February 2026 Government Affairs

SCCA breaks down the latest government affairs updates impacting California’s heavy civil construction industry. This episode covers misinformation around a proposed mileage tax, the declining gas tax and transportation funding outlook, major federal environmental policy changes, and what they could mean for vehicle emissions and infrastructure planning. We also highlight key legislative updates, labor and compliance requirements, Caltrans and transportation developments, and broader economic trends affecting contractors across the state. 

Transcript

SPEAKER_01 0:06

Welcome to February's Heavy Civil Contractors Monthly Government Affairs Update, brought to you by the Southern California Contractors Association. I'm Lori.

SPEAKER_00 0:16

And I'm Scott. Let's jump right in. There's been a lot of noise lately around a so-called mileage tax in California.

SPEAKER_01 0:23

Yeah, a lot of misinformation circulating on social media and even some legacy media claiming the state is moving forward with a vehicle miles traveled tax.

SPEAKER_00 0:33

So let's clear that up. There is no proposal in the legislature to enact a vehicle miles traveled tax, also known as a road user charge or RUC.

SPEAKER_01 0:42

What is happening is research. Lawmakers are studying the issue because gas tax revenue is declining. Analysts estimate a drop of about$31 billion over the next 10 years.

SPEAKER_00 0:54

And that's a big deal considering transportation funding totals about$14.4 billion annually, with roughly$8 billion coming from the gas tax alone.

SPEAKER_01 1:04

Right. And that decline is largely due to more fuel-efficient vehicles and the growing number of electric vehicles on the road.

SPEAKER_00 1:11

Which brings us to AB 1421. That's the bill SECA supports. It simply continues studying how to address the funding gap. Again, no tax proposal.

SPEAKER_01 1:21

There have been informal discussions about a potential road user charge just for electric vehicles, since EV drivers don't pay the gas tax.

SPEAKER_00 1:31

EV owners do pay a road improvement fee about$121 annually, but to be clear, there's no legislative proposal for an EV only charge.

SPEAKER_01 1:40

Now, here's where things get interesting. A lot of the concern around gas tax decline ramped up after Governor Newsom's Executive Order N79-20, which mandates all new vehicle sales be zero emission by 2035.

SPEAKER_00 1:55

But the EV market may be cooling a bit.

SPEAKER_01 1:58

Exactly. With the federal$7,500 EV tax credit gone and HOV lane incentives eliminated, demand is shifting. EV sales dropped from 22.2% earlier in 2025 to 12.8% by the end of the year.

SPEAKER_00 2:14

And Ford even canceled an EV model, projecting a$19.5 billion loss tied to its EV investment. Bottom line, if a real road user charge proposal ever comes forward, SECA will evaluate it carefully. But right now, there's nothing to act on.

SPEAKER_01 2:37

Twitching gears to legislation, SB 310, a bill opposed by SCCA and several contractor groups, failed to move forward.

SPEAKER_00 2:45

That bill would allow employees to recover penalties directly instead of going through the Labor Commissioner. Without key amendments, it didn't have the votes to pass.

SPEAKER_01 2:54

On the labor side, employers should also note a new reminder from the Labor Commissioner's office. Annual notices on employee rights are required.

SPEAKER_00 3:02

And the timing is tight. The notice went out January 30th, but compliance is required by February 1 each year.

SPEAKER_01 3:09

Those notices cover retaliation protections, immigration-related practices, emergency contacts, and other labor law requirements.

SPEAKER_00 3:17

Let's move into trucking and federal policy. The US EPA ruled that California's emissions requirements for out-of-state trucks are unlawful.

SPEAKER_01 3:26

The issue is tied to the Commerce Clause. States can't regulate in ways that interfere with interstate commerce.

SPEAKER_00 3:33

So that decision could reshape how California approaches trucking emissions.

SPEAKER_01 3:37

At the same time, there's increased scrutiny on commercial drivers' licenses. A federal audit flagged about 17,000 licenses, some issued to individuals with expired immigration documentation.

SPEAKER_00 3:49

Hal Matters has more detail on that story.

SPEAKER_01 3:51

Another trend worth watching congestion pricing.

SPEAKER_00 3:54

Right. California uses it on some toll roads, but New York has taken it further, charging about$9 to enter Manhattan below 60th Street during peak hours.

SPEAKER_01 4:04

The goal is to reduce congestion, and they're reporting about an 11% drop in traffic, but it also raises questions about affordability.

SPEAKER_00 4:13

On a positive note, Joe Cruz has been named Vice Chair of the California Transportation Commission. SCCA supported his confirmation.

SPEAKER_01 4:21

Meanwhile, Governor Newsom proposed$200 million in state funding to offset the loss of the federal EV tax credit.

SPEAKER_00 4:30

But when you break it down, that's about$528 per vehicle, so likely more impactful for manufacturers than consumers. And in California, oil drilling permits ticked up slightly, 17 approved in 2025. Still low historically, but a small increase.

SPEAKER_01 4:58

On demographics, the Public Policy Institute of California reports that Idaho and Nevada are the top destinations for Californians leaving the state. This is huge. That finding allowed the Environmental Protection Agency to regulate greenhouse gas emissions under the Clean Air Act.

SPEAKER_00 5:19

Without it, the legal foundation for many vehicle emissions regulations, both federal and California specific, could be challenged.

SPEAKER_01 5:27

California has built multiple programs around that authority, including advanced clean cars and advanced clean trucks.

SPEAKER_00 5:33

And now the state is responding. SB 1266 would create a California-specific version of the endangerment finding to maintain regulatory authority over greenhouse gases.

SPEAKER_01 5:44

If it passes, expect regal challenges.

SPEAKER_00 5:47

Environmental groups are already pushing back hard. The Sierra Club called the repeal a reckless assault and plans to challenge it in court.

SPEAKER_01 5:55

Back on infrastructure, Congressman Vince Thong is requesting details on a$537 million change order for high-speed rail, which has already seen 597 change orders.

SPEAKER_00 6:07

And to close things out, some key stats. About 28% of California's population is foreign-born, and 44% of children have at least one immigrant parent.

SPEAKER_01 6:17

And finally, the legislature recognized February 22nd through 28th as Engineers Week. So a shout out to the engineers keeping California building.

SPEAKER_00 6:26

Well, that wraps up our update for today. Thanks for listening. We'll see you next month for more insights impacting California's heavy civil construction industry.