Transportation Financing Opportunities for the State of California

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Transportation Financing Opportunities for the State of California


Significant investments will be required to maintain, operate, upgrade, and expand California's transportation infrastructure if the state is to retain its economic position in the global economy and accommodate a projected near doubling of the current population by 2040. At the same time, available funding for transportation will decline significantly over the next 15 years if the current transportation finance system remains unchanged. This report analyzes a range of alternative sources of revenue, as well as different finance options. The research is based upon reviews of existing literature, interviews with key stakeholders, and two statewide phone surveys. The facility-based sources considered were toll roads and lanes, truck-only toll lanes, privatized rest areas, and public-private partnerships (PPPs). The taxes and fees evaluated were increasing fuel taxes by a fixed amount, indexing fuel taxes to inflation, mileage-based fees, vehicle registration fees, vehicle license fees, weight-mile taxes for trucks, a statewide sales tax, and state general fund revenues allocated either for current expenditures or to pay off general obligation bonds. Each of the revenue and finance options was evaluated according to five criteria: (1) revenue generation; (2) ease of implementation; (3) transportation system performance; (4) equity; and (5) political feasibility.

California needs a multiphased approach that considers near-, medium-, and long-term options. In the near term, state leaders could look to options with relatively strong political appeal that require no new administrative apparatus to implement. Of the tax and fee options evaluated, voters were most supportive of raising annual vehicle registration fees if the rate varied according to the vehicle's emissions or fuel economy. In both the near and medium term, public private partnerships and tolled facilities have strong potential to help fund new infrastructure in certain locations.

Likely voters were open to the idea of private companies building and operating toll facilities, particularly with state oversight. Also, despite general antitax sentiments, 43% of voters supported increasing the gas tax by 1¢ per year over ten years. General obligation bonds could be a source of funds in the near term, though they do not generate any new revenues for the state, and they reduce the level of funds the government will have to spend for other state programs.

Long-term solutions that address fundamental changes in our transportation system and vehicle fleet will likely require significant shifts in attitudes and approaches.



Dr. Weinstein is an assistant professor of Urban and Regional Planning at San José State University. Her research and teaching interests in transportation policy and planning include transportation finance, pedestrian planning, and urban street design. She also works in the area of planning and transportation history. She has a BA from Harvard University, an M.Sc. from the London School of Economics and Political Science, and a PhD from the University of California at Berkeley.


Dr. Dill is an assistant professor of Urban Studies and Planning at Portland State University and the Assistant Director of the Center for Urban Studies at PSU. Her research and teaching interests focus on transportation and environmental planning, travel behavior, air quality, and transportation-land use interactions. Prior to entering academia, she worked as an environmental and transportation planner for government and nonprofit organizations in California. She has a B.S. in Environmental Policy Analysis and Planning from UC Davis, an M.A. in Urban Planning from University of California at Los Angeles, and a PhD in City and Regional Planning from the University of California at Berkeley


Dr. Goldman is assistant director for New Initiatives at the University Transportation Research Center, based at the City College of New York. His research interests include transportation finance and economics, regional planning and governance, transit planning and management, and infrastructure policy. He is a member of the TRB Committee on Transportation Economics, and holds a PhD in City and Regional Planning from the University of California at Berkeley.


Mr. Hall is a doctoral student and graduate research assistant in Urban Studies: Regional Science at Portland State University. His research interests include industrial location and economic development policy. His teaching interests include urban economics and community economic development. He has a B.S. from Willamette University, an MAS from Portland State University, and anticipates completion of his PhD in June 2007.


Ms. Holtzman is a Transportation Planner for Fehr & Peers Associates. She recently received a master’s degree in Urban and Regional Planning from San José State University and has a BA in Environmental Studies from the University of California Santa Cruz. She is particularly interested in alternative modes of transportation, and hopes to help increase the viability and use of transit in California.


Mr. Recker is a graduate student at Portland State University in the Master of Urban and Regional Planning program. His study interests include cost/benefit analysis of transportation systems, real estate development, and regional planning. Prior to studying at PSU, he worked for several years as a land use planner for the City of Long Beach. He received a BA in Geography from California State University Long Beach.


Ms. Goodwin has over 23 years of leadership experience in building consensus and in completing complex projects involving numerous parties on time and within budget. As Executive Director of the Santa Clara County Traffic Authority, Ms. Goodwin successfully delivered the $1.2 billion Measure A Highway Improvement Program, including building 18 miles of new Highway 85 and widening Highways 101 and 237. Since completing the mission of the Traffic Authority, Ms. Goodwin has been principal of Apex Strategies, counseling and assisting public agencies and private parties in favorably positioning their projects and programs with the community and the media. Strategic Plans, Expenditure Plans and community outreach programs for transportation, water and land use issues are her specialty. Ms. Goodwin is recognized statewide and nationally as an expert and innovator in the field of community participation, strategic planning and sales tax programs. Her 24 years of professional experience include political campaign management, marketing, and organization and government management.

October 2006
Government funding
Highway user taxation
Toll roads



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