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HomeMy WebLinkAboutStaff Report 3.B 10/01/2018DATE: October 1, 2018 TO: Honorable Mayor and Members of the City Council FROM: John C. Brown, City Manager � SUBJECT: Resolution Opposing Proposition 6: Voter Approval for Future Gas and Vehicle Taxes and 2017 Tax Repeal Initiative RECOMMENDATION It is recommended that the City Council adopt the attached Resolution Opposing Proposition 6: Voter Approval for Future Gas and Vehicle Taxes and 2017 Tax Repeal Initiative. BACKGROUND In April 2017, the Legislature enacted Senate Bill 1. The bill provides approximately $5 billion annually to restore state highway and local road systems, and includes over $390 million per year for the Bay Area. SB 1 dedicates funding to roadway maintenance, public transit, congestion reduction, and bike and pedestrian safety. SB 1 is funded by adjustments to roadway user fees assessed on gasoline, diesel fuel and motor vehicles. New revenue measures contained in SB 1. include: • A 12-cent/gallon increase in the state's gasoline excise tax. This amounts to an inflation adjustment to restore the purchasing power lost since the gas tax was last raised in 1994. • A Transportation Improvement Fee, an annual vehicle registration surcharge which varies based on the value of the vehicle and depreciates over time. • A zero -emission vehicle registration surcharge of $100 per year • A 20-cent/gallon increase in the diesel excise tax • A four (4) percent rate increase in the sales tax on diesel fuel Proposition 69, approved by 81 percent of voters in June 2018, added a provision to the California Constitution ensuring SB 1 funding sources cannot be diverted to any non - transportation purpose. State highway and local road systems currently face maintenance backlogs of $59 billion and $78 billion, respectively. The Metropolitan Transportation Commission (MTC), the transportation planning, financing, and coordinating agency for the nine county Bay Area, maintains statistics on road conditions for each jurisdiction in the region, and awards them an annual score on their pavement condition index (PCI). In 2017, MTC awarded an overall average PCI of 67 out of 100 possible points to the region. A PCI of 67 is considered "fair". Many jurisdictions have much lower scores, with 22 percent of them already ranking in the poor or failing category. Petaluma is among these, with a 2017 PCI of 46. MTC estimates the value of Petaluma's roadway maintenance backlog at approximately $171 million. Bay Area cities and counties are forecasted to receive $208 million from SB 1 in FY 2018/19, a 73 percent increase in their baseline state gas tax funding. This can be spent on road maintenance and rehabilitation, safety, railroad grade separations, traffic control devices and complete streets components, including pedestrian and bicycle safety projects. Petaluma's share of that funding for FY 2018/19 is approximately $1.1 million. Although calculating Petaluma's share of increased funding from SB 1 for transit is more complicated, staff estimates an annual average increase of approximately $586,000, per year. DISCUSSION An initiative petition was submitted to the Secretary of State adding Proposition 6 (Prop 6) to the November 2018 ballot. If approved by voters, Prop 6 would eliminate road repair and transportation funding enacted by Senate Bill 1 in 2017 by repealing revenues dedicated for those purposes. Prop 6 would also subject any fitture tax on motor vehicles or fuel to a vote of the people. Without SB 1 funding, pavement conditions can be expected to further deteriorate, as maintenance backlogs increase. Public transit systems will face tighter budgets that could require cuts in service, and delays to vehicle procurements and in addressing State of Good Repair transit program priorities. Much needed congestion relief projects and transit system expansions also would be delayed. The greatest negative impact of an SB 1 repeal would be the on the condition of local streets and roads. As previously noted, 22 percent of local roadways in the Bay Area are already classified as being in poor or failed condition. MTC estimates the loss of SB 1 funding would lower the region's PCI to 58 by 2027 and increase the share of poor or failed conditions to 36 percent in that time. MTC estimates that the loss of SB 1 funds would drive up the backlog of local road maintenance by $3.9 billion over 10 years and would cost more than twice that amount to restore conditions to what they are today. If Prop 6 passes, the Bay Area will lose $156 million in new State Transit Assistance (STA) funds for FY 2018-19. Of this, $118 million augments the existing STA program and can be used on any transit agency needs. Another $38 million would fund a new State of Good Repair transit program, which is limited to capital uses such as replacing vehicles and upgrading facilities. Passage of Prop 6 would also result in funding gaps for priority congestion relief projects in the Bay Area. In its first award of competitive funds from SB 1 programs, the MTC awarded Bay Area projects $660 million, more than 25 percent of the statewide total. The MTC also awarded Caltrans $85 million through the Solutions for Congested Corridors program to complete the final Sonoma County portion of the multi -phase widening of U.S. 101 through the Marin - Sonoma Narrows, and Petaluma. Under SB 1, a State -Local Partnership Program was revived that rewards communities in which voters have approved measures that dedicate funding for transportation. Prop 6 would eliminate the only sources of funding for that program. 2 Petaluma's Streets Fund budgets for 2018/19 total $5.42 million. The revenues supporting those budgets include the proceeds from gas tax, franchise fees, and Measure M funding. Gas tax estimates include nearly $1.1 million in SB 1 funding. SB 1 funding represents over 43 percent of total gas tax revenue, and increases the City's baseline gas tax by 73 percent. These monies have been directed to the City's capital improvement program for Streets, and are being used to support various pavement restoration projects totaling $1.5 million in 2018/19. A list of these projects can be found on Page CIP-60 of the City's 2018/19 adopted budget. Prop 6 would eliminate this $1.1 million per year funding source, and further impair the City's ability to address its deferred street maintenance needs. MTC estimates that even with SB 1 funding, Petaluma's current street maintenance backlog of $171 million will increase to $290 million by 2027. If Prop 6 passes, Petaluma's backlog is projected to increase to $322 million. In the same 10 -year period, Petaluma's PCI is projected to decrease from 46 to 40 with SB 1 funding, and to 34 without SB 1 funding. Staff estimates that Petaluma's transit system will lose an average of approximately $586,000 a year, if Prop 6 passes. Some of this money would be used to meet the division's funding reserve requirements. Without SB 1 funding, Transit will not be able to meet those requirements and may need to reduce existing route service levels and delay capital projects. If SB 1 is repealed, staff estimates Transit will lose approximately $4.7 million through 2027. Without this funding source, transit system improvements such as more service hours or partnerships, and capital improvements such as rolling stock purchases or bus stop improvements will be much less likely. Finally, Prop. 6 will eliminate the only currently identified source of funding to provide the $85 million needed to complete the Marin -Sonoma Narrows project. That project will widen Highway 101 through Petaluma and add an HOV lane and sound walls for noise attenuation, and reduce congestion by eliminating the existing two-lane bottleneck. For the foregoing reasons, it is recommended that the City Council support SB 1 by adopting the attached resolution opposing Proposition 6. It should be noted that information regarding SB 1 funding is and will be posted on the Public Works and Utilities Department's website, and acknowledgement of the use of the funding source is identified at related project sites. FINANCIAL IMPACTS Proposition 6 would reduce Petaluma's annual gas tax apportionment by approximately $1.1 million per year, and State Transit Assistance funding by an average of 586,000 per year. It would also eliminate $85 million that is currently authorized to complete the Marin -Sonoma Narrows project. ATTACHMENTS 1, Resolution 3 ATTACHMENT 1 RESOLUTION OPPOSING PROPOSITION 6: VOTER APPROVAL FOR FUTURE GAS AND VEHICLE TAXES AND 2017 TAX REPEAL INITIATIVE WHEREAS, Senate Bill 1 (SB 1), the Road Repair and Accountability Act, was signed into law by the Governor in April 2017 to address a backlog of streets and roads repair and maintenance, and to address significant multi -modal transportation shortfalls and congestion management statewide; and WHEREAS, approximately $78 billion in funding is needed on a statewide basis for local streets and roads, and $59 billion is needed to restore the State highway system; and WHEREAS, statewide, SB 1 will provide over $1 billion annually for state and local roadway system maintenance and rehabilitation, safety improvements, traffic control devices and complete streets components, including pedestrian and bicycle safety projects; and WHEREAS, regionally, SB 1 will provide $208 million for local roadway system maintenance and rehabilitation, safety improvements, traffic control devices and complete streets components, including pedestrian and bicycle safety projects; and WHEREAS, SB 1 will provide $15.2 million annually to Sonoma County and its cities for local roadway system repairs, maintenance, and improvements, including approximately $1.1 million a year for Petaluma; and WHEREAS, regionally the average pavement condition index (PCI) score is 67 out of a total score of 100, which is in the "fair", but several jurisdictions' scores are below 50, the "poor or failing category; and WHEREAS, the Metropolitan Planning Commission has estimated Petaluma's 2017 roadway maintenance backlog at $171 million; and WHEREAS, for 2017, the City of Petaluma had an overall PCI rating of 46 out of 100 which is in the" poor -to -failing" category; and WHEREAS, Proposition 6 will eliminate SB 1 funding currently dedicated to fixing roads and potholes, reducing traffic congestion and upgrading freeways, bridges, tunnels and overpasses to make them safer, and for multi -modal transportation; and WHEREAS, it is anticipated if Proposition 6 passes that the City of Petaluma will lose approximately $10 million in roadway maintenance funding by 2027, its unfunded maintenance backlog will increase to $340 million, and its PCI will decrease to 34; and WHEREAS, if Proposition 6 passes, Petaluma will also lose an average of $586,000 per year in transit funding and approximately $4.7 million through 2027; and 4 WHEREAS, the $85 million awarded to Caltrans for the Sonoma -Marin Narrow project will no longer be available and identifying replacement funding will further delay the much- needed congestion relief that project will provide. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Petaluma opposes Proposition 6 on the November 6, 2018 statewide ballot.