13 Key Pros and Cons of California’s Prop 69

Proposition 69 was on the June 2018 ballot in California. It is an amendment which places the revenues from the Road Repair and Accountability Act, which increase fuel taxes, into a locked box so that the funds can only be used for transportation-related purposes. This legislation also exempts the revenues from the fuel tax from previously existing appropriations mandates and expenditure limits.

Prop 69 passed with about 80% of the vote in the state. This amendment ensures that SB1 Gas Taxes can only be used for infrastructure needs instead of other budgetary options. It does not allow any additional lanes or roads built other than bus, bicycle, or car pool lanes and increased funding for other public transportation, such as trains and buses.

Instead of creating the potential for an increase in taxes because the funds can go to other budget lines, Proposition 69 forces lawmakers to take on the necessary mass-transit and road projects that support the infrastructure of the state. Governors, including Arnold Schwarzenegger, raided transportation funds in the past to balance the state budget. Now that can no longer happen.

Here are some of the additional Prop 69 pros and cons to review.

List of the Pros of Prop 69

1. Creating the lockbox does not cause taxes to rise.
Proponents of Proposition 69 point out that the legislation does not raise taxes at all. It forces lawmakers to use the money that comes from the gas tax to help fix roads in the first place. That means the mass transit projects and infrastructure repairs have a better chance of happening because other budget lines are not robbing this one of its revenues. Because 53% of the roadways in the state are listed as being in fair condition, with 6% listed as being poor, the funds can go toward helping the aging infrastructure effectively.

2. Improvements to highways do not impact other roads.
Although roadway improvements can be problematic for traffic levels after the successful completion of a project, there is not a trickle-down effect that occurs from the work. If California uses Prop 69 to fix highways throughout the state, then the added congestion that can occur does not impact the side roads. This principle holds true for improvements to other roadways as residential streets do not see an increase in activity.

That means you can still work to manage traffic levels and congestion strategically while still making improvements that can reduce the dangers that drivers face on roadways today.

3. Prop 69 promotes more jobs and a stronger economy.
Because California ensures that transportation revenues will go to transportation projects instead of balancing the budget in other ways, there are more opportunities to provide good-paying jobs to construction, transportation, and survey personnel as they work on the state’s infrastructure. There are hundreds of thousands of workers who receive a paycheck because of the way that this proposition ensures that funds will be spent in specific ways. These wages help to boost local economies across the state, make transportation networks more efficient, and help workers report to their shifts more effectively.

4. Funds can be used for pedestrian walkways as well.
Proposition 69 allows for the improvement of pedestrian safety as part of the overall infrastructure lockbox. It is possible to build or upgrade sidewalks and crosswalks with the money collected from the gas tax. Because it protects revenues dedicated to every transportation agency, county, and city, local roads can receive improvements with regularity just as much as the state highway system. It is able to accomplish this goal because it protects existing revenues without requiring another tax increase.

As long as there is a transportation or infrastructure need that these funds can finance, then they fall under the guidelines of spending for this proposition.

5. It works to improve the safety of roadways throughout the state.
California faces the same challenge as the rest of the United States in the fact that the last significant infrastructure investment occurred more than 50 years ago. Many of the bridges that we use still today have outlasted their original estimated lifespan. With the passage of Prop 69, transportation agencies can now make the safety improvements that are necessary to repair these aging and deteriorating structures. The funds can also be used to repair tunnels and overpasses.

Cities are using the funds from this lockbox to start paving over their crumbling and cracked roads. Potholes can now be filled thanks to fewer ways to reallocate funds from the budget. That ultimately means there are fewer vehicle maintenance costs to pay as well.

List of the Cons of Prop 69

1. Some people believe that it doesn’t go far enough to protect transportation funds.
One of the most significant criticisms of Proposition 69 is that the measure doesn’t protect all of the transportation fees which are collected through various means, such as the vehicle weight fee. Instead of trying to find ways to curtail spending in the state or encourage budget management, it fails to full protect all resources from being diverted to other budgets so that repairs to the roads and highways does not happen.

Although it does protect a significant chunk of the funds that the state raises, it does not prevent a reallocation of resources to balance the budget using funds from other areas. There are more than $1 billion each year that remain unprotected by Prop 69 that can funnel back toward the general fund.

2. It increases traffic congestion in the areas where the funds are used.
Evidence from other repair and maintenance projects across the state show that when roads receive the extra attention they sometimes deserve, then there is a related increase in the number of cars that the stretch of highway must serve. Even an average amount of road improvement in the state can result in a 10% increase in base traffic over short-term measurements and a 20% over the long-term life of the road.

That means any improvement to a road will cause it to see increased traffic levels, which then reduces the overall lifespan of the maintenance work performed. It is cheaper to patch roads or leave them as-is in some situations when there are heavy traffic levels impacting the local environment.

3. It ties the transportation funds to the fuel tax earnings that occur each year.
Alaska is the only other state besides California which has a definitive lockbox in place for transportation funds in the way that Proposition 69 works. Since 2010, a handful of states have amended their constitutions through ballot measures to enable this process, while 21 States allow for the dedication of revenues to transportation under broad terms. 27 states restrict revenues only to highways.

When an amendment to the constitution like Prop 69 passes, then it directly ties transportation revenues to the amount that is raised each year through the fuel tax. Although there is a benefit in the fact that revenues won’t be suddenly cut, the increased fuel economy of the new vehicles can erode the financial benefits of this idea.

4. Not all of the money protected by Prop 69 goes to roadway infrastructure.
Although this proposition requires that politicians spend the gas tax resources in specific ways, there are not as many limitations in place for how the lockbox is utilized in Sacramento. Proponents often say that one of the best benefits of this idea is that the money becomes usable for roadway projects, but that is only one feature of many where the funds can be directed by state politicians.

There is the possibility that no funds could go to California roads the way that this proposition is structured. Dollars can be spent on high-speed rail projects only, go to the development of bike lanes, or even protecting wildlife habitats when they are part of the overall transportation agency purview. It is up to each person to hold their elected officials responsible for their choices in funding even today with Prop 69 in place.

5. It does not change the structure of outsourcing that costs Californians money.
California only outsources about 10% of its overall transportation work to agencies outside of the political sphere. Most of the other states in the United States outsource at least 50% of this need because of the cost savings that are possible. Some companies that work with the legislature to improve the infrastructure have cost overruns that can top $500 million per year. This proposition might be a step in the right direction toward accountability, but it needs more teeth within its language to have a beneficial effect.

The only thing that does lockbox does is dedicate money towards specific transportation projects. There is no mechanism in place to ensure that accountability is present to stop wasteful spending.

6. This proposition even allows for unchecked spending.
Proposition 69 actually exams the transportation taxes and fees which were enacted only recently from the state spending limits. Propositions 13 and 4, in 1978 and 1979 respectively, were voter-approved measures that limited the spending of government operations in the state. Because of the language that is found in Prop 69, it effectively raises the cap on general fund spending by about $2 billion each year.

By exempting all of the expenditures, state spending is now allowed to grow to levels that would otherwise not be permitted through previous propositions.

7. It does not take into account the overall impact of taxation.
There might be many reasons why you would want to call California your home, but living there gets to be very expensive quite quickly. The top marginal income tax rate in the state is 13.3%, which is the highest rate in the country. If you make more than $1 million per year, then another one percent surcharge is added to your tax bill to provide for mental health services. When you add on the additional gas tax and vehicle fees, it can be a struggle for some families to make ends meet.

Proposition 69 might help to control spending in some ways, but it does not take into account the overall impact of taxation on each community or the state overall. There must be more accountability placed upon those who are responsible for creating the budget in Sacramento rather than creating more bureaucratic red tape to ensure that the money is spent appropriately.

8. Diesel sales taxes are exempt from this proposition.
Although some of the fuel taxes are protected through Prop 69, the Diesel sales taxes and the transportation improvement fees are not currently protected from being safe and off to the overall general fund. As long as these fees and taxes are still being collected by the state legislature, taxpayers deserve to have constitutional constraints in place that let them know with confidence how their money is being used.

Conclusion of the Pros and Cons of Prop 69

Proposition 69 provides a guarantee that the transportation budget, which is fueled by gas taxes in California, will be used to provide improvements to the state’s infrastructure so that roads receive the repairs and maintenance they deserve. It forces politicians to actually do their job instead of robbing one budget line to pay for another. Having marginal limits on what politicians can do with transportation funds is better than not having any restrictions at all.

This amendment does not solve the problem of overspending in the state. There are several ideas in the works or ongoing which have massive cost overruns, such as the high-speed rail project. It may be a step in the right direction, but this structure does not solve some of the core problems that the state faces.

These Prop 69 pros and cons help to provide safe roads, but some may feel that it does so in an embarrassing way. The very fact that a lockbox is necessary to prevent unwarranted spending or transfers of cash is a verdict on the work of each politician more than the voters who feel that such a structure is necessary.