ADVOCATING FOR THE INDUSTRY


The protection of Senate Bill 1 revenues continues to be a priority for the construction industry and general contractor community five years after its 2017 passage.


A Status Check, Halfway Through the Legislative Session


BY FELIPE FUENTES


Fortunately for the construction industry, one- time spending on infrastructure lies outside of the Gann limit. As such, it has been of great interest to the Governor and Legislature to invest greater sums from the budget surplus in construction and infrastructure projects.


T


he 2022 legislative session brought significant concern from the employer and business community


given the fits and starts that the pandemic has had at the state capitol. With a solid supermajority and full


control of the constitutional offices of California, Democrats were expected to struggle in exercising restraint in their governance of the state during these unprecedented times. And now largely an endemic, legislators have begun to legislate other non-COVID-19 issues facing the state. Halfway through the legislative session, it’s time to see if those worries were truly warranted.


The State Budget With a record high budget of $300 billion, Gov. Newsom and the Legislature have had unique challenges in appropriating


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CALIFORNIA CONSTRUCTOR JULY-AUGUST 2022


so much unexpected revenue. Te most pressing and constraining challenge to our state leaders has been the Gann limit – a California constitutional law intended to limit growth in state and local govern- ment appropriations to match changes in population and cost of living. If state budget appropriations exceed


these thresholds, then money is supposed to be returned to the taxpayer. Fortunately for the construction industry, one-time spending on infrastructure lies outside of the Gann limit. As such, it has been of great interest to the Governor and Legislature to invest greater sums from the budget surplus in construction and infrastructure projects. Equally exciting has been the expected $38 billion of formula-based transporta- tion funding that is expected to be sent to California over the next five years from


the federal Infrastructure Investment and Jobs Act (IIJA). Under this measure, IIJA funding will supplement specified state projects such as: existing surface trans- portation, safety, and highway programs; new bridge replacement, rehabilitation, and preservation construction; electric vehicle (EV) charging network expansion; transportation infrastructure resiliency funding; and public transportation and transit improvements. Understanding that 2022 is an election year for most legislators, Democrats in both houses are looking to press worthy spending ideas given the woes brought on by rising inflation. After two years of COVID-19 shutdowns, the war in Ukraine, and supply chain shortages, policymak- ers are making the most of these excess revenues.


Dodging a Gas Tax Holiday The protection of Senate Bill 1 (SB 1) revenues continues to be a priority for the construction industry and general contractor community five years after its 2017 passage. Tis year the Newsom administration’s newest salvo on SB 1 dollars came in the form of a suggested “gas tax holiday” on the cost escalator built into SB 1 revenues. Having learned from the last gas tax


increase in 1994, Legislators and stake- holders built in a cost of inflation adjuster into the gas tax collection when SB 1 was adopted. Set to increase on July 1, 2022 by three cents per gallon, this amounts to approximately $523 million in increased revenues that otherwise would not have been collected had AGC and other stake- holders not lobbied the Legislature to reject the Governor’s proposal. Instead, the Legislature and Gov-


ernor are contemplating a cash rebate between $200-400 dollars to taxpay- ers and/or registered vehicle owners to help soften the blow of record high gas


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