Will Kempton

Viewpoints: Change in gas tax will direct all revenue to transportation

Published: Saturday, Jul. 13, 2013 - 12:00 am | Page 11A
Last Modified: Monday, Jul. 15, 2013 - 7:22 am

There has been a flurry of recent news articles regarding the state's gas tax and a recent "increase" approved by the Board of Equalization that took effect this month. Unfortunately, most of the stories fail to mention the reason for the board's adjustment, and the public should have the facts as they consider this issue.

The recent increase was part of a 2011 legislative agreement to eliminate the gasoline sales tax and replace it with an equivalent level of excise or gas tax to produce the same amount of revenue. This pact was dubbed the "gas tax swap."

The difference between sales taxes and the gas tax is important because the gas tax – the cents-per-gallon tax – is constitutionally protected and can be spent only on transportation.

In the past, sales tax revenue from gasoline purchases was sometimes redirected for other purposes – contrary to the will of the voters who in 2002 overwhelmingly supported Proposition 42, a measure meant to protect those monies.

While somewhat complicated, the swap agreement ensures that all of the tax dollars paid at the pump are committed to transportation. And, the agreement is revenue neutral, meaning that motorists are paying no more today than they would have paid if the swap wasn't implemented.

This adjustment came about because sales tax receipts go up when the price of fuel is increasing, and gas tax revenue doesn't. So, in order to hold our state's transportation program harmless, the Legislature wisely included a mechanism that required the State Board of Equalization to regularly adjust the gas tax to keep pace with what the sales tax on gasoline would have contributed to the program. If the price of fuel goes down in the future, gas taxes will be reduced to reflect a lower projection of sales tax receipts that would have been collected had the swap not gone into effect.

No one doubts that Californians would like relief from high gas prices, and we all know the pain associated with filling our gas tanks at the pump. However, Californians also want more jobs, a stronger economy and reduced congestion on our transportation network. We all can relate to concerns over the higher cost of fuel and the taxes that contribute to that cost, but there is another side of the story.

Mobility is an essential element of a thriving economy. It is also an essential ingredient for a desirable quality of life; and just like every other commodity, mobility has a price tag. The fact is, for too long we haven't been paying the true cost of taking care of our aging transportation system. As a result, we need to make changes in the way we're paying for our mobility.

When the gas tax was first developed, it was the purest form of a user fee. Drivers paid commensurate with their use of the system. Unfortunately, that structure is no longer working. As fuel economy improves and more alternative fuel vehicles are added to the fleet, the number of gallons of gas consumed decreases. What's more, electric vehicles don't pay any fuel taxes since they use no gasoline – great for the environment, but problematic for our state's major transportation funding source.

Regardless of the gas tax swap, California has ended up with a revenue structure that does not adequately support the vital transportation program it's intended to pay for. While this may be a difficult topic for our state's policymakers, it is a critical problem that must be addressed.

California cannot have a strong economy without a strong transportation system. Delaying the repair of our existing infrastructure is irresponsible, and over the long haul, this state will pay a much larger price for that neglect.

As Dan Walters indicated in his recent opinion column, "Hefty fuel taxes buy poor roads" (July 3), we also need to be more efficient in the way we do business and the public needs to be satisfied that any transportation funding is being well spent. But eliminating or reducing these incremental "increases" in the gas tax, which may sound appealing at first, would only aggravate the existing transportation funding shortfall and further reduce the substantial benefits derived from a robust infrastructure system. Instead, we must develop a way to adequately and efficiently pay for our mobility needs, and for the sake of California's future, we can't afford to wait any longer.

Will Kempton is executive director of Transportation California, at transportationca.com.

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