Continuing concern about fuel costs in California has state legislators pursuing fuel tax relief efforts.
California’s average diesel price is about 79 cents above the national average for a gallon of on-highway diesel fuel, according to AAA. The state’s average gas price is about $1.29 above the national average for a gallon of regular gas.
On Monday, Gov. Gavin Newsom opened a special session to address high fuel prices. The intent of the session is to pass legislation to authorize a price-gouging penalty on oil companies.
At the same time, the regular session convened. Among the bills introduced in the first days of both sessions were measures intended to lower fuel prices via limits on state taxes.
Suspension of fuel taxes
Senate Minority Leader Brian Jones, R-Santee, is behind two bills that would suspend the state’s fuel taxes for one year.
The state charges a 51.1-cent excise tax on gas and a 41-cent rate on diesel. An inflationary adjustment is scheduled for July 1.
Jones says his legislation would bring immediate relief to Californians at the pump when many are struggling to afford high fuel costs.
“California is behind the nation in bringing relief to overly taxed Californians by suspending our gas tax,” Jones said in a news release.
He added that Gov. Newsom’s special session is “tone deaf” to Californians’ economic struggles.
His bills would require the $1 per gallon in savings to be applied directly to the consumer.
Projects and programs funded by fuel taxes would be backfilled by the state general fund.
Earlier this year, a group of bipartisan lawmakers dubbed the Problem Solvers Caucus were unsuccessful in their pursuit of a yearlong suspension of the state’s 51.1-cent gas excise tax.
Excise tax suspension
Assemblyman Vince Fong, R-Central Valley, has offered similar plans to bring relief to Californians.
AB53 and ABX1-2 would suspend the excise taxes on gas and diesel for one year.
“Persistent inflation continues to cause painful financial burdens for California families,” Fong stated. “We must do what we can to help ease these difficulties immediately.”
Democratic leaders at the statehouse are opposed to suspending fuel taxes. They cite concern about how suspending tax collection would take away funds for road repair projects and jobs.
Additionally, they say there is no guarantee the fuel savings would be passed along to consumers.
Fong’s bills would tap the state’s general fund to cover the lost fuel tax revenues for current projects and programs.
Other fuel tax relief pursuits
Another bill from Assemblymember Diane Dixon, R-Newport Beach, would suspend fuel tax rates.
The state is authorized to adjust fuel tax rates each July by a percentage amount equal to the increase in the California Consumer Price Index, as calculated by the California Department of Finance.
Her bill, AB16, would authorize the governor to suspend an adjustment scheduled on or after July 1, 2024.
Earlier this year, Newsom called for freezing the state’s fuel tax rates prior to the July 1 inflationary adjustment.
The governor’s office said a one-year pause was expected to decrease fuel tax revenues by $523 million over the next year.
Democratic leaders said they were reluctant to move forward with the plan. They cited concerns about jeopardizing jobs, stunting economic growth, and slowing transportation work.
A separate bill would place a cap on annual adjustments to fuel taxes.
Sponsored by Sen. Janet Nguyen, R-Huntington Beach, SB5 would limit the annual adjustment to a maximum of 2% starting on or after July 1, 2023.
Nguyen offered the same bill during the 2022 regular session when she was in the California Assembly. LL
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