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Falling Gas Prices Mask Hidden Tax So why is it that while other states are now enjoying gas prices of less than $2 per gallon, California is still paying higher prices?
public outcry if the government had caused new revenue the State of California collects gas prices to soar then! from its capand-trade system is being used to fund the state’s costly and controversial When government imposes higher costs on high speed rail project. Yet even with this fuel providers, California consumers inevita- funding source, the project—which recently bly pay the price in lost jobs, income and broke ground in Fresno—still lacks the necopportunity. essary funding to finish the job. As economist Severin Borenstein notes: So next time you fill up at the pump, re“Every analysis of cap-and-trade — or of a member you’re helping pay for a train you gas tax or, for that matter, of movements in won’t be able to ride until the year 2029— the price of crude oil — finds that a change assuming it ever gets built. (Even then you’ll in the cost of selling gasoline, up or down, is still have to pay to ride the train.) Maybe quickly and fully passed through to consum- that’s why politicians try so hard to keep ers.” taxes like these hidden.
Due to high taxes and costly regulations, our state's gas prices are higher than other states. It's been that We’d likely all be paying 10 to 15 cents way for years. less per gallon if not for the new regulaBut what's new is that the gap between Cali- tion. Depending on the auction price of fornia's and other states' gas prices has emission credits, some fear the cost could grown. To get a sense of the change, com- grow far higher in future years. pare California gas prices with those of the nation as a whole. According to GasBud- Concern about the economic impact of dy.com, even while overall prices have fall- high gas prices led to a bipartisan effort en, the gap has grown from about 32 cents last year to postpone the planned cap-andper gallon just a month ago to as much as trade expansion. Unfortunately, Assemblyman Henry Perea’s legislation (AB 69) 47 cents this January. died when Senate President Pro Tem DarThat's a 15 cent increase in just one month! rell Steinberg refused to authorize a hearThe likely culprit is a new "hidden gas tax" ing. that took effect January 1. The new regulation expands the state's cap-and-trade program to include transportation fuels. The expansion is the latest in a series of sweeping and costly regulations developed by the California Air Resources Board as it implements the California Global Warming Solutions Act. Luckily for the Governor and his Air Board appointees, gas prices barely budged when the new rule kicked in; in fact, prices have continued to fall, masking the rule's true impact and ironically causing the new "hidden gas tax" to be even more hidden.
FEBRUARY 2015 - ISSUE 4
Republicans have already announced a repeal effort this year in the form of SB 5 and AB 23, but it’s hard to imagine their bills will fare better. Of course, with hidden taxes, exactly how much more we’re paying is anyone’s guess. That’s just one of many reasons hidden taxes are such a bad idea. Taxes should be transparent, straightforward and easy to understand. You shouldn’t need to hire an economist to know how much money you’re sending to Sacramento—or Washington, D.C.—each year or how it’s being used.
Just a few years ago gas prices were soaring We do know that 25% of the billions in dangerously near $5 per gallon. Imagine
State Water Board Addresses State and Federal Water Projects Petition to Conserve Water During Drought Conditions Courtesy CA.gov Facing the likelihood of a fourth consecutive drought year, the State Water Resources Control Board announced two actions today that will allow the state and federal water projects to conserve water supplies in upstream reservoirs and more effectively operate their facilities in response to ongoing dry conditions. The actions, in response to a petition by the Department of Water Resources and the federal Bureau of Reclamation, balance public health, water supply and environmental needs and allow the projects to better prepare for extreme drought conditions should they persist into 2015. The actions are similar to those taken last January in anticipation of statewide drought conditions. State Water Board Executive Director Tom Howard issued an order approving elements of the Jan. 23 petition to adjust flow and water quality requirements that govern inflows and outflows in the Sacramento-San Joaquin Delta and
operation of the Delta Cross Channel Gates for the next two months. These requirements, in place since 1995, help control salinity in the Delta and protect fish and wildlife uses, and water quality for municipal, industrial and agricultural uses. The Sacramento-San Joaquin Delta provides drinking water to two-thirds of the state’s population, supplies some of California’s most productive agricultural areas and is one of the largest ecosystems for fish and wildlife habitat in the United States. The actions by the Executive Director, in consultation with the projects and with the federal and state fish and wildlife agencies, will help to assure that these uses are protected through the drought. “Persistent drought conditions and our
experiences last year in balancing water supply and environmental requirements require us to work nimbly together,” said Tom Howard, Executive Director of the State Water Board. “The projects are initiating part of their plan to prepare for these events ahead of time. I expect more requests for action in the weeks and months ahead. Building on our experience working together last year, I expect that some tough decisions may have to be made about water use in 2015 in the event we don’t receive any appreciable precipitation in the coming months.” Specifically, this approval allows the Delta Cross Channel Gates to be opened at times during the next two months in order to reduce salinity intrusion that can occur when less water is released into the Bay Delta system. The gates typically remain closed during the late winter and spring in order to protect fish from straying into the central Delta where survival is low. Continued on back page
Courtesy CalChamber Alert
My name is Nancy Gotschall and I am coowner of Let’s Go! Travel. We offer all types of travel, from cruises, riverboat cruises, tours, hotels, adventure travel and independent travel to name a few, not to mention that we are available to our clients 24/7. As a home based travel agency, Let’s Go! Travel has been in business for 10 years and is still going strong! Let’s Go Travel became a member of the Tuolumne County Chamber of Commerce several years ago and soon after I became one of the Ambassadors for the Chamber. Belonging to the Chamber and being an Ambassador is a great way to make new friends, network with other businesses and take an active role in our community.
Seeking a creative and long-term solution for financing highway and road construction and upkeep, a new commission has kicked off its investigation of a “road user charge” as a possible replacement for the well-traveled gasoline tax. Created by 2014 legislation and given the nod by Governor Edmund G. Brown Jr., the Road User Charge Pilot Program Technical Advisory Committee kicked off its deliberations last week. Among the committee’s 15 members is Loren Kaye, president of the CalChamberaffiliated California Foundation for Commerce and Education, representing business and economic interests. Gas Tax Revenue A confluence of forces continues to reduce the effectiveness of the gasoline tax as a stable revenue source for highways. Pegged to the amount of gasoline purchased, the tax could keep pace neither with inflation in construction costs or increased efficiency in automobile performance. CalTrans has estimated that inflation and improved vehicle efficiency has eroded more than 60% of the value of the gasoline tax since 1994. And this is before the ambitious rollout of electric, plug-in hybrid and fuels cell vehicles in the state—which use little or no
gasoline and therefore are the quintessential “free riders.” In his inaugural address, Governor Brown spoke of the “importance in having the roads, highways and bridges in good enough shape to get people and commerce to where they need to go,” estimating that the state has deferred maintenance and upkeep needs of $59 billion. In calling for a bipartisan solution for transportation finance, the Governor did not single out a mileage fee, but this option is certainly deeply in the mix. The advisory committee has an ambitious agenda: within one year it must recommend how the state Transportation Agency can launch a pilot program testing a road user charge in real world circumstances. The committee will examine technical feasibility, reliability, implication for privacy rights, data security, motorist compliance, and overhead costs. Other States California probably will not break new policy ground on this project. The states of Oregon and Washington are already examining mileage fee alternatives, with Oregon on the verge of implementing a pilot project with 5,000 volunteer motorists. Findings from these other West Coast states will be invaluable for California’s consideration.
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CA Drought, from Page 2
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Opening the gates allows high quality fresh water to flow through the central Delta, reducing saltwater intrusion and the need for releases from upstream reservoirs. The State Water Board’s order approving the petition provides flexibility to operate the gates based on evolving water quality conditions and fish migration information. The approval also allows for modifications in Delta outflows and San Joaquin River flows over the next two months so that water can remain in storage for critical uses later in the year in the event of continued drought conditions, including preventing salinity intrusion, minimal water supply needs, and fish and wildlife protection. The approval includes further modifications to export requirements requested in the petition that allow for minimal water supplies while protecting fish and wildlife uses. The order does not approve all of the requested changes to the export requirements at this time. Specifically, the Projects requested a higher level of exports with a lower level of outflows than what was allowed last year under a similar change. The Executive Director did not approve the change at this time but instead indicated that this issue should be discussed at a public workshop on February 18. Although the order is effective immediately, the State Water Board will hold a workshop on February 18 to hear from the public and interested parties on the order, potential further requests to modify Delta flow and water quality requirements, or other actions that the Board may take. During this
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workshop, the Board will discuss the petition, the Executive Director’s action in response to the petition and potential future requests under the petition. The State Water Board may provide direction to the Executive Director on modifications to his order or on how to proceed on future requests. The State Water Board may also consider taking action related to this matter, including issuing its own order modifying the Executive Director’s order. In addition, the State Water Board recently sent a notice to all water right holders that curtailments could begin in key watersheds if water demand exceeds available supply. Both of these actions, which are directed in the Governor’s January 2014 State of Emergency declaration, reflect extraordinary circumstances brought on by the state’s record drought. After a wet December, 2015 has started out with the driest January on record. The runoff from December storms gave a modest boost to major reservoir storage, but conditions since then have turned dry. With 2015 appearing to be the start of a fourth dry year, the State Water Board is working in coordination with the state and federal water projects as well as the various state and federal fish and wildlife agencies as early as possible to plan ahead. Visit SaveOurWater.com to find out how everyone can do their part, and visit Drought.CA.Gov to learn more about how California is dealing with the effects of the drought. Information on what the State Water Board is doing in response to drought conditions.