Editor’s note: This story has been updated to reflect that California’s gas tax is among the highest in the country.
California’s automatic gas tax hike may not kick in this summer under Gov. Gavin Newsom’s new budget proposal, which seeks to halt the increase.
“It’s a $523 million dollar gas tax holiday of sorts,” is how Newsom described the plan.
The Golden State’s excise tax has been rising incrementally since 2017 due to Senate Bill 1, which aims to raise money to fund transportation projects such as road and bridge repairs.
“We’re going to backfill it in terms of the tax itself to transportation projects so that there’s no direct impact to investments,” Newsom explained at a news conference Monday. “But there will be a direct impact by avoiding that inflation adjustment that comes in July … to increase the gas tax.”
At a current cost of approximately 51 cents per gallon, the state’s excise tax is already among the highest in the U.S.
On top of that, California continues to have the most expensive gas on average in the country. Prices were also the highest ever in the state for the beginning of a new year, AAA said in a news release last Thursday.
The current cost at the pump is about $4.65 for a gallon of regular unleaded, over $1.30 above the national average.
The gas tax pause was one of 10 tax incentives Newsom unveiled during his presentation on his proposed $286 billion proposed budget for the upcoming fiscal year, which begins July 1 — the same day the gas tax is scheduled to rise again.
Newsom said his budget for the 2022-2023 year accounts for a nearly $46 billion surplus, which is $15 billion more than what was projected late last year by the California Legislative Analyst’s Office. He noted, however, that those figures could change before the May revision.