California’s Gas Tax Fight Pits Rural Needs Against Political Fear; and Some Republicans Are Siding with Democrats

California GOP lawmakers are incensed over a gas tax study. Rural groups say they need it

By Yue Stella Yu, CalMatters

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For more than a month, Republican lawmakers in California have blasted a legislative proposal to study alternatives to the state’s gas tax, declaring it a dishonest ploy by Democrats to hike taxes on drivers — a claim that’s gone viral on social media and is frequently repeated by conservatives nationally.

Ironically, though, several of California’s biggest conservative interest groups and rural Republican officials support the legislation, some from the very districts those critical GOP lawmakers represent.

Assembly Bill 1421, introduced by Assembly Transportation Chair Lori Wilson, a Suisun City Democrat, would order the California Transportation Commission to summarize all existing research and recommendations on how to charge drivers by how much they use the road instead of how much fuel they consume.

California has taxed drivers at the gas pump since 1923 and relies on that revenue for 80% of the state’s highway maintenance and road repairs. But the state is expected to take in $31 billion less than projected over the next decade as vehicles become more fuel-efficient and more Californians switch to electric vehicles, the California Transportation Commission estimated last year.

With the shrinking revenue and growing road needs, the commission concluded that the state could fall $216 billion short of what is needed for maintenance over the next 10 years, which means roads and highways could fall further into disrepair.

“(The bill) responds to a reality that we can no longer ignore,” Wilson said at a committee hearing in January. “California’s transportation funding system is becoming less stable, less equitable and less sustainable.”

Wilson’s legislation has support from a bipartisan coalition spearheaded by Transportation California, which helped kickstart the state’s research into road use-based charges in 2014. The coalition includes major labor unions, business groups, county associations and representatives from the building and agricultural industries.

But the issue of the gas tax is so radioactive that even a bill to study alternatives could become a huge political lift for Democrats, especially for Gov. Gavin Newsom, who advocates worry could veto the bill if it even passes because of GOP backlash during his presumed presidential bid. California has the nation’s highest gas prices and Californians pay nearly 90 cents per gallon in taxes, fees and surcharges, according to the U.S. Energy Information Administration.

“It’s caught up in political drama and these guys are afraid of their political lives in the future, and so they succumb to all this pressure,” said Robert Poythress, a Republican Madera County supervisor who spent a day last week talking to lawmakers and rallying support for Wilson’s bill.

“Democrats could move forward quickly, (but) I think that they are scared to death themselves and just don’t have the political backbone.”

Deferred maintenance is backing up

The political fight and the lack of alternative solutions leave many local officials worried: They say they’ve long had to defer road projects due to declining gas tax revenue, and the projected loss could mean more dangerous roads.

“We are right before the waterfall in terms of a big drop in revenues,” said Poythress, who serves on the state’s Road Charge Technical Advisory Committee formed in 2014 to study gas tax alternatives.

Madera County had the fourth worst roads of all California counties in 2022, according to the most recent annual assessment by the California State Association of Counties. Heavyweight trucks regularly pass through the “big ag” county, which means roads deteriorate fast and require frequent maintenance, he said.

Similarly, ranchers and beef producers, who are heavy travelers, could see increased damage to their trucks, trailers or cattle as falling gas tax revenue threatens road repair funding, said Kirk Wilbur of California Cattlemen’s Association. The organization, traditionally more aligned with conservative causes, supports Wilson’s bill.

“It really can’t be understated how essential it is … for the livestock industry that we properly fund our transportation system,” he said. “I know it’s a politically fraught issue, but what is entirely clear to me is that the status quo moving into the future is entirely untenable.”

The hyper-partisan fight, Poythress said, makes him feel “ashamed” of his own party.

“It’s an election year and everybody’s lining up with all their arguments, but it’s really sad, because they are going to hurt the citizens of California in the long run,” he said.

Already, there’s been little political appetite to change the status quo, even though the state has conducted multiple studies and pilot programs of mileage-based charges since 2014. The political risk is simply too great: In 2017, Democrats mustered enough support to raise the gas excise tax by 12 cents per gallon to fund transit and road repairs, a controversial call that cost former state Sen. Josh Newman his reelection bid a year later.

The issue is especially explosive now as Californians, contending with high costs of living, consistently deem affordability a top concern. The GOP attack on Wilson’s bill forced her to publicly commit to amendments that clarify its exploratory nature. Even Newsom’s office weighed in online, stressing that the governor would not sign a mileage tax proposal.

Among some supporters of Wilson’s bill, there’s more caution than excitement. While they all agree that the gas tax revenue shortfall is problematic, no one could articulate another solution they’d prefer, with several telling CalMatters that they staunchly oppose additional taxes.

“The state believes there needs to be an (alternative),” said Justin Caporusso, executive director of the Mountain Counties Water Resources Association, which represents dozens of water districts, counties and municipalities in mountainous areas. He said he supported the bill to get a seat at the table, because state policies often “leave rural California behind.”

‘We’ve got to do something’

In 2017, then-Gov. Jerry Brown championed a 12-cent gas excise tax hike that tied the tax rate to the state Consumer Price Index, while facing a $59 billion backlog in deferred highway and bridge maintenance and $78 billion in deferred costs for local streets and roads.

It was evidence that California leaders only implement such policies when “we have no choice but to do this because we are desperate for the revenues,” said Brian Taylor, a professor of urban planning and public policy at the UCLA Luskin School of Public Affairs.

The increase provided cities and counties with $1.5 billion annually for repairs and maintenance. But the funding for each county is largely based on the number of registered vehicles in that county, which some officials say disproportionately hurts rural areas.

Tuolumne County, which was rated in 2022 as having the worst roads in California, had 77,000 registered vehicles and 609 miles of roads to maintain in fiscal year 2022-23 and received just $3 million from Brown’s gas tax increase, according to a state auditor’s report.

Ventura County, in comparison, had fewer miles of roads to maintain that year at 543. But with 780,000 registered vehicles, it claimed $14 million in funding.

Tuolumne County Supervisor Jaron Brandon, a Democrat running for state Senate who compared the two counties, said the state’s current gas tax revenue distribution hurts his county. Home to the popular Yosemite National Park, Tuolumne County roads are heavily traveled, and the area gets ample snowfall during the winter, making it harder to maintain roads, Brandon noted.

“Has the gas tax worked well for rural areas? No. Should we look at alternatives that are more fair? Absolutely,” he told CalMatters.

But until then, “we are still paying into a system (from which) we are going to get less,” he said.

Some lawmakers say it’s past time the state reformed its road repair funding.

“We’ve got to do something. Accounts are running out of money, causing projects to be canceled and deferred,” said Assemblymember Corey Jackson, a Moreno Valley Democrat who supports Wilson’s bill but said he wished the legislation went further and proposed actual policies.

In more than a decade of research, the state has studied four pilot programs examining the feasibility of funding road repairs with charges based on road use. Scholars, including Taylor, have noted privacy, equity and administrative costs as factors policymakers should consider when designing a road user charge and made recommendations to avoid pitfalls, such as charging lower rates to lower-income households instead of applying a flat rate.

Meanwhile, Oregon, Utah and Virginia have implemented voluntary road use charge programs, allowing drivers to opt into a mileage-based fee. Hawaii is the only state to adopt a mandatory charge program but is phasing it in for all light-duty vehicles by 2033.

“Do we understand the issues conceptually? Completely. Do we understand the issues technically? Mostly. Do we understand the consequences and pros and cons of different kinds of charging structures? Yes we do,” Taylor said.

But voters prefer a much gentler transition, Taylor noted. “Calling for more study is a way of saying, we are not dropping it, but we are not ready to implement it,” he said.

Even with the information from her proposed study, Wilson said legislators would still be years away from any policy decisions. But she said it would ensure legislators have all the information they need before debating policies.

“I want the Legislature to make a data-driven decision,” she said. “There’s going to be multiple options. There’s no silver bullet to address declining gas tax revenue.”

Suspend the gas tax instead? 

Republicans who oppose the legislation aren’t letting up. Following a largely partisan vote to pass Wilson’s bill out of the Assembly, several GOP lawmakers made false claims online that the bill would impose a new tax on every mile a Californian drives. The posts drew outrage nationwide, with some starting petitions online to “abolish the proposed mileage tax.”

“It is a mileage tax plan. It’s not a study,” Assembly Budget Committee Vice Chair David Tangipa, a Fresno Republican, claimed at a press conference last week, even though the bill does not include any language to implement a mileage tax.

To “combat” Wilson’s bill, Republicans proposed a one-year suspension of the state’s gas tax, arguing that it would give drivers relief at the pump, where gas prices are higher than the national average. When asked how else the state would pay for road repairs, Assemblymember Jeff Gonzalez, a Coachella Republican who authored the bill proposing a suspension, said the state should use money from the general fund, the state’s primary account.

But the proposal, as well as the GOP blowback against Wilson’s bill, are largely “political theater” that hurts Republican constituents and does not help local governments’ funding strains, Poythress said.

“We are going to have to see more significant declines in revenues before the Legislature on both sides of the aisle decides that it’s a very serious matter and decides to move forward.”

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.