California Ballot Initiative Analysis: Proposition 6
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Commentary

California Ballot Initiative Analysis: Proposition 6

Proposition 6 would repeal all gas and fuel taxes enacted by California since January 1, 2017, and would require voter approval for any fuel tax and vehicle fee increases.

California Proposition 6: Eliminates Certain Road Repair and Transportation Funding. Requires Certain Fuel Taxes and Vehicle Fees Be Approved by the Electorate. Initiative Constitutional Amendment.

Proposition 6 would repeal all gas and fuel taxes enacted by California since January 1, 2017, and would require voter approval for any fuel tax and vehicle fee increases.

Fiscal Impact

Reduced revenues of $2.9 billion a year starting in 2019 and growing to annual losses of $4.9 billion by 2021.  

Proponents Argument For

Proponents argue this measure is a necessary tax revolt in California due to persistent and increasingly burdensome taxation.  California has the second highest state gas tax in the nation and yet does not have the highest quality roads or bridges. They argue that California does not need more money for transportation, the state needs to learn how to be responsible with the money it has. Only 28 percent of vehicle-related taxes and fees in California are spent on highways and roads.  While California lawmakers keep saying these higher taxes are needed to fund safe roads they have actually be cutting CalTrans funding.

Proponents remind us that vehicle fees and fuel taxes are among the most regressive taxes.  They are inequitable, penalize travel, and make it harder for people to get to work. The vehicle fees, due in part to their fixed rates, are particularly inequitable towards poorer Californians because of the lower the value of the car the higher the proportion of the total value the fee represents.  

Supporters of this measure argue that the legislative restrictions, “lockbox” measures and the like, have not proven enough to restrain inefficient spending.  

Opponents Argument Against  

Opponents argue that California’s infrastructure is in poor condition and this money is critical to upgrading that infrastructure so that California’s economy can continue to be one of the best in the world.  While taxes may be high in California, infrastructure spending is so critical to the economy that passing this measure would prove a drastic mistake that would surely be felt throughout the state. This would eliminate thousands of jobs and rob the state of important economic growth.  

Opponents also argue that state law provides lockbox measures so that transportation-related taxes have to be spent on transportation-related items.  This is not about taxing road users to line the pockets of politicians, this is about the sensible use of necessary funds.

Discussion

California’s tax and spend habits on infrastructure are way out of balance in many ways.  Not only in that California has the highest tax rates and highest debt ratios, but Reason Foundation’s Annual Highway Report ranks California 42nd in state highway spending cost-effectiveness.  In other words, California spends more per mile than most other states yet has roads in worse condition. Californians are now paying the highest fuel taxes in the nation for one of the worst road systems. 

It is hard to justify raising revenues even further when current policies do not seem to be working.  There is no direct correlation between the state’s total infrastructure spending and the quality.  So repealing these tax increases (and therefore government transportation revenues) could be a welcome tightening of the fiscal belt that focuses the state on prioritizing its spending on the most important infrastructure projects.  

It could be debated whether having voters approve every rule tax increase is a good idea or not.  On the one hand, it would certainly be an effective check against raising taxes in the state. On the other hand, it limits the ability of policymakers to cut a tax in spot A in order to add a tax spot B, a plausible political trade-off in a legislative body.  Ballot initiatives, particularly pertaining to tax and finance, can become exceedingly complex, making it hard for taxpayers to distinguish what the measure actually does or to follow the money. However, given that California already has some of the highest tax rates in the country, another check on raising those rates may be a good thing.  And this proposition only applies to fuel taxes and vehicle fees so it is more straightforward than many initiatives. 

Voters’ Guide to the 2018 California Ballot Initiatives

The Voters’ Guide offers analysis of each of the 11 ballot propositions certified for the election being held on November 6, 2018.