California Gov. Gavin Newsom Proposes $400 Debit Cards for Car Owners, Free Transit, Gas Tax Cuts

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New $11 billion relief package aims to help Californians ease burden of higher gasoline prices

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His plan comes as the average price of regular unleaded gasoline in California is $5.88 a gallon, according to AAA data, with some neighborhoods charging more than $6 a gallon. That compares with the national average of $4.24 a gallon.

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Gasoline prices hit record highs after Russia invaded Ukraineas traders, shippers and financiers rejected Russian oil, omitting much of it from the daily global supply.

Lawmakers in other states are also pushing to pause or reduce the collection of gasoline taxes. And at the federal level, some members of Congress are calling on the Biden administration to suspend federal taxes on fuel.

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Gasoline prices in California are often higher than in other states due to higher fuel taxes and stricter regulations. An average California driver spends about $300 in gasoline excise tax in a year, according to the governor’s office.

Mr. Newsom’s proposed tax refund would take the form of $400 debit cards for registered vehicle owners, including electric-vehicle owners, with individuals eligible to receive up to two payments. The rebates would cost the state about $9 billion.

There were 35.6 million fee-paid registered vehicles in California in 2021, according to state government statistics. About 22 million vehicles would be eligible for the proposed rebates, a for the California Department of Finance said. Certain vehicles—such as fleet vehicles and those registered to corporations—wouldn’t be eligible under the proposal.

Mr. Newsom’s proposed package calls for $750 million to provide Californians free transit for three months, roughly $1.1 billion to reduce fuel taxes and $500 million toward projects that promote biking and walking. The transit grants apply to bus, subway and light-rail riders.

“That direct relief will address the issue that we are all struggling to address,” Mr. Newsom said.

The Newsom administration said it plans to meet with the California state legislature in the coming days to negotiate the details of the proposal. If the proposal is approved, the first payments could begin as soon as July, the statement said.

Republican James Gallagher, minority leader of the California State Assembly, said Mr. Newsom’s plan to help ease the impact of higher gasoline prices would take too long. “July? Really?” he said in a tweet. California Republicans are instead pushing to suspend the state’s 51-cent-per-gallon gasoline tax.

In other states, Maryland, Connecticut and Georgia are temporarily cutting state gasoline taxes.

State lawmakers in Florida approved a measure earlier this month that suspends the state’s 25-cent-per-gallon tax of gasoline in October, which comes after the end of the state’s busiest tourist season. Lawmakers in Illinois, Massachusetts, Maine, Michigan, Minnesota, New Hampshire, New York and Tennessee are considering gasoline tax suspensions.

Critics of a suspension say oil companies might further raise the price of fuel if the federal tax is paused. Others point out that the gasoline tax only makes up a small part of the overall cost of gasoline.

Suspending gasoline taxes at the state level also means officials would have less money at their disposal to spend on mass transit and road and highway maintenance unless it is offset in some way. State officials that back gasoline-tax suspensions say this is one of the few tools they can use to give drivers some relief.

Write to Omar Abdel-Baqui at [email protected]


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