Californians Split on Gas Tax Repeal Initiative

September 25, 2018

While the proposal to split California into three states won’t be on the November ballot, an equally divisive one will be. Proposition 6 cancels a 12-cent gas tax increase that went into effect November 1, 2017 (with similar increases to taxes on other fuels), repeals a planned annual tax on owners of electric vehicles currently scheduled to start in 2020, and requires any future tax or fee on gasoline or road usage to be approved by voters at the ballot.

The combined package, the Road Repair and Accountability Act (RRAA), was approved on a mostly party-line vote with all Democrats except two voting yes and all Republicans except one voting no. The $5 billion in additional revenue goes primarily to state highway and bridge maintenance ($1.9 billion), local road maintenance ($1.8 billion), and transit and rail operations ($750 million), with the remainder on specific programs such as trade corridors ($310 million), congested corridors ($250 million), pedestrian/bicycling projects ($100 million), parks and recreation ($108 million), and research and planning ($33 million). Supporters say the tax increases were needed to tackle tens of billions of dollars in transportation backlogs and stop diversions of other funds to cover road maintenance; opponents say California’s taxes are already high, and that the state shouldn’t be raising taxes without voter approval or when the state budget has a multibillion-dollar budget surplus. Proposition 6 was put on the ballot with 940,000 signatures.

At 55.22 cents per gallon, California’s combined state gas taxes are indeed the second highest in the country, behind Pennsylvania at 58.70 cents per gallon and ahead of Washington (49.40 cents), Hawaii (47.88 cents), and New York (45.76 cents). (The federal excise tax of 18.4 cents per gallon is additional.) California’s transportation network is admittedly massive: 350,000 paved lane-miles of highway; 13,000 state-maintained bridges and 12,000 local-maintained bridges; and 200 transit agencies. About a third of roads and a quarter of bridges need work, more than the average state. Prior to the bill passing, California’s tolls, taxes, and fees covered only about two-thirds of California’s spending on roads; the balance must be made up from income, sales, business, or property taxes.

Politics is a big factor in Proposition 6, with gubernatorial candidate John Cox (R) and U.S. Rep. Kevin McCarthy (R) heavily supporting the pro campaign. Observers say the goal is that Proposition 6 provides a rallying point to boost Republican turnout in the November election. That perspective got a boost when State Sen. Josh Newman (D-Fullerton, Yorba Linda) was recalled by voters on June 5, and replaced by Republican Ling Ling Chang. The main issue in the recall, launched by former San Diego Councilman Carl DeMaio (R), was Newman’s support of RRAA. California’s State Senate now has 26 Democrats and 14 Republicans; 27 is a two-thirds majority.

A June poll had Proposition 6 ahead 46 to 33; an August poll reversed that, with the proposal failing 36 to 48. Earlier polls asking about RRAA had majorities favoring repeal. The California Chamber of Commerce and League of California Cities are among those opposed to Proposition 6; the Howard Jarvis Taxpayers Association and National Federation of Independent Business are among those supporting Proposition 6.

Was this page helpful to you?

No

Thank You!

The Tax Foundation works hard to provide insightful tax policy analysis. Our work depends on support from members of the public like you. Would you consider contributing to our work?

Contribute to the Tax Foundation

Related Articles