Wasn’t The Fuel Tax Hike Intended To Build Roads, Not Houses?


California cities have a choice: They can comply with the new governor’s effort to increase homebuilding or they can continue to put up with lousy roads.

That isn’t exactly the way the new governor’s deal is going to work, but it is a loose if not generally accurate account of his proposal.

“Beginning July 1, 2023,” Gov. Gavin Newsom’s office announced on March 11, local streets and roads funds generated by the $52 billion motor fuel tax “may be withheld from any jurisdiction that does not have a compliant housing element and has not zoned and entitled for its updated annual housing goals.”

And here we thought the objective of the fuel tax hike imposed by Senate Bill 1 in 2017 was to repair California’s broken roads. Its authors, as Republican Sen. Patricia Bates says, mentioned nothing “about linking road repair funding to housing.” Yet the governor’s office is talking about using the tax to politically discipline local governments.

Of course the hurdles set by local governments unnecessarily restrict homebuilding should be taken down. But is threatening them with the loss of state funds the right way to achieve this? There are legitimate concerns about communities losing local control if they have to comply with state mandates.

When Sen. Scott Wiener introduced a bill last year that would have stripped localities of their authority to enforce zoning laws within a half-mile of a bus or train stop, “it failed,” says Chapman University professor and executive director of the Center for Opportunity Urbanism Joel Kotkin, “in large part because few cities wish to give up their zoning power.” He characterized Wiener’s bill as “top-down legislation,” a reminder, whether he intended it or not, of the sort of central planning we should be wary of.

“Meantime, some libertarian conservatives, champions of ‘small government,’ supported Wiener’s efforts to expand state power because the proposal would remove regulatory restraints,” Kotkin wrote in City Journal.

Of course “champions” of limited government fume when Washington dictates policy to states. If federal intrusion into state matters is out of bounds, then maybe so is the state capitol dictating to local governments.

At the same time, it’s reasonable to ask that if California’s housing crisis has become so disruptive, then isn’t overriding local control justified, especially if one believes local codes – prohibitive zoning, rent control, deliberately obstructive permitting, for a few examples – constrain liberty? Some argue that such controls are the equivalent of regulatory takings.

As for Newsom’s plan, Kotkin told PRI it “can’t come close to solving the problem.”

“Land costs, in part due to regulation, and huge fees assigned to housing are the real culprits,” he said. “NIMBYs simply stop things in existing areas; the greens and the regulators prevent expanded urban boundaries. . . . This problem can only be solved by the private sector. The state has too many obligations, including to its workforce, to do much about it on its own.”

Sidelining the private sector in multiple ways and over several decades has created California’s housing crunch. Allowing it to get back on its feet will do far more to relieve the stress than laying traps for local governments.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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