California Governor Proposes Break on Gas Tax Hike

If Governor Newsom's new budget is approved, Californians may not see the automatic gas tax hike that was scheduled for this summer, reports Tracy Bloom. While the tax has been designed to rise every year since 2017, the governor's proposal seeks to avoid the adjustment while "backfilling" it to ensure continued investment in transportation projects. According to Gov. Newsom, his proposal would give California "a $523 million dollar gas tax holiday of sorts."

As Bloom writes, "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." The governor could take liberties with the 2022-2023 budget in part due to a projected $46-billion surplus.

California's 51-cent per gallon tax is currently the highest in the country and primarily funds road maintenance and transit projects. As electric vehicles gain ground and Californians buy less fuel, some experts are advocating for a shift to a tax based on vehicle miles traveled (VMT).