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Schwarzenegger's
budget plan robs transportation money
Governor Arnold Schwarzenegger
riled California's transportation construction industry this month with a budget
deficit-reduction proposal that diverts $1.5 billion allocated for public
transit and transportation improvement projects to the state's general fund.
Under the plan, the governor would eliminate the state's sales tax on
gasoline and replace it with a 10.8 cent-per gallon increase in the gasoline
excise tax.
California is facing a $6.6 billion budget shortfall for the remainder of this
year and a $13.3 billion deficit in the coming fiscal year.
Some critics say that the tax swap will have a negative long-term effect on the
state's ability to fund transportation projects because the excise tax will not
increase along with the price of gas.
"This nickel sized reduction in the gas tax is a hollow promise that will
actually cost consumers more, because it is the only major source of funding to
rebuild our aging and crumbling transportation system," said Jim Earp, Executive
Director of the California Alliance for Jobs.
An attempt by the governor to raid gas tax funds during last year's
budget-deficit debacle was rejected by a judge as unconstitutional. The proposal
to eliminate the gas tax is a loophole that bypasses the legal requirements.
Governor Schwarzenegger's budget solution also includes cuts to health and human
services and prisons and diverts money for various programs to the general fund.
He is also lobbying for $6.9 billion from the federal government to help close
the budget hole. A review of the budget by the non-partisan Legislative
Analyst's Office says that "the chances that the state will receive all of what
the Governor seeks from Washington are almost non-existent."
If the governor fails to receive federal assistance, the state will be forced to
axe more expenditures or find new revenue sources.
The governor and Republicans have said that they will not consider new taxes to
close the budget hole. Democrats are also digging in their heels, vowing to
defend essential state services.
California's legislature has historically engaged in prolonged debates over the
budget. Last year, lawmakers debated various proposals for 15 weeks before
agreeing on a budget.
California's top financial officials said earlier this month that the state will
be able to pay its bill through May or June. However, California State Treasurer
Bill Lockyer has said that bond-funded construction projects are at risk if the
state fails to quickly solve its budget issues.
To read Governor Arnold
Schwarzenegger's budget proposal, visit:
http://gov.ca.gov/index.php?/speech/14150/
To read the Legislative Analyst's Office review of the governor's budget
proposal, visit:
http://www.lao.ca.gov/laoapp/PubDetails.aspx?id=2160
Congress
debates 2nd stimulus, transportation funding plan
Transportation
infrastructure across the nation is crumbling, and cash-strapped states are
seeking financial assistance from the federal government for maintenance,
enhancement, and expansion projects. The U.S. Congress is currently considering
two options that, if approved, will send billions of dollars to state
transportation departments.
The first bill being debated is the so-called 'Jobs for Main Street' which has
been styled as a limited supplement to last February's American Recovery and
Reinvestment Act (ARRA). The House version of this second stimulus package -
which was passed by the chamber before the winter recess - allocates $27.5
billion for highways, $8.4 billion for transit, and $500 million for airports.
The Senate is less enthusiastic about spending more federal money and reportedly
would like to see total transportation spending in the bill reduced to under $30
billion.
The House version of the second stimulus also extends the Safe, Accountable,
Flexible, Efficient Transportation Equity Act (SAFETEA-LU), which set aside $42
billion annually for state transportation construction, with its original amount
of funding until the end of the fiscal year. SAFETEA-LU expired at the end of
September but Congress has extended the legislation until the end of February at
the annual level of $30 billion. According to the Associated General Contractors
of America, states have a $62 billion backlog of 'shovel-ready' projects that
need funding.
Many lawmakers and officials, though, prefer a separate, multi-year replacement
for SAFETEA-LU instead of another extension of the expired program. According to
the American Association of State Highway and Transportation Officials, state
transportation departments are unable to make long-term plans without stable
fiscal projections.
The House and Senate are both expected to propose a six-year successor for
SAFTEA-LU with a price tag of approximately $500 billion early this year.
However, some experts have pointed out that this price-tag may be too much for
federal government to bear considering its recent spending. New transportation
taxes and bonds have both been floated as potential revenue sources.
The White House has yet to back the Congressional Democrats' transportation bill
and has said it will not support new transportation taxes in the current
economic climate.
Conservative lawmakers and advocacy groups are putting up stiff resistance to
the 'Jobs for Main Street' bill. They contend that stimulus spending on
transportation has failed to retain and create new jobs. A recent study by the
Associated Press (AP) supports this position. After analyzing ARRA employment
figures, the AP found no correlation between stimulus spending on transportation
projects and the number of construction workers hired or fired.
Construction industry experts have rejected the AP's findings.
"The fundamental assumptions in today's Associated Press story are flawed," said
Ken Simonson, chief economist for the Associated General Contractors. "It is
virtually impossible to measure the impact of $4 billion by looking at overall
employment figures for an industry experiencing a $137 billion drop in activity
- especially when only one in twenty construction workers stand to benefit from
those stimulus funds."
Still, some Senate Democrats are questioning the efficacy of another stimulus
bill.
"Senator Nelson is very concerned about the level of federal spending and the
deficit," said a spokesman for Ben Nelson, D-NB. "He would look at a jobs
package, but those factors would weigh heavily in his mind."
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