$500-Million Highway Program Is Proposed By Contractors

Brown administration officials, legislative leaders and the construction industry have opened discussions aimed at pumping as much as $500 million more into the state’s highway construction program without raising gasoline taxes, possibly through the issuance of revenue bonds.

The construction industry, hard-hit by the sharp reduction in highway construction and stymied by Gov. Jerry Brown’s opposition to a gasoline tax increase, is promoting the revenue bonds as an alternative.

A $200-million bond issue, repaid by gasoline taxes over a 20-year period, is being discussed. With matching federal funds, sources said, the bond issue could mean as much as $500 million in new highway construction over the next two years.

The proposal was originated by Bruce Roberts of Associated General Contractors, who said highway construction firms in California are being driven out of business by the highway cutback with tens of thousands of construction workers becoming unemployed.

It was laid before administration and legislative leaders Wednesday during a meeting in Assembly Speaker Leo McCarthy’s office. McCarthy and Business and Transportation Secretary Donald Burns were among those participating.

Assemblyman Jerry Lewis, R-Riverside, one of the participants, said he has bills pending in the Senate that could be amended to include a revenue bond issue.

A key issue – what Burns called “the $64 question” – to be resolved is whether there is enough construction in bid-ready condition to take advantage of any sudden transfusion of new money.

“It’s unclear,” Burns said, “whether we have enough projects ready to go.”

Burns said he will have a status report on pending construction ready by next week.

Legislation to increase the gasoline tax, now 7 cents per gallon, by 3 cents and raise an additional $300 million annually for highways, transit systems and local roads and streets passed the Senate last year but has been stalled in the Assembly because of Brown’s no-new-taxes decree.

McCarthy and Brown have told backers of the bill, bottled up in the Ways and Means Committee, that the bill would be vetoed if it reaches the governor’s desk.

McCarthy said Thursday, however, that he is interested in finding some means of financing additional highways without raising the gasoline tax.

McCarthy said he wants to explore means other than revenue bonds also, particularly those which capture the maximum federal highway money possible.

The revenue bonds are being discussed, sources familiar with the negotiations said, as a one-shot approach to relieving an immediate problem in the industry rather than a long-term approach to highway financing.

“It would be a band aid for an ailing industry,” Roberts, a former deputy state treasurer, said.

Inflation, a leveling off of gasoline tax revenues and the administration’s shift to a “maintenance and rehabilitation” highway program contributed to the sharp decline in highway construction.

The State Highway Commission last month approved an additional $409 million in construction, bringing the projected total for the year to $420 million.

But that is several hundred million dollars under the level of past years.

(Editor’s Note: This front-page story by Staff Writer Dan Walters appeared in the Sacramento Union May 14, 1976.)

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