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COURSEY: Down the rabbit hole with the gas tax

California's gasoline tax increased 3.5 cents a gallon this week, but it hasn't yet been reflected in prices at the pump.

Don't expect it to be reflected in maintenance of our roads, either.

With what is now the highest gasoline tax in the nation, you'd expect California to be a leader in turning gas taxes into quality pavement. After all, isn't that what user taxes such as the gas tax are supposed to do – offset the cost of that use?

That's a quaint notion.

California's complicated gas tax formula has more to do with improving the look of the overall state budget than paving highways and fixing bridges. And the extra 3.5 cents that was added to the price of a gallon of gas this week isn't going to fill a single pothole; it's simply an attempt to maintain the status quo.

The increase to the excise tax on gasoline was approved in March on a split vote of the state Board of Equalization, five elected representatives you don't know and never see except every four years on your California ballot. But you do know the man responsible for the tax: Arnold Schwarzenegger. In 2010, the Governator signed into law a bill that created a new tax structure for gasoline that required the Board of Equalization to lower the sales tax on fuel and raise the excise tax by a corresponding amount to ensure "revenue neutrality."

While "revenue neutrality" may sound good, what the new formula did was free up gas tax money from requirements that it be used for transit and allow it to be folded into the state general fund. It was part of Schwarzenegger's efforts to close a state budget deficit that at the time was approaching $20 billion.

Based on projections used by the Board of Equalization in March, the 3.5-cent bump that went into effect on Monday will generate more than $500 million in the next year. While that may not sound "revenue neutral," the board also had to take into account the fact that gasoline consumption in California has been falling for seven straight years. To keep revenues neutral, gas taxes needed to be adjusted upward.

According to AAA, the excise tax bump hadn't been seen at the pump as of Tuesday. That's not too surprising, since it is charged to the distributor rather than the retailer. Be patient; it will come.

But it won't go toward fixing the roads on which you consume all that gas. It simply goes toward balancing budgets.


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