How to Replace the Gas Tax Law if its Repealed

gas prices 2Before the SB1 gas tax, fuel prices in California were already among the highest in the country with State excise taxes at the pump, and State sales tax at the pump, being among the highest in the country. With Californians also bearing the costs associated with compliance with various State environmental regulation laws, Californian’s are paying as much as $1 more per gallon than most folks in the country as all those costs trickle down to the consumer and are hidden within the posted price of fuel at the pump.

In November 2017, as a result of the SB1 gas tax that was passed by our legislature, but never approved by the voters, California’s base excise tax on gasoline went up 12 cents, increasing the total to 30 cents a gallon. Also, the diesel excise tax rose 20 cents, increasing it to 36 cents a gallon, with even more upward adjustments for inflation starting in 2020. The legislative bill SB1 for transportation Infrastructure funding has been projected to raise $52 billion over the next 10 years for infrastructure projects, and the recently passed Proposition 69 now protects the SB1 taxes just for infrastructure.

With the expected successful repeal of the SB1 gas tax in November, the real carrot will be next – a new initiative to REPLACE SB1. That next bill will designate that all current State excise taxes on fuels at the pumps, State sales tax on fuels at the pumps, and new car sales taxes, MUST all go to infrastructure, with NONE going to the general fund.

Fuels consumption for California’s 35 million registered vehicles in 2016, of which more than 90% were not Electric Vehicles (EV’s), was 42 million gallons per DAY of gasoline and 10 million gallons per DAY of diesel.  A total of 52 million gallons of fuel daily sounds like a lot of fuel, but it’s only about 1 plus gallons per day per vehicle, resulting in refueling requirements every week or two.

The California Energy Commission shows that California fuel consumption is at the highest level since 2007. The good news is that drivers’ are now using less fuel than they’ve used in the past, but the bad news is that new car sales have been in excess of 2 million per year over the last 3 years, that have been netting MORE vehicles each year onto existing roads to join the 35.3 million registered vehicles we had in 2016. New car sales for 2018 are projected to also exceed 2 million which will also net more registered vehicles.

Key features of the next new initiative, a REPLACEMENT bill that will add NO new transportation taxes at the pumps, to a repealed SB1, would be:

  • 100% Lock Box on Existing Gas Excise Taxes: The measure would dedicate 100% of the State excise and sales taxes on fuel at the pump, to road maintenance and improvement contracts (no staffing costs, it has to be actual concrete and asphalt!) Roads must be the only use for gas tax funds.
  • New Car Sales Tax: The measure would dedicate 100% of the existing sales tax on the purchase of new cars to regional infrastructure maintenance and expansion. Interestingly, State sales taxes on new car sales, which have been in excess of 2 million per year, has generated more than $20 billion of revenue for the State per year.
  • Efficiency Reforms: The measure would enact competitive bidding versus the current CALTRANS bureaucratic monopoly they now have on all projects, and other efficiency reforms to ensure that infrastructure funds are properly spent.

Voters never had a chance to vote on the SB1 tax, but voters will get a chance to vote on the replacement bill, The Road Repair Accountability Initiative –in a future election, once the gas tax hike is repealed this November. The replacement bill will provide more dedicated dollars for infrastructure per year, and every year thereafter, without any new fuel taxes at the pumps.

ounder of PTS Staffing Solutions, a technical staffing agency headquartered in Irvine

This article was originally published by Fox and Hounds Daily