As summer season travelers confront California’s highest-in-nation fuel prices – now above $6 a gallon – the nonpartisan Legislative Analyst Office (LAO) examines gas tax abatement in a recent report on fiscal relief options.
Recent AAA data shows the price of regular gas here is up 8 percent from last month and 46 percent higher compared to a year ago. Diesel prices have increased 59 percent over last year.
While prices in general have increased, the price of motor fuels and electricity have grown more significantly when compared to other items, Frank Jimenez, LAO fiscal & policy analyst, told the Northern California Record by email.
“The overall message from our report is that the Legislature has several options in providing relief to Californians experiencing financial hardships, particularly from high fuel costs,” Jimenez said. “These options could include focusing on (1) those experiencing higher fuel prices, (2) those experiencing the greatest financial hardship, or (3) state residents who are more broadly affected by higher prices. The Legislature could also choose to develop a package that contains a mixture of proposals in order to provide relief to several different groups.”
As prices continue rising, how quickly relief could be implemented is tied to action on the part of lawmakers, who have continued to debate suspending the state’s 51-cent per gallon gas tax, and nearly brought it to a floor vote last week.
“The speed at which each policy option could be implemented will vary based on factors such as whether it would be implemented through a new or existing program,” Jimenez said. “For instance, tax refunds—both broad and income‑based—could be issued relatively quickly and efficiently given that the state has experience providing such payments through the Golden State Stimulus Program and annual refunds to taxpayers. In comparison, providing tax refunds to vehicle owners would require several additional steps that could delay payments and increase administrative costs. Such steps would include collecting the necessary data from the Department of Motor Vehicles and selecting an entity to distribute payments.
“We note that fuel tax reductions would need to be enacted 60 to 90 days before they could go into effect.”
Jimenez said that both the Governor and members of the Legislature have expressed interest in providing relief to Californians experiencing financial hardships and have proposed several different policies.
“Each option comes with its own tradeoffs that will need to be considered,” Jimenez said. “Our report identifies key questions for the Legislature to consider when analyzing the merits of the options proposed by the Governor and designing its own relief package.”
Meanwhile, the Assembly may vote this week to replace Speaker Anthony Rendon, D-Lakewood, but how that could impact progress on gas price relief remains to be seen.