Column: California’s gas tax is going up again. You should be pleased
California’s gas tax goes up again next week — and that’s actually a good thing. But I know this won’t sit well with many people.
First, the facts.
The state’s gas tax is set to rise by 3.2 cents on July 1 to 50.5 cents a gallon. This is because SB 1, passed in 2017, automatically boosts the gas tax in line with increases in the consumer price index.
That’s why the gas tax — already one of the highest in the nation — jumped by 12 cents a gallon in 2017 and by 5.6 cents last year.
California currently ranks near the bottom of all states in terms of highway investment, which means our roads and bridges are in particularly bad shape.
The gas tax is projected to bring in about $7 billion this fiscal year to pay for much-needed repairs.
A separate road-improvement fee debuts next week for electric cars with a model year of 2020 or later.
“If we don’t do something, the situation will just keep getting worse and worse,” said Asha Weinstein Agrawal, a professor of urban and regional planning at San Jose State.
“Think of it like maintaining your home,” she told me. “If you don’t do the routine work when it’s required, pretty soon you’re looking at major repairs.”
That’s where we are right now. After years of neglecting our transportation infrastructure, California now faces enormous bills just to catch up and restore our roads to the condition they should have been in a long time ago.
I know, I know. How can anyone be talking about raising the cost of driving at a time when the economy is on the ropes and millions are out of work? Isn’t this a self-defeating move?
Those are fair questions.
“Do you really want to depress behavior that could help the economy in the midst of a pandemic and recession?” asked Rob Peroni, a law professor at the University of Texas at Austin who focuses on tax issues.
“This is a complex thought for many people,” he told me. “They want lower prices and they want them now.”
That said, Peroni and other experts acknowledged that there’s never a good time to raise taxes. When times are tough, higher taxes can make them tougher. When times are good, people think they deserve a break in the form of tax cuts.
The COVID-19 pandemic, in fact, may be a perfect opportunity to raise the gas tax.
“Driving is way down, so in theory this is a great time to catch up on highway investment,” observed Ronald Fisher, an economics professor at Michigan State University.
While less driving temporarily means less revenue from a gas tax, it also means less disruption from road work.
Fisher also pointed out that the state typically contracts with private companies to perform such infrastructure repairs, which means proceeds from the higher gas tax could actually serve as a stimulus for the California economy in the form of job creation.
“Nobody wants to pay for this stuff,” he said. “But let’s face it, you can’t have something for nothing.”
There are two big elephants in the room. One is the problem, familiar to all Los Angeles residents, that there are few alternatives to getting around by car.
Unlike in San Francisco or New York, it’s just too darn hard to navigate much of the Southland via public transportation. Options are limited, and transit times can be two to three times longer than traveling by car.
The other problem is that a gas tax is regressive in nature, which means it has a disproportionate impact on lower-income people who may have no choice but to drive to and from work every day.
L.A. Metro is already at work building out our subway and light-rail system, but we’re still decades from a transit system that comes closer to meeting the needs of this vast and diverse region.
That work should proceed and, if possible, be accelerated. The Expo Line hasn’t lived up to expectations for many riders. The long-awaited Crenshaw Line won’t be operational until next year — two years later than originally promised.
The regressive nature of the gas tax can be more immediately addressed in the form of tax credits that ease the financial burden for lower-income households. This seems like a reasonable solution to a problem that represents an unfair burden for many working families.
In many ways, gas taxes are like cigarette taxes. Revenue raised can be applied to what economists call “negative externalities,” or unintended consequences.
Cigarette taxes generate funds in part to address the higher cost of healthcare resulting from tobacco use.
They also serve to deter behavior that society views as undesirable. In simplest terms, the more something costs, the less likely it is that people will buy it.
The gas tax is aimed primarily at fixing roads and bridges. But it has the added benefit of discouraging use of fossil fuels at a time when the planet needs to be a lot more serious about addressing climate change.
“It encourages people to move around by means other than burning fuel,” said Brian Taylor, director of the Institute of Transportation Studies at UCLA.
“In a sense,” he said, “a gas tax should put itself out of business” by ultimately eliminating our reliance on fossil fuels.
Is there a better way to tackle these issues than routinely jacking up the price of gas? Yes, there is.
Many economists say cash to maintain transportation infrastructure could be much more effectively raised through a so-called mileage fee rather than a gas tax.
Think of it like your metered utility costs. The more power or water you use, the higher your monthly bill. The same thinking would make sense for use of roadways — the people who drive the most should pay more.
Trouble is, the only feasible way to implement a mileage fee is to equip all vehicles with tracking devices, and that raises obvious privacy concerns.
Personally, I have no problem with electronically tracking my driving if that could lower my fuel and insurance costs. But I understand why many people would be wary of such technology and how it could be misused.
So that basically leaves us with the less-efficient gas tax to pay for road upkeep.
Severin Borenstein, a professor of business administration and public policy at UC Berkeley and one of the state’s most highly regarded energy experts, noted that the average Californian represented use of about one gallon of gas a day prior to the pandemic, including consumption by businesses that serve us.
“So this tax increase will cost the typical family of four 13 cents per day or $4 per month,” he said. “That’s not nothing, but compared to all of the other costs of living in California, it’s not a lot.”
Moreover, “simply saying that taxes are bad doesn’t make much sense when they are what enable us to build the infrastructure to support the economy,” Borenstein said.
Look, I get it. Nobody likes higher taxes. Then again, nobody likes having to perform major car repairs after slamming into a pothole.
According to the American Automobile Assn., the average cost of a pothole-related trip to the mechanic runs $306, but in some cases can top $1,000.
Suddenly an extra 3.2 cents a gallon doesn’t seem so outrageous, does it?