With California squeezed by a suffering budget and a desperate
need for transportation improvements, the panel set out to find
a fiscally prudent yet entrepreneurial approach to transportation
funding and financing. By including panel members from all levels
of government, from other states, from the worlds of finance and
project delivery, this group was able to craft a set of recommendations
that are realistic, innovative and can immediately be put into
The recommendations are further explored in the following pages,
but can be summarized here as:
1. De-link the state's General Fund from the state transportation
fund. Begin the process of reform by pledging that this is the
last year of diverting Proposition 42 revenue.
2. Pursue "Hold Harmless", "Revenue Neutral" strategies
to tapping transportation funds for General Fund deficit
reduction. Should additional transportation funds be identified
over and above funds already identified in the proposed budget
(such as an increase in Proposition 42 receipts due to high gas
prices), these funds should be kept for transportation purposes.
3. Revise the Administration's proposal to convert federal
funding for local projects from accrual to cash and transfer
the cash to the General Fund. Leveraging these dollars for transportation
is good policy; leveraging these funds to pay previously approved
bond debt is not good policy, is a dangerous precedent, and
4. Explore refinancing of existing General Fund transportation
debt. Given today's interest rates, can Proposition 108, 116
and 192 debts be refinanced at a savings? If so, the incremental
savings should go to transportation.
5. Seek to monetize State Transportation assets and other facilities
to fund transportation improvements. Proceeds from the sale
and/or lease of state assets, particularly transportation facilities
and buildings, could be deposited in the State Infrastructure
Bank and leveraged to provide badly needed funding for transportation
6. Amend Caltrans' workload reduction plan in current and budget
years to provide for contracting out. With the pent-up demand
for projects, experienced construction and engineering staffing
are needed to keep these projects moving and ready them for construction;
otherwise California won't be ready-to-go when funds become
available. Given the amount of savings involved, there is an
opportunity to keep projects moving both through Caltrans and
7. Monitor and prepare for the infusion of funding resources
from the federal change in how ethanol in gasoline is taxed.
New tax provisions could mean as much as $400 million per year
in increased federal transportation returns to California. These
funds must be for transportation only and we must be ready to
8. Initiate a serious dialogue between the Administration and
the state's transportation community on how to attract private
funds to transportation improvements. States across the country
are leveraging their transportation funds, welcoming private
investment in their transportation infrastructure programs, eliminating
backlogs, and moving forward. California can and should do the
9. Support Federal Initiatives for Goods Movement and other
Mega Projects. Reauthorization of federal surface transportation
legislation is imminent. California potentially stands to gain
hundreds of millions in benefit under two new tax incentives
in the Senate version of reauthorization. Support the issuance
of Federal tax credit bonds by the Build America Corporation,
and support provisions for $15 billion in private activity bonds
for highway and intermodal projects.
10. Enhance accountability for project and policy outcomes.
It is not enough to report quarterly that a project is "underway".
Measurable criteria regarding a clear set of deliverables
is the very least expected by a public that has approved transportation
relief and now looks for urgently needed progress.