California’s November 1 Gas Tax Increase: Just the Beginning

Californians are bracing for the first phase of the SB-1 gas tax and vehicle registration hikes, which could help boost prices by up to 29 cents per gallon over the next 32 months.

Governor Jerry Brown took a huge risk for the California Democrat Party by signing into law the state’s largest registration and gasoline tax increase in history. The last time the highly volatile taxes ad fees were increased was in 2002 when the Democrats increased the vehicle registration fee increase from $46 to $158. That resulted in 9.4 million voters recalling Democrat Governor Gray Davis, just 11 months later after he was re-elected, making him only the second state governor recalled in American history. Voters further punished Democrats by electing Republican Arnold Schwarzenegger to fill the vacancy.

The new increases are contained in a law officially titled “SB-1 Transportation Funding” and signed by Governor Brown on April 28. The University of California Berkeley’s Institute of Governmental Studies poll found in June that 58 percent of voters were opposed the bill and only 35 percent supported the legislation.

Californians currently pay $3.03 per gallon, on average, for regular unleaded gasoline, versus about $2.47 a gallon in the rest of the nation. That’s $0.56 per gallons higher, on average, due to an array of hidden fees to fight pollution, as well as the 40.62 cents per gallon state gas tax, the fifth-highest in the nation according to the Tax Foundation.

Gov. Brown and his Democrat allies in the California legislature hope to do a better job than Davis in managing the anger from the highly regressive tax increase, which will especially pound the middle class and the poor by phasing in the pain over the next three years.

SB-1 will begin with a 12 cent per gallon tax increase on November 1. That works out to a brutal annual cost of about $1,200 per California family. But the full increase will not initially be felt, because Nov. 1 is also the date the  seasonal surcharge for California’s reformulated gasoline summer blend, which amounts to several extra cents per gallon, rolls off.

Moreover, SB-1’s total family pain may be much higher than 12 cents, over time, thanks to the following deadlines: 1) a value-based transportation improvement registration fee kicks in January 1, 2018; 2) the price-based excise tax resets on July 1, 2019; and 3) a new zero emissions vehicle fee begins on July 1, 2020.

State Assemblyman Travis Allen (R-Huntington Beach) has already qualified a ballot initiative to kill the gas tax that will appear along with what he hopes will be his candidacy for governor on the November 2018 ballot.

Orange County Republicans have also successfully qualified an effort to put a recall of State Senator Josh Newman (D-Fullerton), who voted for SB-1, on the next ballot.

The Democrat-controlled California State Legislature tried to rescue Newman by changing state recall rules with the passage of SB 117. But the effort was blocked by the courts in August.


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