The California Board of Equalization voted 3 to 2 yesterday to increase the tax on gas from 36 cents per gallon to 39.5 cents per gallon, about a 10% increase. This increased excise tax is set to go into effect July 1.
Instead of correctly labeling this as a tax hike, however, state legislators are instead calling it an adjustment mandated by law:
"A lot of people have the misperception that the board of equalization is raising your tax. We don't have the authority to raise taxes. We are mandated by the legislature to adjust so that we have revenue neutrality," said Jaime Garza, spokesman with the California Board of Equalization.
Garza is referring to the 2010 state legislation that changed California’s gas taxation system to re-appropriate some of the gas tax revenue from road maintenance to other areas. The excise tax has increased multiple times since this change, but only by fractions of cents.
This newly approved legislation will move California from the #2 to the #1 spot—just behind New York—on the list of states with the highest gas taxes.
Some state legislators are citing a $157 million shortfall in gas tax revenue in fiscal year 2012 and a projection of less consumption by California drivers. However, other legislators are taking issue with the lack of transparency by the state. Board member George Runner, who voted “no” on the increase, said the state should not try to predict volatile gas prices.
Democratic legislators disagree, saying the 2010 gas taxation system change was put in place to ensure constant revenue from gas taxes. Board member Betty Yee, who voted to increase the excise tax, said “we do it based on the best information possible. The rate was to be set so there still would be revenue."
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