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Arnold Schwarzenegger

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

I know it's tempting to gloat.


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.

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