Millions in California could get up to $800 in gas tax refunds to fight high fuel prices, governor proposes
Even more states are considering ways to help fight high gas prices, including a proposal unveiled by California's governor on Wednesday that would give vehicle owners in the state up to $800 as a refund for gas taxes.
Last week Georgia and Maryland both passed bills to pause their state gas taxes of about 29 cents and 36 cents per gallon of regular gasoline, respectively.
And lawmakers in Massachusetts, New Jersey and Connecticut were among those to call this week for cutting or lowering gas taxes in response to fuel prices.
But California's idea of sending cash to millions of vehicle owners is among the most aggressive proposals to be seriously considered in the nation. It comes less than a year after the state sent out millions of $600 stimulus checks to residents, prompted by a massive budget surplus.
In California, where gas prices are typically the highest in the nation, Gov. Gavin Newsom proposed that vehicle owners get $400 on a debit card per registered vehicle, up to two per person, totaling about $9 billion. All residents regardless of vehicle ownership would see free public transportation for three months, Newsom said. The plan needs to be approved by the state Legislature.
“We’re taking immediate action to get money directly into the pockets of Californians who are facing higher gas prices as a direct result of Putin’s invasion of Ukraine,” Newsom said in a statement.
California drivers spend on average about $300 in gas taxes per year, Newsom's office said.
But lawmakers in the state have disagreed on the best way to offset sky-high gas costs. Last week, a group of lawmakers proposed $400 in rebates for all taxpayers. Democratic lawmakers rejected a Republican-led proposal to suspend the state's 51-cent gas tax, and a separate plan by Democratic leaders in the Assembly and Senate addressing rising costs of all goods would give $200 to taxpayers and dependents with an income cap of $250,000, according to The Los Angeles Times.
Debates about how best to address gas price hikes are going on in numerous states in an attempt to balance the benefit for consumers with the potential impact on infrastructure and other public services typically funded by state gas taxes.
Some argue that the price reduction consumers would see at the gas pump would be negligible compared to the total loss of funds to state resources, while others worry that gas and oil companies will keep the costs to consumers high anyway.
Gas prices were already high earlier this year due to the increase of demand as COVID restrictions eased. They soared even higher after Russia invaded Ukraine and the U.S. banned oil imports from Russia. Gas is about $4.24 on average in the U.S. as of Wednesday, according to AAA. It peaked on March 11 at $4.33 per gallon of regular gas, breaking the previous record of $4.11 from 2008.
In Michigan, Gov. Gretchen Whitmer last week called for a suspension of the state's 6% sales tax on gas, but other lawmakers say the state's flat gas tax of about 27 cents should be temporarily slashed instead.
"I think there's a way to give people real relief and not see a deterioration of the roads; not see us having to disinvest in schools; and give people larger, actual relief now," said Michigan Democratic Senate Minority Leader Jim Ananich. His office told The Detroit Free Press, part of the USA TODAY Network, that he would introduce legislation to suspend the state sales tax on gas for a year.
Although the Democrats and Republicans have often tried different approaches, proposals to help consumers save at the pump have come from both parties.
“We cannot, and we will not, stand idle as motorists all across the Commonwealth are feeling pain at the gas pump, trying to purchase a staple that gets them to school, that gets them to medical appointments and that is absolutely essential to their everyday activities,” Massachusetts Senate Minority Leader Bruce Tarr said at a Wednesday press conference as part of a group of Republicans backing the measure to suspend the state's gas tax of 24 cents per gallon.
Contributing: The Palm Springs Desert Sun; The Detroit Free Press