California’s gas tax is set to increase by a modest amount at the start of July as a potential 65 cent increase looms in the near future.
While the 65 cent increase is a projection and not set in stone, California’s total taxes on gas already cost drivers more than half a dollar per gallon.
The big picture: The state’s excise tax will increase from 59.6 cents per gallon to 61.2 cents per gallon on July 1 in order to adjust for inflation.
- The tax increase comes from Senate Bill 1 and faces required inflation adjustments every July.
- According to AAA, California has the highest average gas price at $4.64 per gallon, well above the national average of $3.226 per gallon.
Driving the news: Former Gov. Jerry Brown signed SB 1, known as the Road Repair and Accountability Act of 2017, into law eight years ago.
- Money raised by SB 1 goes toward state infrastructure projects.
- The gas tax totals around $5 billion annually, and nearly $27 billion has been used for state projects since its inception.
- The gas tax started at 29.7 cents per gallon in 2017 and has over doubled since that time.
Go deeper: Another factor that could lead to California’s highest-in-the-nation gas prices increasing is the new low carbon fuel standard which was passed by the California Air Resources Board (CARB).
- That new regulation is projected to increase California gas prices by as much as 65 cents per gallon, although the actual hike may come in much lower, depending on how the regulations impact oil and gas producers.
Republicans, Valley business leaders speak out: California’s Congressional Republican delegation, led by Rep. David Valadao (R–Hanford), sent its annual letter to Gov. Gavin Newsom this week urging him to suspend the upcoming gas tax increase.
- Republican lawmakers also called on Newsom to take action on the projected CARB increases.
- They noted one particular projection from a USC professor that estimates the tax increases, the CARB regulations and the impacts from refineries shutting down could lead California’s average gas prices to hit $8.43 per gallon next year.
- “California already has the highest gas prices in the nation, and instead of providing some relief, Governor Newsom continues to make it worse,” Valadao said. “Central Valley families can’t afford to pay an extra 66 cents per gallon every time they fill up—and they shouldn’t have to. It’s time for Governor Newsom and the Democratic supermajority in Sacramento to finally suspend the gas tax, stop these harmful price hikes, and ease the burden on working families instead of adding to it.”
- “The higher gas taxes aren’t just felt at the pump—they ripple through our entire economy,” said Fresno Chamber of Commerce CEO Scott Miller. “For businesses in the greater Fresno area, rising fuel costs drive up transportation expenses, which often leads to higher prices for goods and services. It’s a tough squeeze for small business owners trying to stay competitive while keeping costs down for their customers.”
- “Our business is built around transporting our services to events across the Central Valley,” said Nick Rocca, owner of The Oval Office With fuel costs continuing to rise, every trip we make puts more pressure on our bottom line. These increases make it more difficult to operate efficiently and keep costs manageable for our clients.”
