California motorists are facing another increase in fuel costs as the state's excise tax on gasoline rose to 63.4 cents per gallon on July 1. This latest adjustment, part of a system established by a 2017 law, contributes to a total tax burden on gasoline that is estimated to reach $1.20 per gallon when including sales taxes and climate fees.
Annual Tax Hikes
The increase is driven by Senate Bill 1 (SB 1), enacted in 2017, which mandates an annual adjustment to the state's gas tax based on inflation. The legislation also initially raised the base gasoline excise tax by 12 cents per gallon and increased diesel taxes and vehicle registration fees, with revenues dedicated to transportation projects. At the time of its passage, proponents argued these measures were necessary to fund essential road repairs.
However, critics point to the state's persistent issues with highway infrastructure. A March report by the Reason Foundation ranked California 49th out of 50 states for state highway performance, ahead only of Alaska. The report cited the condition of roads and congestion levels as key factors in the low ranking.
Legislative Control Over Taxes
The automatic annual gas tax increase allows legislators to bypass annual votes on tax hikes. While lawmakers and Governor Gavin Newsom have the ability to suspend these automatic increases through new legislation, they have historically opted not to do so. This ongoing annual rise in gas taxes has become a recurring financial strain for California drivers, particularly during the summer months.