JUL Y 13, 2009
CMR: 297:09
SUBJECT: . Adoption of a Resolution Opposing the Seizure by State Government of the
City of Palo Alto's Street Maintenance Funds
Staff recommends that Council adopt the attached resolution (Attachment A) opposing the
seizure of the City's street maintenance and transportation funds by State of California.
The State of California is facing an estimated $24 billion budget deficit and is proposing to seize
almost $1 billion in city and county shares of revenues from the gas taxes in the Highway Users
Tax Account (HUTA) to fund State transportation debt service costs in FY 2009-10 and an
additional $750 million in FY 2010-11 to help solve this budget shortfall.
The City of Palo Alto anticipates receiving approximately $1.1 million annually in gas tax
revenue. The current State proposal would result in 100% reduction of the City's gas tax
funding in FY 2009-10 and a 75% reduction in subsequent years. This will result in significant
reductions to the City's operating and capital budgets rebated to street maintenance. Street
repairs, transportation and street maintenance programs would be impacted by the proposed gas
tax reductions as follows:
FY 2009-10 Gas Tax allocations
Public Works Operations Division programs
Transportation Division programs
Annual Street Maintenance Program
(Subtotal of Planned Expenditures)
Total Reduction anticipated FY 2009-10
(assuming 100% gas tax revenue shortfall)
FY 2010-11 Gas Tax allocations
Public Works Operations Division
Transportation Division
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Annual Street Maintenance Program
Safe Routes to School Program
(Subtotal of Planned Expenditures)
Total Reduction anticipated FY 2010-11
(assuming 75% gas tax revenue shortfall)
In summary, reducing the City's gas tax funding will reduce or eliminate programs as follows:
Reduce road safety repairs including base failure repairs, crack sealing, pothole repair
and trip and fall sidewalk repairs performed by the Public Works Operations Division;
Eliminate the Planning/Transportation Division non-salary expenses used primarily to
fund the City's membership with the Santa Clara Valley Transportation Authority (VTA)
and/or reduction of the Planning/Transportation Division's transit, bike and pedestrian
related programs;
Reduce the annual street maintenance program funding by 40 percent resulting in the
paving of approximately 12 fewer lane miles; and
Eliminate the Planning/Transportation Division's safe routes to school capital program
In addition, this gas tax reduction could result in a decrease of road safety improvement plans
and increase the City's street maintenance backlog. Hundreds of pavement segments that would
otherwise receive preventative maintenance will likely deteriorate at an advanced rate and add to
the City's street maintenance backlog. The City will not be able to meet the local matching
funds for American Recovery and Reinvestment Act (ARRA) , Highway Safety Improvement
Program (HSIP), Safe Routes to School, and/or State Transportation Program (STP) grant
programs, thus increasing the backlog even further. Construction job losses are estimated at 100
or more per year, and this local construction industry decline may hurt local businesses and the
Upon Council approval, staff will submit this resolution to the Governor, the City'S State
Legislators, League of California Cities, the Chamber of Commerce, agencies and other
community groups affected by the seizure of gas tax used for the City's Street Maintenance and
Transportation Programs.
The adoption of the resolution has no fiscal impact. The City is at risk of losing approximately
$1.1 million gas tax funds should the State approve the proposal to seize all gas tax funds in FY
2009-10 and 75 percent (approximately $856,500) in FY 2010-11. The funds for the FY 2009"'_
10 Capital Improvement Program Street Maintenance project, PE-86070, would be reduced 40%
from $1.8 million to approximately $1.05 million.
The Planning and Community Environment Department's Transportation Division budget would
be reduced by $128,000 in FY 2009-10 currently allocated for transportation related programs.
The Public Works Department's Operations Division budget would be reduced by $164,000 in
FY 2009-10 currently allocated for road safety repairs.
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This is not a project for purposes of the California Environmental Quality Act.
Attachment: Resolution
Director of Public Works
... :;:
City Manager
Page 3
Resolution No - - Resolution of the Council of the City of Palo Alto Opposing
the Seizure by State Government of the City of Palo Alto's
Street Maintenance Funds
WHEREAS) the current economic crisis has placed cItIes under incredible
financial pressure and caused them to make painful budget cuts) including layoffs and
furloughs of city workers, decreasing maintenance and operations of public facilities) and
reductions in direct services to keep spending in line with declining revenues; and
WHEREAS) since the early 1990s the state government of California has seized
over $10 billion of city property tax revenues statewide) now amounting to over $900
million each year, to fund the state budget even after deducting public safety program
payments to cities by the state; and
WHEREAS, in his proposed FY 2009-10 budget the Governor has proposed
transferring $1 billion of local gas taxes and weight fees to the state general fund to
balance the state budget, and over $700 million in local gas taxes permanently in future
years, immediately jeopardizing the ability of the City to maintain the City's streets,
bridges, traffic signals, sidewalks and related traffic safety facilities for the use of the
motoring public; and
WHEREAS, the loss of almost all of Palo Alto's gas tax funds ($1.042 Million in
FY 2010 and $856,500 in FY 2011) will seriously compromise the City of Palo Alto's
ability to perform critical traffic safety related street maintenance, possibly including, but
not limited to, drastically curtailing patching) resurfacing, street lighting/traffic signal
maintenance, and signals, bridge maintenance and repair, sidewalk and curb ramp
maintenance and repair, drainage repair, as well as possibly eliminating important school
traffic safety programs; and
WliEREAS, some cities report to the League of California Cities that they will be
forced to eliminate part or all of their street maintenance operations while others will be
forced to cut back in other areas (including public safety and transportation staffing
levels) to use city general funds for basic street repair and maintenance. Furthermore,
cities expect that liability damage awards will mount as basic maintenance is ignored and
potential traffic accidents, injuries and deaths increase; and
WHEREAS, in both Proposition 5 in 1974 and Proposition 2 in 1998 the voters of
our state overwhelmingly imposed restriction on the state's ability to do what the
Governor has proposed) and any effort to permanently divert the local share of the gas tax
would violate the state constitution and the will of the voters; and
WHEREAS, cities and counties maintain 81 % of the state road network while the
state directly maintains just 8%; and
WHEREAS, ongoing street maintenance is a significant public safety concern.
The City's failure to maintain its street pavement (potholes filling, sealing, overlays,
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etc.), traffic signals, signs, and street drainage repair could result in increased traffic
accidents, injuries and deaths; and
WHEREAS, according to a recent statewide needs assessment, prepared by
Nichols Consulting Engineers sponsored by the League of California Cities, California
State Association of Counties and the County Engineers Association of California, on a
scale of zero (failed) to 100 (excellent), the statewide average pavement condition index
(PCI) is 68, or "at risk." Local streets and roads will fall to "poor" condition (Score of 48)
by 2033 based on existing funding levels available to cities and counties.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of
Palo Alto, as follows:
SECTION 1. The City Council hereby finds and determines that the foregoing
recitals are true and correct.
City Council
legislation that
unconstitutionally diverts the City's share of funding from the Highway Users Tax
Account (HUTA), also known as the "gas tax," to fund the state general fund.
SECTION 3. The City Manager shall send this resolution with an accompanying
letter from the Mayor to the Governor, informing them in the clearest of terms of the
City'S adamant resolve to oppose any effort to frustrate the will of the electorate as
expressed in Proposition 5 (1974) and Proposition 2 (1998) concerning the proper use
and allocation of the gas tax; and
SECTION 4. A copy of this Resolution shall be sent by the City Manager to the
League of California Cities, the local chamber of commerce, and other community
groups whose members are affected by this proposal to create unsafe conditions on the
streets of our City for pedestrians, bicyclists and motorists.
City Clerk
City Attorney
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City Manager