Fact Sheet AB 1874, Voepel
The Off Highway Vehicle Trust Fund was initially created as part of the Chappie-Z’berg Off Highway Vehicle Act of 1971. The original bill created a program to register Off Highway Recreational Vehicles that were not otherwise licensed for use upon highways. The proceeds derived from this new registration program were used to create the OHV Trust Fund. In successive legislative sessions the funding source for the OHV Fund expanded to include taxes on motor vehicle fuels that are consumed by OHVs while operating on public lands within the state, and later included taxes upon motor vehicle fuels that are consumed by highway licensed vehicles when they are operated off of the public highways. These fuel tax transfers are similar to transfers that take place for marine fuel taxes to the Boating and Waterways Fund and aviation fuel taxes to the Aeronautical Fund, etc. based on the established practice that motor vehicle fuel taxes are a “user fee” and that fuels that are consumed by uses other than upon a highway, should have the taxes paid on those fuels go to benefit that use.
The OHV fund has been administered by the Department of Parks and Recreation to provide safe and environmentally suitable locations for OHV enthusiasts to legally recreate with their Off Highway vehicles. Currently the Department of Parks and Recreation provides several State Vehicular Recreation Areas throughout the state and provides grants to local governments and federal agencies to maintain lands where OHV use is permitted. Grants are used to provide maintenance for areas as well as for law enforcement, safety programs, and restoration of habitat and soil disturbance caused by OHV use. The program has now been in place for 45 years and is considered a model for other states, many of which have created their own programs using California’s as a model.
During the challenging budget years earlier this decade, the legislature used a budget trailer bill (AB 95 of 2011) to divert the transfer of $10 million of fuel tax proceeds derived from off highway vehicle recreation use from the OHV Trust Fund and instead transferred it to bail out the General Fund, and it was generally understood that this amount would offset a portion of the General Fund appropriation that normally supports the Department of Parks and Recreation (DPR). Although AB 95 was a budget trailer bill, it went beyond making a single year, one-time diversion of these funds and instead made it a permanent annual diversion. As a result the OHV program is unable to fully fund their program and many rural local government OHV grants are only getting funded at a fraction of the needs to provide law enforcement, safety, and environmental restoration on lands within their jurisdictions.
Today the General Fund is in much better shape than it was in 2011, but transportation finance in California is in such bad shape that California increased the amount of motor fuel taxes by an additional twelve cents per gallon to maintain existing transportation infrastructure. This action would seem to have solved the off highway program funding shortfall but curiously the newly enacted fuel tax increase measure (SB 1 of 2017) calls for the OHV portion of the new fuel tax revenue to be diverted to the Department of Parks and Recreation instead of to the OHV Fund which would support the activity where the revenue was generated. Motor vehicle fuel taxes have always been held to be a “user fee” such that fuel consumed by vehicles upon highways is supposed to go to building highways, and fuels consumed in boats, airplanes, off highway vehicles and farm vehicles are likewise supposed to be allocated to funds that benefit those uses where the taxes were generated.
AB 1874 simply ends the orginal inappropriate diversion of OHV related fuel taxes at the end of the current budget year so that the $10 million of OHV fuel tax revenues will again go to providing support for the users that pay the user fee/fuel tax and in doing so AB 1874 will restore the public’s confidence that when they pay their taxes on motor fuels, the money is going to benefit the use that is being taxed. It is particularly appropriate to take this action at this time since the purpose of the original budget trailer bill that created this annual diversion of funds was intended to bail out the General Fund for a portion of the money from that source that is used to provide support to the Department of Parks and Recreation. It would seem that with the subsequent enactment of SB 1 last year that enough of the OHV generated revenue will be going directly to support DPR that this $10 million of OHV generated revenue is no longer required to offset General Fund support of DPR.
Finally it should be pointed out that the new SB 1 increase in fuel taxes faces a ballot challenge presumably in November of this year. One of the arguments presented by the proponents of this action is that much of the fuel tax revenue is diverted to non transportation-related purposes. Clearly this ongoing $10 million annual diversion of OHV transportation user fee revenue to general fund purposes clearly makes their point even though the language of SB 1 vaguely suggests that the diversion of the new tax revenue that goes to DPR can be used by the department to provide services to OHV or Boating programs. There was no similar language in AB 95 of 2011 that makes any reference that would suggest any nexus between the General Fund and providing support for a transportation related purpose. It would seem wise on many fronts to correct this inappropriate diversion of OHV tax revenues at this time.