Gov. Gavin Newsom dropped a half-billion dollar bomb on the road-construction industry last week as part of his proposed state budget for 2022-23: A reduction in fuel-tax revenue devoted to transportation.

The reaction from CalAPA was swift and blunt. The association called the Democratic governor's proposal a "budget stunt" and "highway robbery" that undermines recent momentum made on fixing California's long-neglected roads and bridges.

The announcement was made on Jan. 10 as the administration unwrapped its proposed $286 billion state budget for the fiscal year that begins July 1. As expected, the budget reflects a state projected to have a ninth straight year of surplus tax revenue, and the governor outlined various features of the plan to address the continuing COVID-19 pandemic, housing, homelessness, school funding, a persistent state drought and wildfires. The on-line budget and supporting documents can be found HERE. The transportation summary of the budget is HERE.

But in the transportation section, the administration proposed a "pause" on a scheduled inflation adjustment that "is expected to decrease fuel tax revenues by $523 million in 2022-23 based on an estimated 5.6% inflation rate."

CalAPA immediately issued the following statement in response: "The governor’s proposal to suspend the annual inflation adjustment to fuel excise tax rates is nothing short of highway robbery. Years of neglect have placed our roads in the sad shape they are in today. Millions of Californians voted to demand action, and when we are on the verge of making meaningful progress the governor comes along with a classic budget ‘bait-and-switch’ to the tune of more than a half-billion dollars. The need to protect our transportation infrastructure is more critical than ever. This budget stunt is an insult to all Californians who care about accountability from our government and our elected representatives."

The reaction was widely reported in the news media, including in an article in the Sacramento Bee newspaper.

Other transportation advocates expressed similar concerns on an afternoon budget briefing hosted Jan. 10 by the California State Transportation Agency. During that briefing, outgoing Transportation Secretary David Kim sought to put a positive spin on the proposal, and touted some aspirational future projections about road repair work. The emphasis on "relief to consumers" no doubt will become a campaign talking point for a governor seeking re-election to a second term in November.

"In order to potentially lower the price of gasoline and diesel fuel, and provide some economic relief to consumers, especially as we approach Summer months when gasoline tends to be higher, the budget proposes to forgo the annual inflation adjustment to the per-gallon fuel excise tax rate that is scheduled to occur on July 1st of this year," Kim said on the briefing. "The annual inflation adjustment will resume by 2023-24 and there is flexibility built into the budget to delay the adjustment should economic conditions warrant." The pause is projected to decrease fuel tax revenues devoted to transportation by at least $523 million in the 2022-23 budget year, and likely more in future years.

Under questioning by CalAPA and others, CalSTA confirmed that the governor does not have the authority to reduce transportation revenues in this way and that it would need to be done by the Legislature, likely as part of the budget bill that will use the governor's budget blueprint as a template for Legislation that the State Constitution says must be passed and signed into law by July 1. It is projected that the pause could reduce the cost of a gallon of gas at the pump by approximately 3 cents, which critics note could hardly be noticed given wide price swings on gasoline and crude oil prices, a global commodity. The governor, who survived a bruising recall election last year, has been criticized for the high cost of living in California that shows up in housing prices, the grocery aisle and -- thanks partly to California-specific environmental regulations -- at the fuel pump. A fact sheet and graphic produced by the Western States Petroleum Association to put many of those fees in context is HERE.

"The anticipated revenue reduction," Kim said in response to a question, "would potentially be filled by state highway account funds. That is something the administration will examine closely."

The tax "pause" is a stunning development and comes just three years after a pitched battle was waged at the ballot box over Proposition 6, an initiative that sought to repeal the fuel taxes and fees that were part of 2017's Senate Bill 1, the $50 billion "Road Repair & Accountability Act." SB1 was touted as addressing decades of neglect of the Golden State's roads and bridges that saw them slip to near the bottom of the states in road-condition rankings. Forgoing hundreds of millions of dollars -- in effect, declaring "mission accomplished" despite ample evidence to the contrary -- will no doubt be the subject of heated debate in the weeks ahead in Sacramento.

The CalAPA Annual Meeting and Dinner, scheduled to take place Jan. 20 at the Jonathan Club in downtown Los Angeles, has been postponed until May due to a surge in COVID-19 cases in Los Angeles County that also resulted in the postponement of other major events.

In a notice sent last week to all CalAPA members registered for the event, the association said:

"On behalf of the CalAPA Board of Directors, thank you for registering for the CalAPA Annual Meeting & Awards Dinner, scheduled to take place on Thursday, Jan. 20, 2022 at the Jonathan Club, 545 S. Figueroa Street in Los Angeles. We regret to inform you that this event is being POSTPONED due to circumstances largely related to the recent surge of COVID-19 cases in Los Angeles County. The tentative NEW date for this event is Thursday, May 19 at the same location. All tickets and sponsorships purchased for the January event will be honored in May.

"The association understands and deeply regrets the disruption to you caused by this change, but the safety of all CalAPA members and their guests was paramount in this difficult decision.

As you may know, the CalAPA Annual Dinner is the premier networking event for the asphalt pavement industry in California, and for many years has been held at the elegant Jonathan Club in downtown Los Angeles. The CalAPA dinner has traditionally been scheduled to coincide with the annual Golden Beavers Awards Dinner, which has been held on a Friday night in January in downtown Los Angeles. Last year's CalAPA Annual Dinner was not held due to the COVID-19 pandemic. During the planning for this year's event, CalAPA staff has been closely monitoring guidance from local and state public health officials and also has been in constant communication with the venue. At all times, the safety and welfare of our members and their guests has been central to the event planning process. In recent weeks, a new and highly contagious COVID-19 variant has emerged in the United States, leading to sharp increases in COVID-19 case counts, hospitalizations and deaths, particularly in Los Angeles County. This has led to concerns expressed by many CalAPA members about the timing of this year's Annual Dinner. Also, the Beavers in recent days also announced the postponement of their awards dinner, which was set to take place on Jan. 21 this year.

"The CalAPA Executive Committee, in consultation with CalAPA staff, voted today to postpone the CalAPA Annual Dinner. The tentative new date for the CalAPA Annual Dinner -- Thursday, May 19 -- was selected to coincide with the rescheduled date of the Beavers Awards Dinner, which is now scheduled to take place on Friday, May 20. As mentioned above, tickets purchased for the CalAPA Annual Dinner will be honored in May. For those who would like a refund, please contact CalAPA at (916) 791-5044.

"We recognize that this change will create disruption in work schedules and travel plans, and for that we are truly sorry. We thank you for your support of the association and the industry during this extraordinary time, and we hope to see you in May."

Those Annual Dinner registrants who took advantage of the discounted room rates at the InterContinential Hotel near the Jonathan Club will need to cancel those reservations utilizing the e-mail sent to them by the InterContinental Hotel when they made their registration. Details on the rescheduled event, including lodging information, will be sent to members in a future communication.

The Los Angeles County public health department reported last week that COVID-19 deaths surpassed 28,000 in the county since the pandemic began in 2020, and that record high positive cases of COVID-19 have been reported. County health officials urged residents to take precautions to limit the spread of COVID-19. A recent announcement by the county is HERE.

CalAPA has cancelled numerous events during the pandemic, and converted others to "virtual" or in some instances "hybrid" virtual and in-person events. Other in-person events that have taken place have been done while following closely all public health guidance to ensure the safety of event attendees. The current surge of COVID-19 cases, largely blamed on a new Omicron variant that is circulating widely, is expected to follow a pattern observed overseas and dissipate quickly. The California Department of Public Health page devoted to the topic is HERE.

In-depth training on complying with a myriad of rules and regulations for contractors performing publicly funded public works projects is being offered to CalAPA members by Public Works Compliance Advisors.

The next scheduled classes are being held Jan. 25 in Sacramento (details and on-line registration HERE) and Feb. 3 in Corona (details and on-line registration HERE).

Each day-long seminar will cover common mistakes and pitfalls when calculating prevailing wages for certified payroll, as well as proven strategies for ensuring compliance and avoiding expensive penalties for non-compliance. The information is presented in an easy-to-understand, interactive format. The classes, which include lunch, are being presented by CalAPA associate member Public Works Compliance Advisors.

For additional information, click HERE to visit the company's website, or contact Michael McCoy at (559) 570-2158.

CalAPA is pleased to welcome its newest associate member, Ritchie Bros.

Ritchie Bros. Auctioneers, or simply Ritchie Bros., is an industrial asset disposition and management company, selling heavy industrial equipment and trucks to live and online auctions, and other transactional channels.

For more information, click HERE to visit the company website, or contact Territory Manager Juan Loza at (951) 423-4061.

REQUEST FOR INFORMATION (RFI) : An inquiry a contractor makes to a project owner,

typically in writing, prior to submitting a bid on a project. The RFI generally seeks additional

information or clarification on a specific aspect of the contract documents, plans or specifications.

Each week we highlight a key point or best practice of interest to asphalt paving crews, inspectors and others working in the field. We welcome suggestions. More tips can be found in our Asphalt Parking Lot Construction Checklist HERE.

COMPACTION: Check pavement temperature before compaction begins. Don't rely solely on an

infrared temperature gauge. Have a probe thermometer on hand to check the internal

temperature of the mat. The ability to achieve proper compaction requires a mat temperature of

175 degrees or greater. Do not let roller operators park equipment on the fresh mat while

compaction is ongoing.

"Great acts are made up of small deeds."

-- Lao Tzu

We hope you enjoy CalAPA's Asphalt Insider newsletter. We are committed to providing you with the most up-to-date information on technical issues, regulation, news, analysis, events and trends in California that is of interest to the asphalt pavement industry and our various agency partners. Click HERE to contact us with any comments or suggestions.

Sincerely,

Executive Director

California Asphalt Pavement Association (CalAPA)®