Price of gasoline rises on Monday in California

06/29/2013 12:00 AM

07/01/2013 1:07 PM

The price of gasoline in all of California will go up 3.5 cents on Monday, guaranteed.

That was made certain way back in late February, when the State Board of Equalization approved raising the excise tax for gasoline from 36 cents to 39.5 cents a gallon, to take effect July 1.

Not that the board has much choice.

The hike is the byproduct of state laws, signed by former Gov. Arnold Schwarzenegger in 2010, that created a new tax structure for gasoline and mandated that the board adjust the state gas excise tax rate by March 1 annually.

The so-called "fuel tax swap" laws require the board to lower the sales tax on fuel and raise the excise tax by a corresponding amount to ensure "revenue neutrality."

The new tax structure eliminated the general fund portion of the sales and use tax on motor vehicle fuel and raised the excise tax. The change was proposed when the state sales tax rate was reduced in 2010, and the Schwarzenegger administration was looking for ways to free up money to balance the state budget.

The swap was designed to ensure that state taxes consumers pay at the pump remain the same as they would have been under the previous tax structure.

The current structure is tied to the price of fuel but also involves estimating future gasoline consumption within the state.

BOE said 14.6 billion gallons of gasoline were purchased in-state last year. Based on projections, the latest 3.5-cent increase will generate more than $500 million from July 1 through June 30, 2014.

Gasoline sales tax revenue funds local government programs; the state excise tax on gasoline funds highway and mass transit projects throughout California.

As was true three years ago, there's still sharp disagreement over the process, as seen by BOE's 3-2 vote on the mandated hike in February.

One of those "no" votes was cast by BOE member George Runner, who this week issued a statement that said, in part, Californians "have a right to be angry and demand explanation from their elected officials. I too am upset and frustrated by this tax increase, which stems from a complicated law

"The goal of the fuel tax swap wasn't good tax policy. Instead, its sole purpose was to allow the Legislature to move more than a billion dollars in gas tax revenues into the state's general fund."

Call The Bee's Mark Glover, (916) 321-1184.

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