California gas prices are rising due to inflation. Here’s what Newsom plans to do about it
Gov. Gavin Newsom Monday proposed suspending the gasoline and diesel fuel tax inflation-related increases expected in July – a plan that could save motorists money at a time when prices are rising at their steepest level in nearly 40 years.
Newsom’s budget said the scheduled increases in 2023 and 2024 could also be delayed “should economic conditions warrant it.”
Californians currently pay more for gasoline on average than any drivers in the country. The average price of a gallon of regular gasoline Monday was $4.656 cents a gallon, according to AAA, well above the national average of $3.304. The average price in Sacramento Monday was $4.64., and in Fresno, $4.532.
While taxes are not the sole reason for the higher prices, they are a factor. California’s per-gallon gasoline tax rose to 51.1 cents a gallon July 1, up from 50.5 cents. The diesel fuel tax is 38.9 cents a gallon, up from 38.5 cents.
When federal taxes and other taxes and fees are added in, a gallon of gasoline in California includes 86 cents for those costs.
The state tax increase is supposed to change each July along with the cost of living. That cost has been relatively small in recent years, but has been soaring in recent months. Nationally, prices were up 6.8% over the 12 months ending in November.
Newsom’s budget estimated that inflation would add 5.6% to the tax next year. The pause in the increase is expected to mean a decrease in fuel tax revenue by $523 million in 2022-23.
The administration said it would try to make up the difference for the local share of the money.
Republicans praised Newsom’s proposal. They’ve been advocating to hold of gas tax increases, citing the state’s financial health. The Newsom administration expects to bring in a $45.7 billion surplus in the next budget year.
Tax holiday and road building
Not everyone was pleased. “The governor’s proposal to suspend the annual inflation adjustment to fuel excise tax rates is nothing short of highway robbery. Years of neglect have placed our roads in the sad shape they are in today,” said Russell Snyder, executive director of the California Asphalt Pavement Association.
He called the proposal a “budget stunt” that’s “an insult to all Californians who care about accountability from our government and our elected representatives.”
The higher gasoline and diesel fuel taxes were authorized in the sweeping transportation plan detailed in 2017’s Senate Bill 1. The increases were aimed at raising around $5.4 billion a year for highways, bridges, transit and local roads.
Newsom’s budget said the state remained “on track” to reach the SB1 goal of having 98% of pavement and 90% of culverts in good or fair condition by 2027. California ranked 47th in the nation in “road quality” in the 2019 road rankings by U.S. News & World Report.
The budget said the state was “on pace” to meet its goal of repairing at least 500 more bridges.
The Federal Highway Administration in June listed 25,737 bridges in the state, and found 1,493 in poor condition.
Nineteen of Sacramento County’s 740 bridges were rated poor, with 329 called fair. Other poor ratings: Fresno County, 43; Stanislaus County, 54; Tulare County, 32; Madera County, 31, Placer County, 10, Yolo County, 12 and San Luis Obispo County, 27.
This story was originally published January 11, 2022 at 5:00 AM.
.jpg)