California Gas Tax Relief Proposals Stall as Summer Blend Tax Hike Nears

The number of gas tax relief and rebate programs is likely to be culled even more this week as Governor Gavin  Newsom’s plan to stop the planned inflation-adjusted gas tax increase has stalled, likely making it impossible for any action to be passed by the May 1st deadline.

Four major proposals centered around giving relief to Californians due to high gas prices have been proposed since gas prices have climbed exponentially since the beginning of the Biden Administration and then following the Russian invasion of Ukraine in late February.

The GOP’s $6 billion proposal, AB 1638, which would have removed the state’s 51 cent gas tax for a period of six months, was rejected in the Assembly last month. A $9 billion Assembly Democrat plan to give $400 tax rebates to all Californian taxpayers regardless of car ownership status, is currently under discussion in Sacramento, as is a joint plan between Assembly Speaker Anthony Rendon (D-Lakewood), Sen. Pro Tem Toni Atkins (D-San Diego), worth $6.2 billion to give $200 rebates to all Californians taxpayers except the wealthiest 10% of car owners.

And finally there is Governor Newsom’s $11 billion plan that would give $9 billion in tax refunds to all car owners, amounting to a $400 debit card per vehicle with a household limit of two vehicles. This would be along with $750 million in grants to provide free public transportation for a period of time to California riders, $500 million for walking and biking promotion, $600 million on pausing the diesel sales tax rate for a year, an d critically, $523 million going to pause inflation adjustments on gas and diesel excise taxes.

All four proposals, including Newsom’s, rely on tapping into the projected $30 billion in projected state budget surplus funds.

While the inflation adjustment, currently scheduled to be added to the gas tax on July 1st, would only be for 5.6%, amounting to a roughly 3 cent tax per gallon for gasoline and 2 cent tax per gallon for diesel, would not be much, it would still result in a slight savings for Californians at the pumps. However, efforts to pass the Governor’s proposal have largely been non-starters this month. The inflation adjustment to the gas tax needs to be stopped by legislation by May 1st due to a 60-day lead time. And with a lack of legislation being largely a no-go in the past few weeks, and Assembly Speaker Rendon and Senate Democratic leader Atkins not actively pushing the Governor’s plan in favor of their own, the Governor’s office said in a statement on Monday that that a gas tax increase halt is all but certain to not go through in time now.

A part of Newsom’s plan to not be passed in time

“It is clear now that the Legislature will not act in time to provide that immediate, limited relief,” explained Governor Newsom’s spokesman Alex Stack in a statement on Monday. “But we look forward to working with lawmakers on the Governor’s proposal for direct payments to Californians wrestling with rising prices.”

With only the two legislative plans, as well as the remnants of Newsom’s plan, currently on the table past May 1st, many Californians struggling with gas prices currently hovering around averages of $5.50 a gallon to $6.50 a gallon have little choice but to wait for legislative action to pass. Many also criticized Democratic lawmakers on Tuesday for failing to back that part of Newsom’s plan in time to meet the deadline.

“California Democrats are so bad at helping Californians,” said RNC spokesperson Hallie Balch in a statement. “Democrat Josh Harder has been regaling the public with his gas tank woes, but where is he now with his calls to halt the gas tax? Democrats continue to prove that they have no solutions as they refuse to help the millions of commuters dealing with increasing pain at the pump.”

Others noted that the situation only seemed to be dragging out any kind of relief despite prices going higher.

“Republicans are mad for the Democrats not supporting a measure by Newsom,” said Chuck Albright, a California fuel price researcher, to the Globe on Tuesday. “I’m not really into politics, and even I know how ridiculous that sounds.”

“But Californians need relief. The tax increase is only a few pennies per gallon, but it’s at least something. It’s a start. It’s something. But no. Some in Sacramento don’t want to lose out on infrastructure funding that comes with the gas tax, even though it would be paid anyway ultimately by the surplus. Prices are going up still, and the state still hasn’t come up with something. They dismissed a good plan, the one eliminating the gas tax temporarily, out of hand, and now they’re doing the same to another very reasonable plan here, or, well, part of a plan. And look, prices are likely to climb even more with summer coming. And still nothing. For Californians, this news on the gas tax increase not being stopped in July should be distressing, no matter how small the increase would have been.”

The deadline for legislation to stop the gas tax increase is on May 1st.