This bill aims to maintain the funding necessary for highway and public transit systems within the state by adjusting the state fuel tax in response to any changes in the federal fuel tax. By establishing a recalibration mechanism, SB 591 seeks to prevent revenue shortfalls that could arise from federal tax reductions. This adjustment process is intended to uphold both the state’s infrastructure and its revenue needs while providing a consistent taxation framework that stakeholders can rely on.
Summary
Senate Bill 591, introduced by Senator Berryhill, is an amendment to Section 7360 of the Revenue and Taxation Code pertaining to the motor vehicle fuel tax. This legislation imposes a tax of eighteen cents ($0.18) on each gallon of motor vehicle fuel sold within California, excluding aviation gasoline. The bill also stipulates that if the federal fuel tax drops below nine cents ($0.09) per gallon, the state tax rate will be adjusted to ensure the combined tax from both federal and state sources remains at a total of twenty-seven cents ($0.27) per gallon. Furthermore, the bill ensures continued exemptions for entities that were exempt from the federal fuel tax before any such reductions.
Contention
While the bill primarily makes nonsubstantive changes, discussions surrounding it raised concerns about the overall impact on state taxation strategies and funding flows. Advocates argue that keeping a stable revenue stream is essential for maintaining transportation infrastructure, while critics may view any adjustment to fuel taxes as a potential burden on consumers and businesses, especially those in the transportation sector. The bill emphasizes the importance of strategic tax policies in balancing state revenue with the economic realities faced by its constituents.