New Gas Tax Now in Effect; Average Prices Dip

Originally published 12:59 p.m. July 1.

The average price of a gallon of self-serve regular gasoline in San Diego County dropped Monday for the seventh time in eight days, falling nine-tenths of a cent to $4.039.

The average price is 7.3 cents less than one week ago, but 5.2 cents more than one month ago and 30.6 cents higher than one year ago, according to figures from the AAA and Oil Price Information Service.

The average price has fallen 7.7 cents over the past eight days, including 1.1 cents on Sunday. The falling prices follow an 11-day streak of increases totaling 14.6 cents.

The dropping pump prices follow a large decrease in wholesale gasoline prices, according to Jeffrey Spring of the Automobile Club of Southern California.

A 3.5-cent per gallon increase in the gasoline excise tax that went into effect Monday is expected to be reflected in Tuesday's average price. The California Board of Equalization is required to adjust the excise tax rate by March 1 each year to ensure revenue neutrality under a law that went into effect in 2010.

Sales tax revenue decreased in 2011 and 2012 because of dropping gasoline prices, resulting in the required increase in the excise tax to make up for the sales tax loss, according to Jaime Garza of the California Board of Equalization.

Board of Equalization member George Runner, one of two board members to vote against the increase, said "Most of the July 1 increase is based on uncertain projections of future gas prices. I don't think we should be in the business of raising taxes based on guesswork."

Board of Equalization Chairman Jerome Horton told City News Service "the board simply enacts a rate adjustment of the excise tax on gasoline based on staff's recommendation derived from the best available data at the time."

"Although not a perfect system, it is far from guesswork. Mr. Runner knows this. He is also well aware that the board's statistics department recommends a rate that best complies with state law, mandated by the Legislature.

"I appreciate Mr. Runner's protest vote on the current adjustment and I would have gladly joined him, but in doing so would have caused the BOE to be in violation of the law."

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

-City News Service