Skelton: Don't expect much relief from Newsom gas pledge

A man stands at a lectern with American and California flags behind him.

By George SkeltonCapitol Journal Columnist

March 10, 2022 5 AM PT

SACRAMENTO — Don’t get excited about receiving meaningful tax relief as gas prices soar, despite Gov. Gavin Newsom’s promise in his State of the State speech.

If it’s anything like the so-called rebate that the governor and Democratic legislators concocted last year, it will be unfair and won’t help much of the middle class.

One hopeful sign: Newsom edited the tax relief line in his text before delivering it Tuesday to legislators, and didn’t use the word “rebate.” The governor also wisely erased a reference to submitting the relief details in May, when he revises his state budget proposal.

That’s two months away. And the money probably wouldn’t get into motorists’ hands until July. Newsom realized they’re being burdened now with swiftly rising prices at the pump. And they could be rebelling by spring.

Hopefully, the governor and legislative leaders will agree on a simple plan and enact it quickly — something like sending every vehicle owner a nice check. But that may be beyond their capabilities.

This is what Newsom wound up pledging:

“Look, no one’s naïve about the moment we’re living in with high gas prices. And the geopolitical uncertainty fueling them. In January, we proposed to pause the gas tax increase. Now it’s clear we have to go further.

“That’s why — working with legislative leadership — I’ll be submitting a proposal to put money back in the pockets of Californians to address rising gas prices.”

But Newsom also patted himself on the back again for “what we did last year for middle class Californians, sending $12 billion back — the largest state tax rebate in American history.”

That’s a disingenuous claim. All that money went to people making less than $75,000 annually. I don’t know precisely where the middle-class income range tops out for families in high-cost California, but it’s certainly much higher than $75,000.

A rebate is when you buy something or pay a tax and get part of it back. What Newsom calls a rebate was a social spending program. Most state revenue comes from the income tax, and the top 20% of earners pay roughly 90% of that. None of them qualified for the so-called rebate.

Hopefully, the governor and legislative leaders won’t base eligibility for gas tax relief on wealth, as they tend to in crafting programs. For example, send money to the owner of a Toyota Corolla or a Ford, but not to someone who drives a Lexus or a Lincoln.

Newsom’s January proposal to “pause the gas tax increase” was his effort to suspend for one year a scheduled July inflationary hike in the 51.1 cents per gallon levy. It might save motorists about 3 cents a gallon — and cost the state $523 million.

But legislative leaders have balked, not wanting to slow down the highway repairs that the gas tax pays for. They also suspect oil companies would jack up their prices rather than pass along the tax break to motorists.

In a joint statement, Senate leader Toni Atkins (D-San Diego) and Assembly Speaker Anthony Rendon (D-Lakewood) said the Legislature will use the state’s huge budget surplus to relieve motorists, rather than cutting the gas tax. But their statement also seemed to go beyond a desire to provide only gas tax relief.

They pledged to return “substantial tax relief to families and small businesses as fast as possible. Gas, food and other prices are up, so our focus cannot be a small cut to the gas tax that might not get passed on to consumers. Instead, the Legislature will seek tax relief from the general fund.

“This can avoid taking critical funds away from road repair and improvement while fully protecting … funding for schools. More details will be developed as the state’s revenue picture becomes clearer.”

That last sentence just confirms that you shouldn’t expect any state grandiosity for a while.

Dee Dee Myers, director of Newsom’s Office of Business and Economic Development, told reporters that the relief would probably total billions of dollars and go to registered car owners.

“We want to make sure that the money gets into the hands and pockets of the people who are paying these gas prices, and not into the hands of companies who might take advantage of a moment to increase profits,” she said.

Presumably car rental companies won’t be included in the largesse. Renters mainly pay for the gas.

Newsom was crystal clear about one thing: He won’t increase California oil production to make up for President Biden’s ban on Russian imports. Republicans are pressing him to allow California to become self-sufficient on oil.

“At a time when we’ve been heating up and burning up [from climate change], one thing we cannot do is repeat the mistakes of the past,” he said. “Embracing polluters. Drilling even more oil, which only leads to even more extreme weather, more extreme drought, more wildfire.”

That was about his only mentions of drought and wildfires, two urgent problems.

But that’s fine. His address lasted only 18 minutes — not a long-winded, extemporaneous marathon that is his style.

Actually, he would’ve preferred not to give the speech, but he did in keeping with tradition. He doesn’t like the pomp. And he also doesn’t think anyone outside the Capitol really cares, as he told lawmakers. Especially during Russia’s war on Ukraine.

Newsom didn’t give the speech in the traditional place, the ornate Assembly chamber. He gave it in the Natural Resources Building auditorium, which the governor controls and where he could practice comfortably. Because of dyslexia, the governor needs extra prep reading from a Teleprompter.

It will all work out well if we get our tax relief checks soon.