California Gov. Gavin Newsom’s promise of a gas tax rebate during his State of the State speech Tuesday night seems intended to show voters ahead of midterm elections that he and other Democratic lawmakers are doing something to help Californians with rising prices at the pump.
But why focus solely on gas prices and help for motorists? Price hikes are making practically everything more expensive, from a gallon of gasoline to a gallon of milk, and people clearly need relief from that financial strain. Newsom’s administration has provided few details beyond his plan to submit a proposal to “put money back in the pockets of Californians, to address rising gas prices.” However, some of the specifics his aides shared are concerning.
Dee Dee Myers, Newsom’s senior adviser, told reporters the rebate would probably total billions of dollars, occur as soon as this spring and be limited to people who have a car. That carless residents may be excluded is worrisome and raises serious questions about equity for low-income families that are among those hurting the most from inflation.
Prices in the Los Angeles area rose 7.5% between January 2021 and January 2022, the largest increase since 1982. Gas prices jumped nearly 40% over that period, but the cost of groceries, child care, clothing, natural gas and electricity all shot up dramatically too. The problem isn’t just at the gas pump; it’s everywhere you look, including the grocery store, your utility bill and shopping for a used car.
A tax rebate is a good idea, but must be applied broadly so that it helps all Californians who are struggling. Call it the gas and groceries rebate, and everyone should be able to get behind it.
Newsom has already proposed suspending a scheduled increase in the state’s gas tax — a bad idea that will save motorists only a few cents a gallon at the pump but cost half a billion dollars in transportation funding. His framing of this new proposed rebate around spiking gas prices is, like that proposal, a political calculation.
State Senate President Pro Tem Toni Atkins (D-San Diego) and Assembly Speaker Anthony Rendon (D-Lakewood) said in a joint statement that the Legislature would “seek tax relief from the General Fund” to avoid taking funding for roads and schools, rather than focusing on a “small cut to the gas tax that might not get passed on to consumers.”
California has such a massive budget surplus that under the state’s constitutional limit on spending, known as the Gann limit, a tax rebate may be required anyway. Last year the state worked around that restriction by sending millions of stimulus checks to Californians with annual incomes of $75,000 or less to help them cope with the COVID-19 pandemic.
It’s understandable that Newsom and other politicians, including those in swing districts where rising gas prices are a political liability, want something concrete to point to and spin to their political advantage. But that should not skew their priorities or distract from the need to extend relief to all Californians who need it.
