California Bucks Convention with Gas Tax Increases, New Fees

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Infrastructure repairs, potholes included, are targeted with $52.4 billion that will be raised with gas and sales tax increases and electric car fees.

As previously reported* on Pothole.info, it seems as if raising funds to repair potholed roads by way of a gas tax is not politically possible. Measure after measure proposed by voter referendum and in state legislatures – not to mention anything on the federal level – have been rejected. The failed Proposal 1 in Michigan in 2015 and Amendment 7 in Missouri in 2014 are just two examples.

That said California has proven to be the exception to the rule. By a majority vote in the Democrat-controlled legislature the Golden State passed a measure to raise $52.4 billion in gas and car fees over a ten-year period. The money will be used to repair roads, bridges, highways, and culverts and will be equally split between state and local projects. Mass transit will receive $7 billion (13.4% of the total).

The backlog in deferred road maintenance projects in California, the place that defined car culture for the rest of America in the post-War period, is $59 billion on state highways and $78 billion for local streets and roads.

The taxes and fees stipulated in Senate Bill 1 that will phase in beginning January 1, 2018 are:

  • A gasoline excise tax hike of 12 cents per gallon (to a total of 30 cents/gal.)
  • A diesel excise tax increase of 20 cents per gallon (to a total of 36 cents/gal.)
  • An additional increase of the sales tax on diesel from 5.75% to 9.75%
  • Annual vehicle fees on all gas-burning cars ranging between $25 (for cars valued below $5000) to $175 for cars worth $60,000 or more

To address the matter of electric cars that use roads but don’t buy gas, a $100 annual fee will be levied against those drivers. This fee will be delayed until 2020 in a nod to that industry’s market-development phase.

California Governor Jerry Brown (D) says the bill will cost most of the state’s citizens an average of $10 per month. But there was opposition to the bill by legislators who argued that funds previously earmarked for use on transportation were diverted to other uses. Proponents of the bill counter-argued for a state constitutional amendment to prevent such misallocations, while a new state office will monitor fund misuse.

Will California’s bold move toward raising money for infrastructure repairs in direct user fees take hold elsewhere? The state has a robust, diverse economy that means citizens are relatively tolerant of these increased taxes. It is noteworthy this came through the elected legislature, not a referendum vote. Bloomberg News reported in March 2017 that 15 states ­–Georgia, Idaho, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Nebraska, New Hampshire, New Jersey, North Carolina, Pennsylvania, Rhode Island, South Dakota, Washington state, and Wyoming – are considering gas tax increases while many voices argue these fees disproportionately impact the working poor, people who live in rural areas, and transportation-dependent commerce in general.

 

*See also:

A Gas Tax Isn’t the Only Way to Fund Infrastructure https://www.pothole.info/2015/01/a-gas-tax-isnt-the-only-way-to-fund-infrastructure/

Do Commuter Tax Benefits and Low Gas Taxes Create More Potholes? https://www.pothole.info/2014/12/do-commuter-tax-benefits-and-low-gas-taxes-create-more-potholes/

Increase the Gas Tax – Or Monitor Vehicle Miles Traveled? https://www.pothole.info/2011/06/increase-the-gas-tax-or-monitor-vehicle-miles-traveled/

Seven Things You Should Know About Gas Taxes in 2010  https://www.pothole.info/2010/05/seven-things-you-should-know-about-gas-taxes-in-2010/