Why You Should Be Angry About CA’s “Highest Gas Tax in the Country”

I know it’s tempting to gloat.

Photo: ##http://latimesblogs.latimes.com/washington/2009/06/schwarzenegger-hummer.html##Los Angeles Times##

Today, newspaper headlines are blaring the news that with the newest increase in the state’s gas tax, that California now has the highest gas tax in the country.

As I said, I know it’s tempting.

But, it’s the result of bad policy. None of the money from that increased gas tax will go to fix California’s crumbling infrastructure, or restore and fund any local transit system, or paint an inch of new bike lanes. It’s all going to the general fund, thanks to Arnold Schwarzengger and a short-sighted legislature.

To balance the state budget in 2010, Governor Arnold Schwarzenegger proposed, pushed for, and eventually signed a law that changed the tax structure for gas taxes with a so-called “fuel swap.” The new tax structure eliminated the sales tax on fuel and raised the excise tax. The purpose of the change was to eliminate funds that were dedicated towards transportation from the gas tax so that the Governor could balance the state budget with fewer cuts elsewhere and no tax increases.

After years of Governors Schwarzenegger and Gray Davis “declaring a fiscal emergency” to basically rob transit operations funds that were dedicated by voters in 2002 and 2006, the State Supreme Court ruled that there had to be an actual emergency, not just a lack of political will, to declare and emergency. It was at this point, that Schwarzengger devised the “fuel swap” plan.

The program also allowed the state to raise gas taxes so that the amount collected remains static even as the amount of fuel consumed decreases. If this meant a consistent level of funding for transit and road repair projects, the program might be more popular and useful.

But it doesn’t. As George Runner, a member of the state Board of Equalization that approved today’s increase noted when he voted against it, “The goal of the fuel tax swap wasn’t good  tax policy. Instead, its sole purpose was to allow the Legislature to move more than a billion dollars in gas tax revenues into the state’s general fund.”

The plan was met with scorn by newspaperstransit advocates and environmentalists when it was proposed. Today’s news is just the by-product of that bad decision. 

“It’s what we feared,” said California Transit Association (CTA) spokesperson Jeff Wagner said to SF Streetsblog SF when the proposal was released. “This proposal circumvents both the law and the will of the voters. The court ruled they had to stop doing it, so what do they do? They change the laws that were in place. Time and again, transit has been the piggy bank they’ve gone to to fill in the gaps in the other stuff. It’s shortsighted and it’s in blatant contravention of the voters’ will.”

So unfortunately, even though California is moving the needle on gas taxes slightly closer towards a level resembling the costs incurred by drivers, those tax revenues aren’t actually going towards transportation, so we don’t have much to gloat about. In fact, Schwarzenegger’s policies probably set us even further back from finding an equitable way to fund our infrastructure.

This increase isn’t doing anything to fix our infrastructure, help your commute or improve the environment. At best, it’s a teachable moment that drivers aren’t actually paying for their fair share just by filling up at the pump.

And for that, we can thank Governor Schwarzenegger…perhaps the only elected leader to ever grace the cover of Newsweek Magazine for his plans to reduce greenhouse gas emissions while slashing the funding stream most likely to help do just that.

Of course, it’s not like Jerry Brown, or any other statewide elected official is fighting hard to fix this mistake from the last administration.

  • Robb

    CalTrans 2011 annual budget (per Wikipedia): $13.9 billion
    California’s Fuel Tax revenue (per http://www.boe.ca.gov/members/runner/newsreleases/2012-10-31_Gas_Tax_Revenues_Set_Record_in_2011-12.pdf): $8.3 billion.

    We’re still spending more on transportation than we’re taking in via fuel taxes. So what’s the problem?

  • Stephano Medina

    Not to be too heady here, but earmarking govt. revenue doesn’t really comply with the categorical imperative. Just ask yourself, “What would Kant do?!”

    In other words, if we wouldn’t want ALL of the state budget to work this way, why should we want it to for transportation funds? I understand earmarks as an electoral tactic, i.e. you’re more likely to get voters to approve a new tax if you can say where it’ll go, but, outside of that, why should Sacramento tie its hands by categorizing funds? Local govts. need as much flexibility to solve local problems as we can give them, imho. The only things we should be earmarking are those few things we don’t want subject to fluctuating fiscal policy, like veterans’ benefits.

  • Anonymous

    I tend to agree with this argument, and in fact, I would argue that the “user fee” framework is counterproductive for a lot of what progressives would like to accomplish. It will lead to other public services having user fees as well. If you need an example, here’s none other than Randal O’Toole arguing that the Department of Interior should charge you a user fee if you want to take a walk in the woods.

  • Matt

    All depends on how you look at it. The actual cents per gallon is not the highest in the country. What makes CA the highest is the local sales tax charged on top of the state and federal excise taxes, on top of the base price. As to how gas stations are not required to detail taxes on their sales receipts is beyond my comprehension. Its the only receipt I can think of that just shows the final total with no breakdown.

  • Kenny Easwaran

    Most environmentalists and livability advocates these days endorse the gas tax not as a “user fee” by means of which drivers pay for the use of the roads, but rather as a “Pigovian tax” (google it if you don’t know the phrase) by means of which drivers themselves incur a cost that is (ideally) equal to the costs that they impose on others. If a million car-miles imposes a certain amount of costs on innocent bystanders in terms of congestion, carbon emissions, particulate emissions, and collisions with pedestrians, then we want to make sure that the only car-miles that get driven are the ones that are so valuable that they make up for this cost. Therefore, we should raise the price of driving, by means of a tax whose amount is equal to the sum of the costs imposed on others.

    What we do with this revenue doesn’t matter. And since the state budget has been destroyed by decades of voters fiddling with the rules about how the state is allowed to spend money, it seems reasonable to default to saying that any revenue source that the state has should be put directly into the general fund.

    Now I think ideally, the revenue from a Pigovian tax should just be rebated to all residents of the state equally, so that the average driver pays no net tax, while people who drive more than average pay some and those who drive less than average make money. General fund revenue should be collected entirely from progressive income, wealth, and estate taxes.

    But given that citizen rebates are off the table, as are income tax hikes, I suppose that just putting the gas tax revenue directly into the general fund is still a better use than earmarking the funds for transportation. (Especially since the automotive lobby will try to convince people that an earmark for transportation should really be reserved for automobiles.)

  • weini94


  • Proud Driver

    Transportation is not done in a vacuum, It is imperative for the government to provide roads as an economic necessity. It is one of the few things government should provide as a social benefit as it benefits all of us.

    Driving is not bad! Yes, polluting cars should be removed, but those who wish to penalize driving as some societal pariah are looking at driving in a bubble. How do you expect commerce to happen? How do most people get to work? How do plumbers, social workers, police, and countless other workers get around? We need roads so that the economy can exist and provide jobs.

    Those people who think taxes are only imposed on “other people” are dead wrong. Those higher taxes are passed on to you the consumer every time. I own a small business with 6 cars on the road. When our costs go up including higher taxes, gas prices, workers comp, payroll taxes, etc, they get passed on to our customers. Who else is going to pay them?

    Pigovian taxes. What an obnoxious, obtuse theory. What about all the people who do nothing but take from society? They create more negative drag on society than those who happen to drive to go to work.

  • Anonymous

    Higher fuel taxes in themselves reduce driving and increase transit use without the need to build fancy infrastructure. This means fuller buses and trains that lose less or make more money and less traffic and pollution. It sounds like a good deal to me, especially since it appears that gas taxes don’t even cover road spending, much less the external costs of driving.

  • Commercial vehicle use is generally not comparable to individual travel done for commuting, consumption, recreation, etc. The latter is MUCH less efficient in terms of its utilization of energy and road space compared to the amount of economic activity it supports. There’s an argument to be made for supporting individuals who use their vehicles as part of their jobs, but many, many automobile trips are being taken when other alternatives are available — the half-mile drive to the grocery store to pick up a gallon of milk, for instance. The cumulative effects of these choices on congestion, pollution, increased safety risk to pedestrians/cyclists, etc. are very real, and it’s entirely reasonable to ask individual drivers to shoulder their share of these social costs and consider other ways of getting around when possible.

    We can and do give people a financial break when they use their vehicles for business purposes — ever filled out a Schedule C? There’s nothing incompatible between continuing this kind of support and making the true costs of driving more readily apparent to individuals when they’re choosing whether or not to drive.

  • As for “all the people who do nothing but take from society,” save that stuff for Breitbart, Free Republic or some other site where it’ll be taken for gospel truth. The cliche of “makers” vs. “takers” is mostly nonsense. http://www.washingtonpost.com/blogs/wonkblog/wp/2012/09/17/romney-my-job-is-not-to-worry-about-those-people/

  • Anonymous

    Nice post Niall. For a recent anecdote, BART is currently on strike and my FedEx delivery worker for the office told me that there are shipments stuck in gridlock on the Bay Bridge that might be delayed. Without the transbay tube and BART it would be even harder to make deliveries, move goods, etc. in the Bay Area.

  • Niall Huffman

    Exactly. A bunch of 4,000-lb vehicles each carrying one person is not the same as a bunch of tractor-trailers packed to the gills with consumer goods. Lessening the inefficient use of motor vehicles for individual commuting (by skewing the cost equation in favor of transit) holds the potential to be *beneficial* to commerce and the economy.

  • J T

    There are placards above the pumps that itemize the taxes on the fuel.

  • Jason Aaron Moran

    winston, everything you typed is wrong. Buses and trains only operate because of tax dollars and if they do pollute less its a marginal amount. The gas taxes do provide more than enough money but our state spends the money elsewhere. Also, in Los Angeles they give out over 150 million dollars in parking tickets a yer and spend it on general fund. Our government is causing the problems we have by overspending…

  • Noam.Chomsky

    Actually, everything YOU typed is wrong. Winston clearly stated “fuller buses and trains that LOSE LESS or make more money”

    Gas taxes at their current levels don’t even come close to covering the price of surface street/freeway maintenance. Car drivers are more subsidized than transit riders, please do more research.

    Stop being such a SOV.

  • Jason Aaron Moran

    but those are theoretical full trains. The Metro train here is bleeding passengers, nobody wants to ride a stupid train.

    Please show me links to subsidies for road construction, I have never heard of such a thing.

    SOV? is that some insult that beta males use?

  • Noam.Chomsky

    As for bleeding passengers…that is simply not true.

    As for subsidies for road construction? Really? Do you not know how roads are built? There is a reason they are referred to as “FREEways”.

    And the SOV comment was brilliant, it merely went right over your head.

    Beta male? Is that some insult that oafs who lack a college education use?

  • Jason Aaron Moran


    The reason they are FREEways is because there is no toll. The tax dollars we pay specifically for roads goes to build and maintain roads. Subsidy implies that the government wants or needs to convince people to use a product, i.e. wind turbines.

    If I find an oaf with no college education, I’ll ask him.

  • Noam.Chomsky

    So a separate commuter rail organization (that has a mere 1/35 of the daily ridership of Metro) having decreased ridership means that “nobody wants to ride a stupid train”? Despite the fact that the primary Los Angeles transit agency has seen substantial increases in ridership? Hmm, not sure I follow the logic there.

    You state that it isn’t a subsidy if the government isn’t trying to convince people to use a product…Let’s think about that a little bit.

    Public Transit: Tax dollars taken from public and used to help fund a system that manages to get back around a quarter of the money through fare revenue.

    Freeways: Tax dollars taken from public and user to help fund a system that doesn’t collect any revenue from users.

    Which one of those two systems is the one being subsidized? Are you implying that the government providing something to people for free is by no means encouraging said behavior?

    Some light reading for the alpha males:



  • Jason Aaron Moran

    Why did you post pictures of a fitness video I’m in? You are very strange.

  • Noam.Chomsky

    Merely mocking the fact that you brought up “beta males”. Way to ignore the vast majority of the post in which I made you look like the uninformed Angeleno that you are though.

  • Jason Aaron Moran

    that makes no sense.

    I looked at the blog you posted and it didn’t back up what you wrote at all. Also, blogs are opinion based personal pages and shouldn’t be confused with actual reporting.



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