The California Transportation Commission heard a budget and fund-estimate update that shows a sizable reduction in gas-excise-tax revenues in the governors January budget proposal, and directed staff to delay the formal five-year fund estimate until the commissions August meeting so it can reflect any changes in the spring budget process.

The slide presentation by CTC staff said total excise-tax receipts for the state highway account are estimated to fall from roughly $2.5 billion to about $1.8 billion next year in the governors projection, chiefly because the administrations preliminary calculation for the replacement price-based excise tax dropped from 18 cents a gallon to an estimated 12.5 cents per gallon as pump prices fell. That reduction, staff said, leaves roughly $325 million each for the STIP and for local streets and roads and about $89 million for the SHOP program in the coming year under the administrations working numbers.

CTC staff stressed these are administration estimates and the Board of Equalization will publish the official excise-tax true-up before March 1. To avoid adopting a fund estimate based on an early number that may be revised, staff recommended and the commission approved a schedule that moves final adoption of the 2016 five-year fund estimate to the CTC meeting on August 26, 2015, 11 days after the statutory August 15 deadline to permit incorporation of any budget changes from the May revise and the final budget.

Why this matters: the fund estimate sets the capacity the commission and Caltrans use to program capital projects statewide. A substantial reduction in excise-tax receipts would shrink available programming capacity statewide and at the local level, and complicate project delivery plans that depend on multi-year revenue forecasts.

Key budget details discussed

- Caltrans overall budget in the governors proposal was shown at about $10.5 billion for the coming fiscal year, with an increase of roughly $97 million in state operations primarily for negotiated salary and benefit adjustments. Staff said roughly three-quarters of that $97 million reflects negotiated compensation and benefit changes. The presentation said Caltrans expects ongoing reductions in capital-outlay staffing unless revenues materially improve.

- The budget proposal included programmatic requests the department highlighted: a multi-year appropriation request of $9 million to support a road-usage-charge pilot; about $12 million to accelerate greening of the Caltrans fleet; and a $3 million/25-position increase in PID (project initiation document) capacity to help sustain project delivery.

- Staff noted that the excise-tax reduction shown in the governors budget is an estimate based on current pump prices and the administrations calculation; the Board of Equalizations final number (required by law) will be available before March 1 and will be reflected in the fund estimate process.

CTC schedule and next steps

CTC staff laid out a calendar that begins with draft assumptions to the commission in March, adoption of updated assumptions in May, a draft fund estimate in late June, and the commissions final adoption of the fund estimate at the August meeting. Commissioners approved the proposed schedule adjustment to allow the fund estimate to reflect May-revise budget developments.

Context and caveats

Commissioners and staff repeatedly emphasized that the specific dollar figures in the governors presentation are estimates and that formal fund-estimate numbers will depend on the Board of Equalization and the final state budget. Staff said they will present refined projections to the commission in March and again in May as part of the formal fund-estimate process.

Ending

The commission set an adjusted timeline to complete the five-year fund estimate and asked staff to return with refined assumptions in March and a further update in May so the commission can finalize a fund estimate that reflects the spring budget actions and the Board of Equalizations final excise-tax determination.