As you’ve probably already noticed at the pump, California’s gas taxes are on their way up. But, before you (potentially) see ads bombard the airwaves later this year for and against a referenda on the gas tax, let’s break down what taxes and fees are increasing, and where those funds are going.
Pursuant to SB 1, the bill that enacted the new increases, there was an increase of 12 cents per gallon in the gas tax which includes an inflation adjustment on November 1, 2017. That increased the base excise tax to 30 cents a gallon. Also on November 1, 2017, there was a 20-cent per gallon increase to the diesel excise tax, increasing it to 36 cents per gallon. That increase also includes an inflation adjustment factor.
Additionally, there is a new transportation improvement fee added to the vehicle license that varies from $25 to $175 each year based on the value of the vehicle. That took effect on January 1, 2018. And starting July 1, 2020, there will be a new $100 annual vehicle registration fee that applies to zero emission vehicles with a model year of 2020 or later.
So where is all that money going? $1.8 billion annually goes maintenance and rehabilitation of the state’s system of highways. Another $1.7 billion goes to the rehabilitation and maintenance of local streets and roads annually. This is a very brief summary of where the revenues go. For the full analysis, you can refer to the LAO’s Overview of the 2017 Transportation Funding Package.
As you can imagine, this was controversial when it was passed, and remains controversial. Only one Republican legislator in both houses voted for the gas tax. Further two Democrats, one in the State Senate and one in the Assembly, voted no on the increases.