As the July 24 deadline when California runs completely out of cash keeps creeping up, cities and counties woke up to another body blow last week. The state Budget Conference Committee agreed to raid local transportation revenues derived from the state’s 18-cent-a-gallon tax for transportation uses. The action would “take” $986 million of the local share of the gas tax (around 6 cents; the rest goes to Caltrans) from the Highway User Tax Account to pay for general fund bond debt service in fiscal year 2009-10, says the California State Association of Counties.

The Conference Committee also took action to redirect $745 million of the local share in fiscal year 2010-11. The CSAC says that this action does not include paying back these monies to cities and counties, and there is concern that this would be a permanent loss of this local portion of the gas tax.
In addition, the Dept. of Finance has proposed to suspend the first two quarters of the local portion of Proposition 42 in fiscal year 2009-10, equivalent to another $288 million. Thus, the total loss to transportation at the local level would be more than $2 billion with half of that a reduction to counties.
CSAC surveyed the 58 California counties and found that a loss of this magnitude would result in thousands of layoffs in public works departments across the state -- 3,930 and counting. This would not only have a ripple effect through other county departments, but also would spread to the private sector, including the construction industry and road material providers.

“At times of economic downturn, public investment in infrastructure can provide a significant spark to the economy as recognized by Congress and the Obama Administration in passing the recent American Recovery and Reinvestment Act,” the CSAC says in a statement. “This proposal runs completely contrary to the federal efforts – negating the benefits at the local level.

“It is estimated that this loss of infrastructure investment would eliminate $10 billion to $14 billion in economic activity. Transportation dollars feed the local, state and country’s economic engine. This is not the time to strip away transportation dollars.”

Meanwhile, the governor was making the rounds last week, pounding on the “no more taxes” theme in Fresno. After a rather long and goofy speech (what is it with his digital textbook fixation?), Arnold took questions, the first one from Cynthia Sterling, president of the Fresno City Council.

She started out with a statement – that taking the gas tax money away from Fresno would result in the loss of 31 jobs and that the debt service payment that presently is handled by the gas tax money of $2 million, will be a deficit to the city of Fresno of $2 million.

“There will be approximately 38,000 streetlights that will either be turned off, not repaired, or just won’t be effective in a very devastated area in many places at this particular time,” Sterling says. “Remember, Fresno County and the city of Fresno are the highest concentrated areas of poverty in the nation and we have been severely hit by the water crisis, so our unemployment and our infrastructure and services are very limited at this time.”

She says that road repair reductions will just be massive. Street signs and emergency road repairs will be 100% stopped. Concrete repairs will be at 50% less than what it is now. The impacts to the local economy would be “devastating.”

She didn’t actually have a question.

The governor responded with a “I understand where you’re coming from” response, and says “this is the kind of stuff that I hear all day long.”

Then, he rambles on: “So when you have a cut—and this is the important thing for everyone to know—we have made cuts, by the time this $24 billion is done, we will have dealt with $60 billion. Remember, in January I said $36 billion, now $24 billion. Together that’s $60 billion over a period of two fiscal years. That’s $30 billion short a year.”

Okay, got it; stop with the numbers…

“So that’s an enormous amount of money. Where do you cut when you have $30 billion less? How do you solve that problem? Everyone—law enforcement says, ‘Don’t cut, don’t go and release any prisoners,’ they say over here. Then they say, ‘Don’t cut on our in-home services, don’t cut in kindergarten, don’t cut on Cal Grants, don’t cut in CalWORKs and don’t cut in transportation and don’t cut on local government.’

“So you say to yourself, ‘OK, I totally get it, that those monies are very important.’ But somehow we all have to come together and sacrifice a little bit so that we can meet this goal of those $30 billion each year.”

So, if our city and county public works departments get decimated by the transfer of the gas tax, the question is when will they recover? Or how will they recover? I think the contractors, subs and concrete and asphalt manufacturers that depend on public works would like to know.