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.
