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CA executives debate gas tax suspension due to high fuel costs

California lawmakers have been at odds over the state’s gas tax suspension for months, but a presidential call for action and growing Democratic support are adding energy to the movement to lower the charges to the pump.

President Joe Biden on Wednesday proposed to Congress to suspend the federal gas tax for three months and that states “take similar steps to provide direct relief, whether it’s suspending their own gasoline taxes or assisting consumers in other ways.”

California’s gasoline excise tax — which funds road and infrastructure repairs — currently costs drivers 51 cents a gallon and will drop to 54 cents in July. The federal gasoline tax is 18 cents per gallon for regular gasoline.

The Golden State is the country with the highest gas prices. The Thursday, the statewide average was around $6.36 a gallonwhile the national average was $4.94 per gallon, according to AAA.

Although legislative leaders continue to push against the suspension, some Democrats are joining Republican lawmakers in advocating for a pause as fuel costs hit consumers the hardest.

Some Democrats support gas tax relief

For some time now, a handful of legislative Democrats have suggested they would support some form of gas tax relief. That number increased on Wednesday.

In late April, a handful of Democrats, including Assemblyman Tim Grayson, D-Concord, and Assemblyman Carlos Villapudua, D-Stockton, joined a group known as the California Problem Solvers Caucus. to support a 12-month gas tax suspension. requiring retailers to pass on cost savings to consumers.

On June 17, some Democratic House members also pushed to suspend the 3-cent gas tax increase that will take effect on July 1, even though legislative leaders have already refused to do so before the May 1 deadline.

On Wednesday, Assemblyman Rudy Salas Jr., D-Bakersfield, in the midst of a congressional campaign, announced he plans to hold a news conference Friday in his district to seek a suspension of the tax on gasoline.

Congressman Robert Rivas, D-Hollister, also praised Bidenthough he refrained from supporting a California version of the tax exemption.

Rivas has taken steps to take over the role of Assembly Speaker from Assemblyman Anthony Rendon, D-Lakewood, and is still campaigning for the position.

“All Californians deserve relief at the pumps now!” Rivas tweeted. “I applaud @POTUS for calling on Congress to suspend the federal gas tax. This is an important first step towards lowering gas prices, but we need to do more to bring a immediate and direct relief.

Gas tax suspension debate

California Republicans have spent months pushing legislative leaders to back the state’s gas tax suspension and make up for lost revenue with dollars from the general fund.

But Rendon and Senate Pro Tem Chairman D-San Diego, D-San Diego, are strongly opposed, saying there’s no guarantee fuel suppliers will pass the savings on to consumers.

Rendon argued Monday that a tax holiday could hurt workers doing road construction work paid for with state transportation dollars allocated by Senate Bill 1, which increased the fuel tax in 2018.

“I think what is important in terms of thinking about a gas tax exemption is to consider how much worse it would make things for people who would be laid off, who would not have a job because of the construction aspects related to SB 1, for example,” Rendon said. “You have to wonder to what extent the gas companies would continue to pocket these profits.”

However, Rendon and Atkins are still in negotiations with Governor Gavin Newsom over their relief idea — money sent directly to Californians to help pay for gas or other necessities.

Legislative leaders want to send $200 to all taxpayers earning $125,000 or less a year, with additional $200 payments for dependents. Newsom wants to give $400 to vehicle owners, capped at $800 for two vehicles.

In the meantime, Rendon also formed a select committee to investigate the state’s excessively high gas prices.

“Gas prices are an emergency”

Attempts to suspend the gasoline tax are not new.

On Wednesday, California’s legislative Republicans marked the one-year anniversary of their first call for gas tax relief by unveiling of a new website criticism of Democratic lawmakers.

State Sen. Brian Jones, R-Santee, who chairs the Senate Republican caucus, said Sacramento Democrats are “greedy and somewhat arrogant” in not supporting a break.

“And just because Republicans in California are the loudest noises about it doesn’t mean it’s partisan,” Jones said.

Jones pointed out that Democratic-controlled states like New York, Maryland and Connecticut have also suspended their gas taxes.

The caucus chairman said if Democrats really wanted to help people, they could act quickly on the suspension, much like they rushed through an exemption from California’s Environmental Quality Act in a matter of seconds. days earlier this year. Thousands of prospective UC Berkeley students risked being denied admission to college unless construction of new housing was expedited.

“It was not an emergency. Gas prices are an emergency,” Jones said.

An adjustable gas tax?

An expert also suggested another type of gas tax suspension, which would only apply when oil prices are high. When prices fall, the tax rises.

This kind of tax would offer drivers some relief when gas prices are at their highest. It would also discourage overconsumption of fossil fuels when costs are lower, said Severin Borenstein, faculty director of UC Berkeley’s Energy Institute.

“This tax would disappear when crude oil prices are high, just as tax holiday proponents are now calling for (although some of the savings could still go to producers),” Borenstein wrote in his Energy Institute blog. “And that would increase as the price of crude oil falls, ending the inevitable trend back to big SUVs, as those of us worried about climate change fear. A win-win.

In his blog, Borenstein acknowledges that there are issues to consider, including how to set oil prices that would trigger tax changes, how often those changes would occur, and “how to deal with border issues if the tax is very away from neighboring states. .”

But he told the Sacramento Bee he thought it was “a very doable plan for this budget cycle.”

“I think they don’t see that there’s a middle ground here that would really give everyone what they want,” he said.

This story was originally published June 23, 2022 5:00 a.m.