CSAC Bulletin Article

Gas Excise Tax to Fall by 2.2 Cents in July – Counties to Lose $74 Million

February 26, 2016

On Tuesday, the Board of Equalization took action to set the gasoline excise tax rate for 2016-17. Due to the complex gasoline tax swap, the Board is charged with setting a revenue-neutral rate with the former state sales tax on gasoline by March of each year. The BOE used estimates from the Governor’s January budget estimates and cut the rate 2.2-cents based largely on projections of gas prices between July 2016 and June 2017. Counties stand to see their road maintenance funding from the price-based excise tax decrease by $74 million over this period.

Along with representatives of Los Angeles County, Riverside County, labor unions, and the League of California Cities, CSAC testified for the implementation of five-year smoothing of gasoline price projections, which would have resulted in smaller incremental changes to the rate in any single year. Our proposal was ultimately not supported by the full Board. Board Chairman Jerome Horton and the State Controller’s representative on the Board, Yvette Stowers, supported the implementation of smoothing in 2016-17, while the other members were opposed for a variety of reasons.

The decrease in the price-based excise rate emphasizes the need to immediately address California’s continuing transportation funding crisis. New and stable revenues are needed to ensure that the condition of local streets and roads and state highways do not continue to decline.

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