CA gas tax showdown looms

27 Aug, 2015 by James Poulos

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Democratic legislators in the state Senate have brought Californians closer to new hikes on the cost of driving their cars. But the committee vote represented little more than a first step in a complex, intense negotiation between Republicans, Democrats and the man trying to stay influential but above the fray — Gov. Jerry Brown.

Republicans have resisted Democrats’ preferred approach, but California’s business lobby has pressed both parties to embrace new taxes and fees. “Last week, business organizations such as the California Chamber of Commerce and the Silicon Valley Leadership Group said any deal should seek to raise at least $6 billion annually by raising gas and diesel taxes and increasing vehicle registration and license fees,” the San Jose Mercury News reported.

Part of the rationale for increasing fees, instead of simply dialing up gas taxes, has centered around the growing popularity of hybrid and electric vehicles in California — and the state’s interest in squeezing revenue out of every car on the road. “We have these Teslas that are being sold and they don’t pay any gas tax,” complained state Sen. Jim Beall, D-San Jose, as CBS Sacramento noted.

Gas in California has remained higher on average than out-of-state, thanks to cap-and-trade fees and the state’s unique environmental rules about the blends of gasoline that must be sold. Current state taxes include an excise tax of 39 cents, between 30 and 42 cents in sales tax, and 10 cents for the cap-and-trade levy, as Watchdog Arena observed.

Brown stays secretive

At a recent news conference that left some observers hungry for detail scratching their heads, Brown refused to hint at a revenue source for the improvements. “I’m not going to say where the revenue’s going to come from, how we’re going to get it,” he said. “We’ll get it done, but I’m not going to put all my cards on the table this morning,” Brown said, according to ABC 7 News.

Brown was joined at the appearance by Assembly Speaker Toni Atkins, D-San Diego, who signaled separately that negotiations would be tough. “It will be a bumpy road, but our constituents expect us to work together and figure something out,” she told the San Francisco Chronicle.

To date, the governor has not let slip whether he would support or oppose a tax hike to make up the difference.

Dueling proposals

That raised the possibility that Republicans might get their way, scrounging up revenue from savings and budgetary jujitsu instead of tax increases. But GOP legislators have been keen on siphoning revenue away from California’s cap-and-trade program, which Brown had availed himself of previously in order to fund construction spending on the state’s much-debated high-speed rail project. That has drawn strenuous objections from Sacramento Democrats.

The current proposal advanced by Assembly Republicans “would raise more than $6 billion a year by eliminating thousands of state employees and unfilled positions and reallocating existing state money, both from the budget and from other projects,” the Chronicle noted, while the plan pushed by Beall would raise billions with a suite of increased gas taxes and fees, including an “annual road access charge of $35 a vehicle,” according to the paper.

It was Beall’s bill that cleared its first committee test in the Senate this week, with Democrats besting Republicans in a party line vote.

For now, just a few broad outlines of an agreement have come into focus. According to the Chronicle, both sides reject the option of a “one-time fix, such as a bond measure that would pile more debt on the state. Any money raised must be earmarked only for road and infrastructure repair, and protected against being siphoned into other parts of the state budget.” Plus, legislators agreed that expenditures should be clearly identified and made public, with some kind of oversight and monitoring built into the arrangement.