Crushing Blow to Local Jobs and California's Economy
By Paul McIntosh, Executive Director
pmcintosh@counties.org
The Budget Conference Committee took action yesterday to raid local transportation revenues with devastating consequences for job loss and economic recovery in the state. The action would “take” $986 million of the local share of the gas tax from the Highway User Tax Account (HUTA) to pay for general fund bond debt service in Fiscal Year 2009-10. The Conference Committee also took action to redirect $745 million of the local share in Fiscal Year 2010-11. To be clear – this action does not include paying back these monies to cities and counties. Further, there is a shared concern with the cities that this will result in a permanent loss of this local portion of the gas tax.
In addition, the Department 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 lay-offs 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. 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 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.
The Budget Conference Committee held hearings all week and managed to get through the entire agenda. While they took action on numerous reductions, there are many large items – including Proposition 1A – where no action was taken and remain open for further discussions to occur next week. The Conference Committee rejected very few of the Governor’s proposals, but did act to reject the elimination of Cal Grants, the elimination of CalWORKs, and the reduction to child welfare services funding. Please see today’s Budget Action Bulletin for detailed information.
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