California’s state legislature and Governor Gavin Newsom took a unique approach to rising gas prices. Rather than reducing taxes or providing a rebate to car owners, California increased its gas tax. While this seems counterintuitive, the path to this agreement is even more mind-boggling.
In January, when the price for regular gasoline in California was $4.65, Governor Newsom proposed suspending the gas tax as part of his budget. The Governor described his proposed three-month gas tax suspension: “It’s a $523 million gas tax holiday of sorts.”
While legislative Republicans supported the measure, Democratic leadership led by Assembly Speaker Anthony Rendon and Senate President Pro Tem Toni Atkins pushed back on Newsom’s plan, pointing to concerns on how to pay for roadway improvements. Labor also pushed back on the proposal, which was ultimately scrapped.
By March, California’s gas prices had climbed to more than $5.65 a gallon, causing Governor Gavin Newsom to roll out an $11 billion relief package to reduce the impact of “higher gas prices.” The proposal included more funding for charging stations and promoting mass transit. It also called for the suspension of the July inflationary adjustment on gas and diesel excise taxes. The Governor also suggested vehicle owners receive a $400 rebate per vehicle.
In making this announcement, the Governor said, “We’re taking immediate action to get money directly into the pockets of Californians who are facing higher gas prices as a direct result of Putin’s invasion of Ukraine. But this package is also focused on protecting people from volatile gas prices and advancing clean transportation.”
Unfortunately for Californians, that immediate action never materialized. The Legislature left for Spring Break. Gas prices became a part of the budget debate rather than an urgent action. During those debates, Democratic leadership once again tabled Governor Newsom’s proposal.
On June 14, the Legislature passed a $300 billion-plus budget that did not include a gas tax break, a rebate to vehicle owners, or a suspension of the proposed tax increase. Meanwhile, California’s gas prices exceeded $6.40 per gallon.
On June 20, the Assembly Democrats formed a Select Committee on Gasoline Supply and Pricing. At the time, Speaker Anthony Rendon said, “Californians need more than Band-Aid relief from high gasoline prices.” Speaker Rendon also blamed high gas prices on the oil industry with a “foot on our necks and a hand in our pockets.” While there seems like a sense of urgency on the issue of gas prices, nothing noteworthy came out of the first committee meeting and they are not scheduled to meet until August so we will have to wait to see what – if anything- will happen.
Before the month of June ended, Governor Newsom and Democratic leadership finally reached an agreement to provide relief for rising inflation.
Assembly Budget Chair Phil Ting said, “we decided that the taxpayers would get a bigger check directly through the rebate rather than giving people pennies at the pump.”
Based on Assemblyman Ting’s statements, it appears that the Legislature was providing a gas tax rebate similar to Governor Newsom’s proposal to give vehicle owners a $400 rebate on each car or truck.
However, the final budget did not include such a break. Instead, the budget offers up to $1,050 to Californians as the Governor’s press release states, “Cha-ching! You just received a deposit. Global inflation. Rising costs. It’s hard out there and we know it. So, we’re giving you $9.5 billion back. MILLIONS of Californians – 23 million to be exact – will benefit from up to $1,050.”
While Californians are dealing with rising inflation today, the checks will not be sent until October. Meanwhile, the state’s gas tax increased by more than three cents per gallon starting July 1.
So, while gas prices jumped nearly an additional two dollars a gallon over six months, California officials worked expeditiously to give inflation relief four months from now, study gas prices starting next month, and failed to pass a gas tax holiday or even stop a tax increase.
