California drivers will pay 2.2 cents less for a gallon of gasoline, starting in July, after a divided Board of Equalization voted to cut the state excise tax.
“Lowering the rate is the right thing to do, and I’m sure Californians will welcome this reduction,” board Vice Chairman George Runner said in a statement after the agency voted 3 to 2 to pass the reduction.
The current rate is 30 cents a gallon and will stay in effect until June 30. The rate will drop to 27.8 cents a gallon once the new fiscal year starts July 1.
Tuesday’s cut marks the third straight year the Board of Equalization has reduced the excise tax.
The cratering price of oil has triggered lower gasoline prices. California’s average price was $2.31 a gallon for regular Tuesday, according to AAA; the national average was $1.71.
Californians pay the fourth-highest rate of taxes for gasoline in the country. In addition to the 30-cent excise tax, drivers pay 18.4 cents in a federal excise tax and 10.62 cents in other state taxes and fees.
The revenue generated goes to maintaining and constructing roads as well as funding transportation projects.
In the most recent fiscal year, the Board of Equalization collected nearly $5.4 billion in excise tax revenue for the state’s Motor Vehicle Fuel Account.
The Board of Equalization’s action is in large part the result of a “gas tax swap” passed by the state Legislature in 2010 during the state’s budget crisis. The swap adjusted the rates of the sales and excise taxes on gasoline, making the excise tax higher and the sales tax on gas lower.
Critics said the swap was unnecessarily complicated, but supporters said it helps maintain highway funding levels.
It’s estimated a lower excise tax will reduce the amount of money going to roads and mass transit programs by about $328 million next year. The board believes the new tax rate will bring just as much money as the old sales tax.
Runners was joined in voting for reducing the excise tax by Fiona Ma and Diane Harkey. Board member Jerome Horton and Deputy Controller Yvette Stowers — sitting in for state Controller Betty T. Yee — voted no.
“While I’m happy to help lower the price at the pump, to have a true impact for constituents we need to work on eliminating the extra fees from the cost of cap and trade being extended to the oil refineries in the state and the Low Carbon Fuel Standards that have driven up California’s gas costs, making it some of the most expensive fuel in the nation,” Harkey, a Republican from Laguna Niguel, said in a statement.