majority Leader Kevin McCarthy gave money to the gas tax repeal effort and hoped it would help the GOP in the midterm congressional elections in California. However, Republicans still lost at least six House seats in the Golden State to Democrats.

"California's taxpayers already pay some of the highest gas taxes in the country but are forced to suffer with some of the worst roads and infrastructure in the country because politicians have diverted, stolen, and wasted the funds," proponents of the new measure claim in a filing to the state.

The filing was signed by DeMaio, chair of the anti-tax PAC known as Reform California. DeMaio declined a request for an interview.

Cesar Diaz, legislative director for the California Building and Construction Trades Council, said that the measure if passed would damage the state's economy and cut jobs and jeopardize highway reliability and safety. The measure also could lead to local governments "fighting for resources" to keep highways safe, he added.

"We live in earthquake-prone California where we constantly have to upgrade and maintain our roads just for the expectation of a disaster," said Diaz. "But just the normal wear and tear can cause a huge impact on cars and their safety."

A state analysis of the proposed measure estimates it would shift about $10 billion in outgoing state revenue from the state to local nontransportation programs and counties and other local transportation programs. It also estimated there would be higher ongoing state spending approaching "several billions annually to backfill certain programs affected by this shift."

At the same time, it estimates that about $12 billion in existing ongoing state revenues for transportation would be diverted to local governments.

If passed, the measure would be a blow to Caltrans, an agency with more than 18,000 employees that oversees construction of the state highway system. The state agency also manages more than 51,000 lane miles of the California's highways and freeways.

The proposed measure also would terminate the state's $77 billion high-speed rail project from the San Francisco Bay Area to Los Angeles. A business plan for the project released earlier this year warned that construction costs could reach nearly $100 billion for the project.

"We continue to build the first 119-miles of high-speed rail in California, so far, creating more than 2,500 labor jobs and putting hundreds of small businesses to work," California High-Speed Rail Authority spokeswoman Lisa Marie Alley said in a statement. "The investment in the high-speed rail program is an investment in California's future — transforming travel, expanding mobility and connect the state like never before."

Voters authorized nearly $10 billion in rail bonds for the high-speed rail project in 2008 but public support for the plan has fallen. There's also been about $3.5 billion in federal funds available and other money from about 25 percent of the proceeds from the state's emissions trading program, or the quarterly cap-and-trade auction, designed to reduce greenhouse gases.

However, last month an independent audit of the project found that "flawed decision making and poor contract management have contributed to billions in cost overruns and delays in the system's construction." The audit also warned that the state was at risk of having to pay back as much as $3.5 billion in federal funds on the bullet train project.