The middle class is fleeing. It costs too much to live in California. And with Kamala Harris and Gavin Newsome in place, you just watch the new taxes and the new entitlements come pouring in. Ah-but that editorial is for another time. This time is about why we need to keep taxing ourselves with SB1 taxes.
So here we are 5 days away from one of the most important votes in our ECA history-yep, I am referring to Prop 6. I promised Randy Parker I would do one newsletter on taxes we pay for fuel so Randy-here it is.
I decided to write this piece about why California fuel prices are typically the 3rd highest in the Nation (behind only Hawaii and Alaska), yet our roads are just about the crappiest. This is too big an issue for a few paragraphs, so I am going to take a lot of liberty on facts and details but will try to provide you with some links, so you sleuths can see where my conclusions came from. Here is one link—
To see a more in-depth analysis of how a dollar of fuel is broken down, click the above link from the San Jose Mercury News. Otherwise, take my word for the breakdown of a dollar of gas in October of 2017:
42% is for oil (based on $52/barrel on average)
13% is State fuel excise tax (this is where your 12 cents per gallon will be added to the cost shown here and will push this number to approximately 16% for the extra tax included from SB1)
18% is for “other taxes” which include federal tax, cap and trade tax and other tax
27% is for transportation, refining, retailing and profit
So why are Californians paying approximately $3 billion a year more in fuel costs than experts say we should be paying while we have the crappiest roads? The short answer from the mind and knowledge of John Bly (with some research thrown in) is:
1. because voters asked for cleaner fuel sources, and cleaner burning fuels-that accounts for 8% of the 31% we pay in taxes in California. Go back in time and read where the AB32 law in California passed due to collaboration between Governor Arnold and the Democratic controlled State Legislature. AB 32 made California the first State to regulate carbon emissions and the sources of same. Anything you are paying for fuel prices in California pale in comparison to what else AB32 is costing you in building materials, housing costs, groceries, and just about any other services you can think of. AB32 is the bog culprit here in my humble opinion. We can thank Gray Davis for the pension problem, but you can largely thank the Terminator for your high price of gas!
2. Our roads (and our water system-but that also is a topic for another column in the future), were not originally designed for so many people. Back in the 1950’s, when the bulk of the California roads were designed, and our highway system and bridges were mainly built, the population was about 20 million and designs figured about 25 million in population. Whoops-now we are around 40 million. That spells “congestion”. Why are there so many more people in California? This is another topic for the future—
The land of “milk and honey” attracted far more people than our roads were designed for. The cost of expanding those roads and bridges is astronomical now that land has been used up for housing and other uses. We did not keep land for expanding our roads and bridges. Hardly any monies were put into expanding (in a meaningful way) our highway system in the last 50 years. Now it costs lots more than we have.
3. Part of the reason the State does not have the funds to simply pay for roads and bridges is because of the enormous debt the State has. Arguably, the State owes several Trillion dollars to take care of its pension obligations. If you believe Prop 6 is going to reform pension debt, I have some swamp land you might want to buy. Aint gonna happen.
So, as we face the vexing question that Prop 6 poses to us, whether to lower our taxes or not, we have to ask ourselves if the good outweighs the bad. Yes-for sure we pay a lot of taxes in California, and not all are going to roads and bridges. That part of 6 is true. But, if we backed out the 12 cents per gallon for SB1, what then? You will still have the other taxes and fees. And the oil companies are not dumb, they see that Californians by and large could afford the 12 cents per gallon for SB1, so they are going to want to increase their 27% of the “pie” and make more money. And you still have the pension problem. And you will have Gavin coming into power and Gavin likes giving health care to ALL (including undocumented aliens). Read the tea leaves-more taxes are coming, not less.
So here is why I support continuing to pay for SB1 fuels taxes (which means a Vote No on Prop 6 vote):
A) because not paying those pennies per gallon will have no effect on our cost of fuel. I am convinced oil companies will simply raise prices and we will get no benefit from them without SB1 funding road and bridge projects.
B) Californians voted themselves into this mess years ago by wanting to clean up our air and regulate carbon emissions. You are not going to convince me that Californians are not getting exactly what they deserve because they wanted to be the first to regulate carbon emissions. Our cars are now getting more miles per gallon (less taxes paid), our taxes increased by at least 30 cents per gallon back in 2006 due to the desire to curb carbon emissions, and the passing of Prop 6 does nothing to change that fact.
C) We are not going to drive out the increased population of largely Latinos that have located in California that were not expected to be here in the minds of the 1950’s planners that designed our roads and bridges. So, the fact that it cost a lot more to accommodate the larger than forecast population is too bad. You have to pay for it somehow. SB1 is largely a user tax that pays for it in a fair manner-the more mile you drive, the more fuel you buy and the more tax you pay to fix our damn roads!
There you have it-imperfect as it is, SB1 fuel tax increases are the best and fairest way to deal with AB32 impact and the increased and unforeseen population increase in California. I do not see anybody clamoring for “more dirty air” so AB32 is here to stay as well. And trust me, there are way too many folks getting entitlements from the State to reform the pension mess just because a few folks think their protesting SB1 fuel taxes are loud enough. At just under $100 per year on average, the good of SB1 far outweighs the bad. Keep SB1 dollars flowing from our wallets. Vote No on 6.
That’s all folks
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