As gas prices have started to decrease in time for the Fourth of July weekend, a scheduled California gas tax increase has gone into effect with the start of the new fiscal year July 1.
The tax, which is a standing annual increase, will cost drivers an additional three cents per gallon at the pump. The tax before the increase stands at 51 cents per gallon — the highest in the country.
Money collected through the state’s gas tax goes towards highway and road improvement projects.
Both Democrats and Republicans at the state capitol have been vocal in the past months about wanting to suspend the gas tax for a year and give residents money to keep up with rising inflation.
Gov. Gavin Newsom initially proposed halting the gas tax increase for a year in his January budget draft. His efforts were opposed by lawmakers concerned about the effect this would have on funding transportation projects.
Though Newsom’s efforts failed, a group of bipartisan lawmakers proposed a bill to suspend the tax in April. The bill missed the deadline for a vote, which was required for budget measures to be considered.
The tax increase is part of California’s budget plan, which Newsom and the legislature reached an agreement over on June 26. If finalized, the agreement includes a one-year suspension on the diesel tax, which would go into effect Oct. 1.
This year’s state budget plan also propose “inflation relief” payments for about 23 million California residents. These direct payments, which range from $200 to $1,050 depending on income and family size, will go out between October and the beginning of the year.
The gas tax went into effect July 1, though in general gas prices have started to decrease. The state average gas price currently stands at $6.29 per gallon — down seven cents from an average of $6.36 one week ago. Prices are down an average of eight cents per gallon in San Francisco and 10 cents per gallon in San Jose.