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Key takeaways from recent LAO publications, as of February 27, 2023

Our office will publish shorter, more focused budget analyses over the next few months. In most cases, rather than sending out an announcement for each publication, we will provide periodic updates with the key takeaways from recent pieces. All of our 2023-24 budget analyses to date can be found here.

The 2023-24 Budget: Proposed Reauthorization of AB 8 Vehicle Fees

  • Consider Whether “AB 8 Fee” Revenues Still Are Essential to Meeting State Goals. The Governor proposes extending certain vehicle fees that fund clean transportation activities that are scheduled to sunset at the end of 2023. We recommend that the Legislature weigh whether these revenues—which total roughly $175 annually—still are vital to helping the state pursue its clean air and greenhouse gas emission reduction goals, given the continued—albeit modest—tax burden they represent for California vehicle owners.
  • If Fees Are Reauthorized, Consider Highest Priorities for Funding. Much has changed since the AB 8 fees were last reauthorized in 2013. Should it choose to extend them, we recommend the Legislature consider its highest-priority goals for the associated funding, including potentially revising existing programs, supporting a different mix of clean vehicle efforts, or using the funds for other budgetary priorities. The Legislature could also consider restructuring the fees, such as to charge variable fees based on a vehicle’s value or to also apply the fees to heavy duty vehicles.

The 2023-24 Budget: Proposed Fund Shift for CHP and DMV Capital Projects

  • Governor Proposes Switching Capital Outlay Projects from General Fund to Lease Revenue Bonds. This would affect a total of seven projects for the California Highway Patrol and Department of Motor Vehicles in 2023-24, totaling $332 million.
  • Does Not Identify Which Fund Source Would Be Used to Pay Debt Service. This lack of specificity is problematic because both potential fund sources—the Motor Vehicle Account and General Fund—present important tradeoffs.
  • Recommend Specifying Fund Source for Debt Service. We find the Governor’s proposed shift to be reasonable given the General Fund condition. However, we recommend the Legislature provide clear direction regarding which fund source to use for debt service payments after weighing the associated tradeoffs.
This article was released by the Legislative Analyst’s Office.