Will Californians strike a blow for lower taxes and gasoline prices?

Will Californians strike a blow for lower taxes and gasoline prices?
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Come November, Californians have the opportunity to get the government out of their pockets —or, more accurately, out of their gas tanks. Not completely, mind you, but it’s a start.

Last year, the Golden State’s legislature increased gasoline and diesel fuel taxes, along with vehicle fees. Proposition 6 on the November ballot would repeal those tax increases and require voter approval for future gasoline and vehicle fee increases.

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Voters’ concern is well justified. According to the Tax Foundation, last year’s 12-cent-per-gallon gasoline tax increase pushed the state’s gas tax to $0.55 per gallon, the second highest in the nation after Pennsylvania. That's on top of the federal gasoline excise tax of $0.18 per gallon.

The tax increase was expected to raise about $54 billion over 10 years for road and infrastructure repair. But when it comes to gasoline and diesel taxes, what states claim and what they actually do with the newfound tax dollars can be two different things.

According to the Federal Highway Administration, California raised $4.8 billion from the state’s gas tax in 2016 — before the additional 12-cent tax took effect. Nearly $4 billion went to “highway purposes,” according to the FHA. But $578 million was redirected to mass transit and $247 million was spent on “general purposes.”

There’s more. The state collected nearly $7 billion from motor vehicle registrations. And while most was devoted to highways, $709 million was spent on mass transit, while $304 million, as well as $408 million from toll revenues, was spent on general purposes. 

So of the various California gasoline taxes and car fees, $1.3 billion was redirected from road repair to mass transit and $960 million for general purposes, according to the FHA. Would Sacramento have needed that 12-cent increase if it had funneled all of that revenue to road repair?

And California is not alone. Nationwide, the FHA says that about 25 percent of gasoline taxes are redirected to mass transit and other purposes. And those other purposes can vary significantly. For example, the Cato Institute claims that about 25 percent of gasoline taxes in Texas are redirected to public education.

Now, states are free to spend their gasoline tax and car-related fees however they choose. But it is duplicitous to impose a tax ostensibly for the purposes of road or highway building and repair and then redirect those funds to other purposes — in some cases not even related to transportation. And then claim that the state needs even more money for infrastructure.

And here’s another problem. Gasoline taxes are some of the most “regressive,” meaning they hit lower-income folks harder than they do those with higher incomes. 

Liberals tend to strongly oppose regressive tax structures; they much prefer a “progressive tax system” — one that imposes much higher rates on higher-income people.

Yet, many of the states with the highest gasoline taxes — California, Washington, Pennsylvania, New York, Illinois — can be some of the most left-leaning states.

Let’s put it bluntly: high gas-tax states do not have a revenue problem. They have a spending problem. Had California utilized all of those gasoline- and car-related tax revenues over the years for road building and repair — an additional $2.3 billion in 2016 alone — it might not have needed to challenge Pennsylvania for highest gasoline taxes in the country.

States need to be held financially and politically accountable for their spending decisions. If they claim they need a gasoline tax increase in order to repair roads, that’s where the money should go. But they won’t do that unless voters hold them accountable.

Californians have a chance to do that in November, other states should follow suit. 

Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas. Follow him on Twitter @MerrillMatthews.