California Faces Huge Transportation Challenges in '04

By The Transportation Leadership Network

The new year begins with transportation funding in the crosshairs in Sacramento and Washington.

The California Department of Finance has proposed using a complex bookkeeping scheme to divert $800 million in federal dollars away from local transportation projects and into the State General Fund. This scheme is of questionable legality and sends the wrong message to Washington about California's priorities at a time when transportation reauthorization decisions are being made.

No funding for transportation projects

When it comes to new transportation projects, California is essentially flat broke. The California Transportation Commission, which is doing its best to make every dollar count, has been forced to stretch out the three years of projects in the current State Transportation Improvement Plan over a five-year period. No money is available for a new STIP.

The Department of Finance is also proposing to eliminate the Traffic Congestion Relief Program. TCRP projects that are a priority with local agencies would have to compete for STIP dollars. Since the STIP well is dry, these projects would either have to be scrapped or knock out other projects already in the STIP. While there is a legitimate question whether it would have been better to put more money into the STIP rather than legislatively earmarking projects, to dump the TCRP projects now, without transferring the money to the STIP, would create a fiscal nightmare for transportation.

Hundreds of millions of dollars would be wasted in having to shut down projects already underway and literally billions of dollars could be siphoned away from transportation. The 2004 Proposition 42 funding would be an obvious first target.

The future of TEA-21

Federal Transportation Reauthorization is also in limbo. TEA-21 has been extended through February, but it still remains to be seen whether a consensus will emerge on revenue sources to allow Congress to pass a viable bill that approaches the $375 billion, six-year package proposed by House Transportation and Infrastructure Committee Chair Don Young and Ranking Member Jim Oberstar. The fate of reauthorization may well linger until after the November election.

Ethanol tax

Ethanol mandates also pose a threat to transportation funding, since ethanol is taxed at a lower rate than gasoline and a portion of the ethanol tax does not go into highway accounts. Sen. Charles Grassley, Chair of the Senate Finance Committee; and California Congressman Bill Thomas, Chair of the House Ways and Means Committee, apparently reached an agreement that would have restored much of the funding to the highway account, but that deal is hung up awaiting agreement on a broad energy bill and reauthorization. If there isn't a fix soon, California will see a drop in federal transportation funding of about $600 million a year as a result of the new ethanol mandates.

Transportation projects are vital

"Every bit of progress we have made during the past several years in making transportation a priority in California is threatened," said Transportation California Chairman Bert Sandman.

"Transportation is absolutely vital to rebuilding California's economy," he added. "Not only does the work we do create construction and other related jobs, it also assures that the state will have the ability to move people and goods that is essential to sustain a growing economy.

"Instead of further retrenchment on transportation, Transportation California has proposed that the governor and the Legislature move to utilize a portion of the $15 billion in bonding authority being placed before the voters to repay more than $2 billion in existing debt from the General Fund to highway accounts.

"It is critical that the business community, organized labor, elected officials, transportation agencies and the construction industry stand together and let the governor, the Legislature and our congressional delegation know that shortchanging transportation is not an option."

The article was submitted by The Transportation Leadership Network, which is sponsored by Transportation California, a non-partisan, non-profit public-interest organization.

By Joseph A. Maraccini and Garland Self

In his State of the State address, Gov. Schwarzenegger underscored that jobs are the lifeblood of California and that worker's compensation needs to be reformed to promote job growth within the state.

The Bay Area Chapter of the Sheet Metal & Air Conditioning Contractors' National Association and the Sheet Metal Workers International Association Local 104 have seen the dramatic impact the growing burden of worker's compensation has had on the construction industry. As a result, we stand firmly behind the governor's call for aggressive reform of worker's compensation by March 1.

Bay Area contractors have been particularly hard hit by the rising cost of workers' compensation, which has tripled from 2000 to 2003. Many businesses, including contractors and construction companies, are failing or fleeing to avoid being crushed under the weight of rising employment costs. But that's just the tip of the iceberg. To offset rising workers' compensation costs, companies are seeking other ways to cut overhead, including hiring unskilled or undocumented workers and taking shortcuts on regulated safety procedures. Substandard training and inadequate safety not only raise workers' compensation rates for the entire construction industry, but they also impact the taxpayer when uninsured workers and others seek state-funded medical treatment for their injuries. These are the hidden costs of rising worker's compensation that will exact a higher price from state government in years to come.

SMACNA and SMWIA 104 have been working together to promote quality workmanship and higher safety and construction standards throughout the sheet metal industry. However, no matter how much individual contractors or companies focus on safety, it's the insurance companies that establish the rates for worker's compensation based on accident statistics and industry averages. The burden of skyrocketing workers' compensation premiums falls to union contractors, rather than to non-union shops that employ untrained, often undocumented, non-union laborers willing to work for less. What's worse, the end result is often substandard sheet metal installations with ventilation flaws that promote toxic mold and other health-related problems. It's a vicious cycle that will continue to drive workers' compensation and medical insurance costs higher.

We applaud the governor's commitment to rein in skyrocketing workers' compensation costs. If the California economy is going to recover, we need to lower the cost of employment and make California a safe, sane place to work and do business.

Maraccini is the financial secretary and treasurer of SMWIA Local 104. Self is president of Bay Area SMACNA.