Eleven months after leading a successful campaign against a ballot measure that would have repealed fuel tax hikes approved by the Legislature in 2017, Gov. Gavin Newsom is facing bipartisan criticism over his administration’s decision to cancel three road projects in the Central Valley and San Luis Obispo County.

Newsom has rejected the criticism that he had engaged in a “bait and switch” because he previously emphasized to voters in 2018 that at least 60 percent of the $5.2 billion generated annually by the 2017 tax hikes would go to roads and bridges, as specified in Senate Bill 1.

But his Sept. 20 executive order directed state transportation officials “to leverage the more than $5 billion in annual … spending for construction, operations and maintenance to help reverse the trend of increased fuel consumption and reduce greenhouse gas emissions” and to “reduce congestion through innovative strategies designed to encourage people to shift from cars to other modes of transportation.” 

Soon after, Caltrans – citing Newsom’s order – said the three road projects had been subject to “deletion” from a list of scheduled work at a savings of $32.5 million. It also said other road projects had been reduced in scope, creating a total savings of $61.3 million “to be held in reserve for priority rail projects and other priorities aligned with [the governor’s] executive order.”

Assemblyman Rendon says voters remembered ‘clear promises’

This led to criticism not only from Republican officials in the Central Valley and San Luis Obispo but from Assembly Speaker Anthony Rendon, D-Lakewood.

Gas taxes were raised “with some clear promises … that this money would be used … almost exclusively for roads and repairs,” he told the Los Angeles Times. “Now is not the time to go back on those promises.”

But Newsom said he would honor Senate Bill 1 exactly as it was written and said critics shouldn’t “conflate” his Sept. 20 executive order with the state’s “locked in” commitment to fix roads and bridges.

Nevertheless, Democrats in the Legislature have good reason to be wary about fallout from their support of the 2017 gas tax hike. One of their few setbacks in recent years as they have established lopsided majorities in the Assembly and Senate came in June 2018 when state Sen. Josh Newman, D-Fullerton, was recalled easily after a campaign that focused on his vote for the gas tax hike.

But the potency of the issue has been evident longer than that. In 2002, 69 percent of state voters backed Proposition 42, which made it more difficult for gas taxes to be shifted for use on general needs. In 2006, 77 percent of state voters supported Proposition 1A, which added even more restrictions.

Gas tax revenue diverted to general uses in 2010

Yet these measures were unable to block Gov. Arnold Schwarzenegger and the Legislature from raiding gas taxes again in 2010. Facing a huge budget deficit after the Great Recession had led to a nearly 20 percent drop in state revenue, the Republican governor and Democratic lawmakers and their lawyers came up with a plan to end state sales taxes on gasoline while sharply increasing excise taxes. Because the “gas tax swap” didn’t increase revenue, it was allowed to be enacted on a simple majority vote.

And since there were far fewer restrictions on gas excise taxes than gas sales taxes, lawmakers were able to take $1.8 billion in annual gas excise revenue for general uses.

Senate Bill 1 in 2017 eliminated the law setting up the tax swap.

Senate Bill 1, passed last year, raised the base excise tax on gasoline by 12 cents per gallon. This initiative would require a majority of voters to approve any increases on the taxes on gas – and it would apply retroactively. 

“This is a message to the millions of forgotten Californians ignored by the Sacramento political elite, help is on the way,” Republican gubernatorial candidate John Cox said in a written statement. “Let this also be a message to every special interest in Sacramento, we’re coming for you. You can outspend the people, but you can’t outvote the people, because there are more of us than there are of you.”

Cox worked with other Republican leaders in organizing and providing funds for the repeal effort.

Democrats in the state argue that the higher tax on fuel is needed to fund repairs to crumbling infrastructure in the state, while conservative opponents note that Californians are already highly taxed and that it’s unnecessary spending – like the long-plagued bullet train project – that prevents funds from reaching road repairs.

“The gas and car tax hikes will cost the typical family of four $700 more per year in higher taxes, but the roads will not get fixed because the politicians will continue to divert the funds as they always have in the past,” Carl DeMaio, chairman of Reform California and a leader of the Gas Tax Repeal campaign, explained in a statement.

For Gov. Jerry Brown, a repeal would be a major blow to his budget and legacy as he departs office, with the outgoing governor offering a blistering critique of the move.

“This flawed and dangerous measure pushed by Trump’s Washington allies jeopardizes the safety of millions of Californians by stopping local communities from fixing their crumbling roads and bridges. Just say no,” Brown said.

For Republicans nationally, having the repeal measure on the ballot is thought to be able to increase turnout and could be key in saving vulnerable congressional seats in the 39th and 49th districts, where longtime GOP representatives Ed Royce and Darrell Issa are retiring.

Surveys over the winter showed state voters were evenly split – within the margin of error. But a USC-Los Angeles Times poll posted last week showed 51 percent were opposed to the tax, 38 percent were in favor, and 11 percent had no opinion or didn’t expect to vote on the measure.

What’s changed? Fuel prices in California. They were relatively stable and low throughout 2017, dropping to an average of $2.93 per gallon of unleaded gasoline last July, according to AAA. But as of Tuesday, AAA reported the state average for a gallon of unleaded gas was $3.74 per gallon – a 28 percent increase in less than 11 months, with most of the jump this year.

A Politico story Monday said geopolitical trends made it likely that gas prices would continue to rise nationally and noted Democrats were eager to use the issue to hammer President Donald Trump and Republican congressional incumbents.

That dynamic may not work in California. Brown and Democrats had support of some GOP lawmakers and business groups, but the push for Senate Bill 1 was mostly a one-party affair. It was billed as a way to address badly needed road and infrastructure improvements by raising $52 billion over 10 years. The law added 12 cents per gallon to gasoline taxes and 20 cents per gallon to diesel taxes. It also increased vehicle registration fees by $25 to $175 and for the first imposed a $100 additional fee on the vehicle registration of electric vehicle owners, with the EV fee taking effect in 2020.

State’s reputation as anti-tax haven took hits in 2012, 2016

The November 2018 gas tax repeal is only the latest chapter in decades of ballot fights over taxes in California, most notably the 1978 approval of Proposition 13, which capped annual property tax increases and made it more difficult to increase or add other taxes. But the Golden State’s reputation as the birthplace and home of the national anti-tax movement was shaken in 2012 and again in 2016 when state voters approved raising income taxes on the very wealthy, with future sunset dates on the tax hikes.

Some of these voters may not be as enthusiastic about increasing regressive taxes like those on fuel. Signature gatherers said they found it relatively easy to gather the 900,000 signatures turned in to state officials last month, far more than the 585,000 they needed to qualify the measure for the November ballot. The effort was galvanized by conservative talk-radio hosts, particularly KFI 640 AM’s John and Ken in the Los Angeles region.

The ballot measure has been avidly embraced by the leading GOP candidates in the governor’s race – Rancho Santa Fe businessman John Cox and Huntington Beach Assemblyman Travis Allen. Congressional Republican officials have also latched on to the idea that having the gas tax repeal on the November ballot may improve the chances of the GOP holding seven California House seats targeted in November by the national Democratic Party and House Minority Leader Nancy Pelosi, D-San Francisco.

Until recently, Brown has mostly ignored the push to repeal the tax hike. But in a May 18 speech to transportation officials at Union Station in downtown Los Angeles, the termed-out governor blasted the “stupid” effort as  “devious and deceptive” – “nothing more than a Republican stunt to get a few of their losers returned to Congress, and we’re not going to let that happen.”

Supporters of the gas tax hike also have another tack. They are increasingly emphasizing what transportation projects are in the works at least partly because of the additional funding SB1 provides. In late April, the state announced that $4.3 billion of rail and bus service improvements would be part of the first wave of projects.