Gas Taxes

In the Middle of a Severe Recession, California Prepares To Raise Its Gas Tax to 50 Cents a Gallon

The Golden State has the highest gas tax in the nation, and one of its worst-performing highway systems.

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In the middle of a severe recession, the California state government is doing what it does best: raising taxes.

On July 1, the state's motor fuel excise tax will rise by 3.2 cents to 50.5 cents a gallon. That heavily regressive levy secures the Golden State's status as the nation's top taxer of gasoline. This coming increase—the third in four years, according to the Los Angeles Times—is the first time the tax will go up as the result of an automatic inflation-adjustment mechanism added in 2017.

That law requires that every July, beginning this year, the state's gas tax rate be adjusted to match any change in overall consumer prices, as measured by the California Consumer Price Index (CPI).

Inflation rates have plummeted around the globe during the pandemic, and California is no exception. The California CPI shows an overall decline in prices between February and April 2020, according to the latest figures published by the state's Department of Industrial Relations.

But that decline comes a little too late for the state's drivers. While California's economy is being ravaged by COVID-19 and the related shutdowns of businesses, the data the state relies on to calculate its gas taxes are coming from rosier times.

The 2017 law specifies that the tax's first inflation adjustment be based on the changes in the California CPI from November 2017 to November 2019. Because prices went up about 6 percent over that time, the gas tax is set to increase by the same amount.

That's prompted a group of Republican legislators to propose suspending the gas tax increase.

"Unemployment continues to rise and all the ways California was unaffordable prior to the pandemic still exist—suspending the gas tax increase is the least that could be done," Assemblymember Marie Waldron (R–Escondido) told the Los Angeles Times.

Democrats have dismissed the idea of delaying the tax increase, arguing that the state needs all the money it can get for roads at a time when tax revenues are falling across the board.

Twenty-two states and the District of Columbia index their gas taxes to inflation. The idea has some sense to it, says Baruch Feigenbaum, a transportation expert with the Reason Foundation (which publishes this website), but it should come with some flexibility in tough economic times.

"In the middle of a recession, folks have less money to spend, the economy is in bad shape," he says. "Any increase in taxes is just going to take money out of people's pockets."

Feigenbaum adds that California's gas taxes are already too high. In addition to being the highest in the country, the state's 50 cent excise tax is also double the average state gas excise tax.

Despite its high tax rates, California ranks 43rd in the Reason Foundation's 2019 measurement of state highway performance.

"The state is just so mismanaged when it comes to roadways," says Feigenbaum, citing excessive labor and environmental rules as some of the reasons California spends so much for such little return. Addressing those underlying issues, he says, would allow the state to get by with lower gas taxes in general, making any inflation-adjusted increase much less burdensome.

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  2. Those trains need money now that the Donald has cut the purse strings.

  3. When I moved to New Jersey in 2016, I was stunned to see gas prices of $1.55 a gallon, at a time when prices just across the river were anywhere from $1.95 to $2.25 a gallon—and more like $2.45 to $2.65 a gallon in Minnesota, where I was living at the time. Cheap gas and all full-service into the bargain? What kind of paradise was this?

    Then a couple of years later, our wonderful state legislature hiked the gas tax by 23¢ a gallon, and overnight, our gas prices ceased to feel so luxurious. Did our roads improve after this hit to our collective wallets? The number of flat tires I’ve had to replace every year sure didn’t go down.

    Now I’m moving to South Carolina, where gas prices range from 20¢ to 60¢ a gallon cheapee, and the roads are nicer to boot. (Though the lower speed limits are obnoxious.) I hate pretty much everything about the Carolinas except the Blue Mountains, but I’ll take little blessings where I can get them.

    1. I’m sitting around bullshitting with you assholes instead of packing the moving truck in my driveway. What’s wrong with me anyway? -_-

      1. What’s wrong? You aren’t renting out that moving truck sitting in your driveway. Use it or rent it out!

        1. It’s mostly packed, honestly. I had to rent a 16-foot truck in order to tow my car, and I probably didn’t even need a 10-foot truck. My shit’s going to be flying all over the place as I careen through the Appalachians, and I don’t even care

          1. Didn’t need even a 10-foot truck in order to hold all my stuff is what I meant to say.

            1. Congratulations on leaving Jersey! And not paying an exit tax.

              Moving sucks. You have my sympathies. It’ll be over before you know it.

              Just don’t tell the locals, “Back in Jersey, we did it this way…”

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    2. I’m sure Carolinians are eager to see more blue states, especially from New Jersey, moving in and spurring on high tax “progressive” politics. Maybe after you “fix” the south you can all move to Alaska, the last state untouched by bue and the only one left with any space. You can even train the bears not to eat salmon, creating a truly blissful world of peace and harmony.

  4. That’s prompted a group of Republican legislators to propose suspending the gas tax increase.

    California Republicans are the political equivalent of a Libertarians anywhere else in the country.

    1. We can make that a nationwide phenomenon with unlimited and unregulated immigration into the United States. I am supremely confident that people from Latin America share our values of limited government, a generous welfare system, and common sense gun control regulations.

      1. Yeah, the first thing you like, limited
        government, does not go with generous welfare and ‘reasonable’ gun regulations, the second and third things you like.

  5. That’s prompted a group of Republican legislators to propose suspending the gas tax increase.

    If these Republicans wanted to have a say in public policy they shouldn’t be in California.

  6. The trouble with these taxes are they are not used to repair roads and bridges. They go to many other uses. Also, I believe the federal tax should be eliminated and let the states charge what they need for roads. The Davis-Bacon act needs to be repealed to lower cost of construction. We all know the feds don’t build roads , the money comes to Washington, is dolled out to states and paid to private companies to do the work. The taxes also go into the general funds of the feds and states. They are never earmarked for their proper use.

    1. I wonder what effect a law banning the diversion of use taxes and/or fees to the general fund would have. If all special taxes and fees had to be funneled into a fun earmarked for their purpose, would the process become more transparent and perhaps the public become less tolerant of new taxes, or would new assessments simply be directed to the general fund from the outset?

      1. One of my libertopia fantasies is that every single bill would have to include its own dedicated funding source.

        1. I agree, but I wonder how such a provision could be enforced.

          1. I don’t see any worse problem with enforcement than we have no requiring all funds be appropriated with funds from bills begun in the House. Yes, Trump’s wall is pushing that, and ObamaCare originated in the Senate as a gut-and-amend bill, but it’s generally been not a problem.

      2. I wonder what effect a law banning the diversion of use taxes and/or fees to the general fund would have.

        In CA we add such language to virtually every bill that gets passed, as our Legislature has a rather ostentatious history of ‘borrowing’ from the Save the Children Fund, which is then perpetually empty.

        Of course, we also always add the “except in emergencies, or when we really, really need it” clause.

    2. 59% goes for highway repair and public transit
      22% goes for enforcement and regulation (traffic cops, etc)
      3% goes for administration
      7% goes for debt payment
      7% goes for local law enforcement, General Fund, Department of Food and Agriculture, and Dept of Parks and Recreation.
      1% goes for other
      https://www.mercurynews.com/2018/07/01/gas-tax-where-does-the-money-actually-go/

      Higher gas prices reduces amount of driving and helps clean the air (we pay for that in medical bills) and reduces traffic fatalities, just as taxes on cigarettes lessen demand and improve public health (with a cost benefit). Less driving also means less greenhouse gas emissions, and less spent to deal with climate change.
      The IMF study found that fossil fuel corporations get over 5 trillion a year in public subsidies to pay for externalized costs, such as human disease (13 million killed a year by pollution), environmental damage, and global warming costs.

      So what we get with higher gas costs are the benefits of reduced driving: cleaner air, less climate change, fewer fatalities, less environmental damage.

      The pandemic revealed to us that heavily polluted cities (like Beijing, Delhi, and LA) all saw clear, clean air….and people could breath again! Also in California, traffic fatalities were down 50% with 30% fewer cars on the road…and driving was a lot more fun with no traffic jams and wide open spaces.

      So we have to look at all sides…..the less we drive (and I love to drive here in wide open Northern Arizona), the better off we and the earth are. True fact.
      As for driving that is necessary: mass transit, bullet trains, electric cars will reduce much of the damage done by fossil fuels and the externalized costs.

      1. It’s good that we have wise betters like yourself to tell us all why raising our taxes is a good thing and why a little inconvenience is good for us.

        Haha. You’re either a parody, or all the worst parts of a smug statist. You’re in the wrong place, homeboy. Fuck off.

      2. The pandemic revealed to us that heavily polluted cities (like Beijing, Delhi, and LA) all saw clear, clean air….and people could breath again!

        You know what else the pandemic and the riots revealed to us: that cities are shitholes full of criminals, violent thugs and racists, and that public transportation spreads disease. And that’s why people prefer to live in single family homes outside of cities.

  7. NJ and CA are in competition to be the worst state in the country.

    1. Don’t sell Andrew and Fredo Cuomo short!

    2. CA has nicer weather.

    3. Don’t worry, Jay Inslee is taking notes on how he can fuck WA up further.

      1. Jay Inslee is trying, but he’s just too dumb and unimaginative.

    4. Damnit, NJ is second to NOBODY!!!

  8. California’s going to need the money to pay for the “reparations” bill it just passed.

    1. In fairness, CA has a lot to answer for wrt slavery.

    2. Just checking…they still want monies from the Feds because the pandemic ruined their economy and not, say, their moronic policies.

      I’d wonder how “reparations” wouldn’t run insanely afoul of numerous laws. Hard to justify robbing from somebody who was not involved to give money to somebody who ALSO was not involved.

  9. Gas is comically cheap in the states anyhow. Anything to lessen the sprawl is welcomed, especially as anyone here (reading a libertarian minded rag) should be concerned so we can stop subsidizing suburbia.

    1. Right, because a low gas tax is a subsidy. Riiiiight.

      1. It is if you start on the wrong side of possession. We’re lucky they let us keep (I mean give us) anything at all.

    2. lol more like gas is expensive everywhere else because urban progs want it to be $10 a gallon so all the peasants have to rely on them for public transportation

      1. “so all the peasants have to rely on them for public transportation”

        Or not. See: New York City, coronavirus

        1. If you want more riders of public transportation, you want more people dying of corona virus and other transmissible diseases.

    3. Not taxing something to the point average people can’t afford it is a ‘subsidy’?

      Ok you fucking progtard.

    4. Why do you hate poor people?

    5. Gas is comically cheap in the states anyhow.

      And by “comically cheap”, you mean that it is heavily taxed, just not as comically taxed as it is in Europe?

      Anything to lessen the sprawl is welcomed, especially as anyone here (reading a libertarian minded rag) should be concerned so we can stop subsidizing suburbia.

      Whe stop there? Why not just send people who prefer to live different from the way you do to reeducation camps or Siberia? It’s what progressives and socialists like to do.

    6. Why do liberals hate the poor so much?

    7. wearingit
      June.15.2020 at 2:05 pm
      “Gas is comically cheap in the states anyhow…”

      Anyone who claims to know what the market price of any good ‘should be’ is a fucking lefty ignoramus.
      Like this fucking lefty ignoramus.

    8. Another slice of eirophilia. White Supremacists want to raise gas tax. Black people drive too. Black Drivers Matter. With the social u rest building in Canada especially among eskimos, those gas refineries in Alberta may be torched. No gas for you! says the Gas Nazi.

  10. california gonna california

  11. Stop. Voting. Democrat.

    1. Start voting Democratic Socialist?

    2. Start. Shooting. Them. Instead.

  12. and, as always in california, the poor will take it in the pooper. i can take the price gouge and it really doesn’t change my life at all. same with all the other of the many taxes that equate to death by a thousand cuts. the poor and hourly types take it in the teeth. someone making $12- 25 an hour REALLY feels these taxes. for those outside of the “golden” state in addition to about 8% sales tax we have EXTRA taxes on lumber, paint, carpet and pad, tires, computer monitors, TV’s, battery’s and probably stuff i haven’t even noticed. it PERPLEXES me as to why the lumps allow themselves to be tossed around again and again. taxes? we eat ’em like chocolate cake. the dopes bend over and take it like the dopes they are.

  13. Growing up in California, I remember maps with the Foothill Freeway route and estimated completion in the 70s. By the time I left, the rough and congested freeways were the regular carrot for passing yet another bond which then got used almost entirely for taking over existing lanes for HOV lanes or subsidizing the few remaining routes of public transportation. It’s really sad what’s been done to a previously great state.

  14. Fuck California!

    1. Too late – we’re already fucked.

  15. California is a lost cause. Let it fail and fail miserably, only then can it rise from the ashes. Or not. either way.

    1. Plate tectonics will eventually take care of the problem, probably both separating California from the rest of the US and pushing it up to Canada.

  16. Damnit, NJ is second to NOBODY!!!

  17. That law requires that every July, beginning this year, the state’s gas tax rate be adjusted to match any change in overall consumer prices, as measured by the California Consumer Price Index (CPI).

    Isn’t the gas price a significant component of the CPI?

  18. We’re not in the middle of a recession. The recession is over.

  19. If CA used all the money to support roads it wouldn’t be so bad, but they don’t.

  20. Forget it, Jake. It’s California….

  21. This is an excellent threat-straight out of a Gene Wilder movie. Let’s see them go through with it.

  22. Lay off of California. While it’s true we have some of the highest taxes in the nation, we excel at having some of the most littered and worse roads in the nation. Not only that our school system is one of the worse in the nation. So…take that.

  23. Well, since Newsom knee-capped the economy, the government is scrabmling for revenue that stupid son of a bitch removed.
    Oh, and it’s odd-on he’ll be re-elected.

  24. “California’s transportation problems will all be solved with our brilliant high speed rail project”!!
    / Retarded majority of Californians, circa 2010

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