1. California’s Infrastructure Crisis Transportation Funding Updated March 10, 2014

2. Neglected Improvements Are Staggering 2 California’s unfunded needs are through 2021. - California Transportation Commission. Statewide Transportation Needs Assessment 2011

3. Our Current Challenges Prop 1B Coming to an End Decline of Gas Tax Revenues and Purchasing Power Diversion of Existing Transportation Revenues Lack of State and Federal Solutions 3

4. The Fiscal “Cliff” 4

5. Industry Trend 5 Caltrans Project List: One Year Out Projection

6. And If You Think the Federal Government is Going to Help… 6

7. Political Obstacles Investing in Transportation Infrastructure Not High Priority Voters believe they are Paying Enough Taxes Skepticism High about Government Doing the Right Thing with Tax Dollars Few Political Champions 7

8. What To Do? Need is Substantial System Continues to Deteriorate Industry is Suffering “Coalition” Formed to Identify Solutions  Transportation California  California Alliance for Jobs  California State Association of Counties  League of California Cities  California Transit Association 8

9. Options Considered 1.Gas Tax Increase 2.New Statewide Bond Measure 3.Cap & Trade 4.Lowering Voter Threshold on Local Measures 5.Vehicle License/Registration Fee Increase 6.Diesel Excise Tax Increase 9

10. Why VLF? Extensive Voter Research Over the Past 2 Years Raising Additional Dollars Through an Increase in the VLF is a Fair and Equitable Concept Early Polling of the VLF Encouraging Little Support for Other Options 10

11. Gas Tax Options Support Opposition No Opinion Increasing the State Gas Tax by 1 cent per gallon each year for the next 10 years 41%55%4% Increasing the State Gas Tax by 5 cents per gallon 25%72%3% Increasing the State Gas Tax by 10 cents per gallon 11%86%3% 11

12. Declining Support for Lowering Voter Threshold to 55% 12 FavorOpposeNo Opinion November, 201245% 10% February, 201341%50%9% July, 201337%57%6% October, 201339%55%6% November, 201335%57%8% Would you favor or oppose a statewide ballot measure to allow local taxes to be approved by a 55% vote, rather than the current two- thirds vote requirement?

13. Bonds Support Opposition No Opinion Approving a $20B State Bond Measure 24%66%10% Approving a $10B State Bond Measure 35%53%12% Approving a $5B State Bond Measure 54%33%13% 13

14. VRF Registration Fee (May, 2013) Support Opposition No Opinion Increasing Registration Fees by $95 per year 11%86%3% Increasing Registration Fees by $65 per year 25%71%4% Increasing Registration Fees by $35 per year 54%43%3% 14

15. VLF Increase Support Opposition No Opinion June, 2013 (with conditions*) 49%44%7% August, 2013 (our ballot language) 57%39%4% 15 *Conditions: - Funds allocated to local streets and roads, and state highways - Funds dedicated to “Fix It First” - Revenue cannot be diverted by the Legislature for other purposes - Voter approval required for expenditure of local funds beyond a certain timeframe - Program requires annual audits

16. Transportation User Fee Increase VLF Advantages:  Progressive Fee Structure  Built-in Inflation Factor Dedicate Funding to Fixing Existing State/Local Roads, Improving Safety Hazards Portion of Funding for Transit 16

17. Transportation User Fee Constitutional Amendment Required (Statewide Ballot Measure) Could be Placed on Ballot by Legislature or Through Petition Qualifying Effort Needed Good Numbers Before the Trigger was Pulled on an Expensive Campaign 17

18. Transportation User Fee California Road Repairs Act Draft Measure Filed with Attorney General Nov. 18 th to Obtain Title & Summary Assess Annual California Road Repair Fee on all Vehicles, Excluding Heavy Trucks (over 10,000 lbs.)  Equal to 1% of each Vehicles’ Value  Phased in Over 4 Years in ¼% Increments  Trucks to Pay Increased Diesel Excise Tax to Cover their Share Annual Total Revenue Estimated at $3B/year (when rate reaches 1% in 2018 or nearly $25B over the first 10 years) 18

19. Transportation User Fee California Road Repairs Act New Revenue Allocation  25% to California Cities  25% to California Counties  40% to the State Highway Account  10% to Transit Fix It First  Maintenance and Rehabilitation, Replacement of Equipment, Repairing Potholes, etc. 19

20. Transportation User Fee California Road Repairs Act Title & Summary, Fiscal Impact Received on January 13, 2014 Official Language was Re-tested in New Round of Polling Decision was Made to Place Ballot Measure on Hold 20

21. Voter Sentiment 21 PROS: We need to keep up with road maintenance or it will cost much more to make repairs later. Any new revenue should be used only for repairs and should not be diverted for other purposes. CONS: There should be plenty of money for road repair if the money was just spent better. We can’t trust government to spend more tax money wisely – even for road maintenance. Now that we’re recovering from the recession is not a time to raise taxes.

22. Factors Leading to Decision Marginal Support from Prospective Voters Voters are Still Feeling the Effects of a Prolonged Economic Downturn Voters want Assurances that Existing Tax Dollars are Well-Spent Before they Dig Deeper into their Pockets Voters want to see Dedicated Transportation Funds Used for the Purposes Intended Concerns about Financing a Viable Campaign in the Current Political and Economic Environment 22

23. Our Challenge In short: Embarking on our Heaviest Political Lift  Working Harder to Negotiate Adverse Political Climate No “Silver Bullet” Solution  Combination of new Revenue Streams Only Viable Approach 23

24. The Best Opportunities Recapture Truck Weight Fees Advance Loan Repayments Increase Cap & Trade Funds for Sustainable Communities Program Implement VMT Pilot Approve a $5B Bond Program for Transportation Reform Measures: Better Accountability, Efficiency and Innovation 24

25. Recapturing Truck Weight Fees Truck Weight Fees Generate $940MM/yr. Currently Used to Backfill Transportation Bond Debt as Part of Legislative “Gas Tax Swap” Deal 3 Years ago Redirect Fees Back to the Transportation Program at least until Expiration of Prop. 30 Numbers are Strong – over 70% Support 25

26. Advance Loan Repayments Builds on Governor’s Proposal to Advance Repayment of $351MM Frees up $1.4B to $2.5B in Outstanding Loans No New Fees or Taxes General Fund Implications 26

27. Cap & Trade in 2014 Governor’s Budget Includes $850MM in Cap & Trade Funding  $300MM for HSR and Rail Modernization  $100MM for Grants to Reduce GHG Emissions Many Competing Interests Chamber Lawsuit Challenging Cap & Trade Carbon Tax Proposal Next Steps:  Work with Governor to Support our Plan  Participate in the Budget Process 27

28. VMT Pilot VMT may be the Long-term Solution If this is the Future Direction, Let’s Get Started 28

29. Bond Program Short-term or Interim Fix Consider for 2016 Ballot Debt Service Could be Provided by Modest Increase in VRF 54% Voter Support for a $5B Bond 29

30. Reform: Accountability/Efficiency Imperative Need to Increase Efficiency in Operations and Public Confidence in Caltrans and Other Transportation Agencies CalSTA-sponsored Comprehensive Review of Caltrans Completed California’s Transportation Infrastructure Priorities Effort Underway Will work with Governor and Legislature to Develop Package of Legislative Reforms Need Input from Industry and Stakeholders 30

31. Strategy Going Forward Inform and Educate the Public Work with Governor Cultivate Transportation Advocates in Legislature Build our Coalition Tell our Story 31

32. It’s Up To Us! 32

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