Gov. Newsom Plan Could Put Brakes on California's Soaring Gas Prices
SACRAMENTO (CBS SF) -- Gasoline has long cost more in California than any other state in the U.S., with prices jumping nearly seven percent in just the past year.
A little help may be on the way from Governor Gavin Newsom that will make filling up a little less expensive, but not everyone is behind Newsom's latest plan.
Pain at the pump hasn't been this jarring in the Bay area in nearly 40 years.
Newsom's idea to put a tourniquet on California drivers hemorrhaging on their fuel budgets is a "tax holiday" that would suspend the state's fuel tax increase tied to inflation.
Newsom says it's possible because of the state's strong economy.
"Because California is as resilient as it is, because we're the fastest growing economy of all western democracies over the last five plus years, because we've done a little better than many in terms of addressing the pandemic, as a consequence, our economic output is strong," Newsom said earlier this week. "As a consequence of that, our budgets are running on extraordinary back-to-back surpluses."
As part of the governor's $286 billion budget proposed Monday, Newsom is floating the idea of suspending the 5.6% gas tax hike set to go into effect July.
While drivers would appreciate the break, suspending the increase would drop California's fuel tax revenue more than $520 million.
Haas School of Business Professor Severin Borenstein told KPIX that just because the gas tax would go down, doesn't mean gas prices necessarily will fall.
"It's clear there's something else that we don't understand going on with our gas prices, creating this mystery gasoline surcharge that we've had since 2015, where we are paying an extra 30 cents a gallon that really can't be explained by our higher taxes or environmental fees," said Borenstein.
But given the current prices at the pump, Bay Area drivers will take whatever break they can get.
