Get ready for another gas tax increase

July 1 is shaping up to be a big day for California.

That’s when the Golden State’s sky-high gas prices are set to tick up even more due to a scheduled increase to the excise tax rate, which will tack nearly 3 cents per gallon onto prices at the pump. On Wednesday, drivers were already paying an average of $6.44 for a gallon of regular gas, compared to the national average of $5.01.

July 1 also marks the dawn of California’s new fiscal year — although the state’s spending plan is far from finalized. Lawmakers on Wednesday sent to Gov. Gavin Newsom’s desk a $300 billion placeholder budget, which the governor criticized earlier this week for failing to include “more immediate, direct relief to help millions more families with rising gas, groceries and rent prices.”

A similar message was struck Wednesday by a group of Republican lawmakers, who gathered outside the state Capitol in front of a huge “100” constructed out of bright orange traffic cones. According to the GOP legislators, Friday will mark 100 days since Newsom first floated the idea of gas tax relief in his March State of the State speech.

• Assembly Republican Leader James Gallagher of Yuba City: “We are still waiting with no relief in sight, fighting over $400 or $200 that they’ll send to you. And that’s not enough. We need action now. We’ve been calling since January to suspend the gas tax, the quickest, easiest way to provide relief to every California consumer on gas prices right now. If we had done it … everyone would have saved over $2,400 right now.”
• GOP Assemblymember Suzette Martinez Valladares of Valencia: “The cost of a gallon of gas in my district is equivalent to five cans of baby formula, or roughly two weeks of feedings. I know single moms are choosing to fill up only half of their tanks so they can make sure they have the money for baby formula. This is heartbreaking.”

But it isn’t just Republicans who have pushed to postpone gas taxes during an election year when many voters cite the cost of living as a major issue.

• Newsom earlier this year proposed suspending July’s scheduled tax increase and using the state’s nearly $100 billion surplus to backfill more than $1 billion in lost revenue for transportation projects. The plan was basically dead on arrival. “We stand ready to act as soon as the governor joins us in supporting a plan that provides stronger relief for California families,” Assembly Speaker Anthony Rendon and Senate President Pro Tem Toni Atkins told me in April. On Tuesday, Rendon tweeted a photo of him, Atkins and Newsom discussing “our joint efforts on the budget.” “I’m grateful as always for their partnership,” he wrote.
• A bipartisan group of lawmakers also suggested suspending the gas excise tax for one year and ensuring gas companies pass 100% of the savings on to consumers. Their colleagues voted the proposal down.

Meanwhile, the Federal Reserve raised interest rates by three-quarters of a percent on Wednesday — the biggest increase since 1994. The move is intended to tamp down inflation rates that have reached 40-year highs — but could also depress economic growth and prompt unemployment rates to tick back up. That doesn’t bode well for California, which last month accounted for more than 25% of the nation’s ongoing jobless claims.

The coronavirus bottom line: As of Monday, California had 9,169,339 confirmed cases (+0.7% from previous day) and 91,107 deaths (+0.1% from previous day), according to state data now updated just twice a week on Tuesdays and Fridays. CalMatters is also tracking coronavirus hospitalizations by county.

California has administered 76,967,300 vaccine doses, and 75.5% of eligible Californians are fully vaccinated.

Other Stories You Should Know

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1 The hidden risks of children’s day camps

One morning in June 2019, Doug Forbes and his late wife Elena Matyas dropped off their six-year-old daughter, Roxie, at a day camp in Altadena. Less than an hour later, they were racing to the hospital: Roxie had drowned in the camp pool.

It was only after Roxie’s death that her parents discovered the extent to which children’s day camps are unregulated in California, CalMatters’ Elizabeth Aguilera reports in this heart-wrenching story. Unlike child care facilities and schools, day camps are not required to conduct employee background checks, be licensed by the state, mandate CPR certification or report injuries or deaths to the state. No state agency conducts inspections for child safety, audits lifeguard certifications or reviews safety plans for activities that include zip-lining, swimming and shooting guns.

• Forbes: “What we found out was that nobody is watching over these camps. Millions of children are at operations that are completely unlicensed.”

Meanwhile, a legislative proposal to toughen regulations is facing obstacles.

• Assemblymember Chris Holden, a Pasadena Democrat who introduced the bill after Roxie’s death: “It would be totally irresponsible for us to continue operating this way as a state knowing what we know and the great harm that has happened to children.” But “it’s very complicated trying to find who will be the regulator of this. Everybody says this needs to happen but no one wants to take hold of it.”

2 Employers win victory from high court

From CalMatters economy reporter Grace Gedye: The U.S. Supreme Court on Wednesday handed California employers a victory by limiting a unique state labor law called the Private Attorneys General Act, or PAGA. The law enables workers to help enforce California’s labor laws, such as minimum wage and overtime pay, by collectively suing their employers for labor violations in the name of the state. 

The court ruled that workers who have signed arbitration agreements — job contracts that bar them from suing their employers and require them to settle disagreements through a private third party — with specific language cannot bring claims to court using PAGA. 

• Attorney General Rob Bonta: “PAGA strengthens California’s ability to tackle labor violations. While today’s decision is disappointing and adds new limits, key aspects of PAGA remain in effect and the law of our state.”
• Tom Manzo, president of the California Business and Industrial Alliance, a trade organization dedicated to changing PAGA: “We are grateful to the Court for hearing our arguments and rightfully ruling that businesses and employees should be allowed to resolve their disputes bilaterally and through arbitration, rather than through abusive, and often frivolous PAGA lawsuits.”

Nevertheless, the court seemingly left the door open for the California Legislature to make changes that would allow employees bound by arbitration agreements to still bring PAGA claims to court on behalf of a group of workers — or for California courts to correct the high court’s understanding.

• Justice Sonia Sotomayor wrote in a concurring opinion: “Of course, if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word. Alternatively, if this Court’s understanding is right, the California Legislature is free to modify the scope of statutory standing under PAGA within state and federal constitutional limits.”
• State Sen. Dave Cortese, a San Jose Democrat and leader of the Senate Labor, Public Employment and Retirement Committee: “We are still studying the Supreme Court ruling, and I am prepared to author legislation to respond; I believe that this ruling has provided a roadmap as to how we can create for employees a new pathway to legal standing as well as safeguard the protections that state law puts in place for our workers.”
• But voters could ultimately have the last word: An initiative to repeal PAGA is likely to soon qualify for California’s 2024 ballot.

3 Reading in between the (budget) lines

The scale of the budget blueprint state lawmakers sent to Newsom on Wednesday is hard to comprehend: more than $300 billion allocated across more than 1,000 pages of text. But even small sums contained within short sentences can have massive implications. Consider the following two provisions buried within the budget:

• California taxpayers will pay about $54.5 million in incentive bonuses to keep youth prison workers on the job ahead of next year’s planned closure of the state Division of Juvenile Justice, CalMatters’ Byrhonda Lyons reports. The contracts, which Newsom’s administration negotiated with six labor unions, represent one of the largest retention bonuses the state has ever offered to employees.
• A $600,000 line item underscores potentially massive changes for California’s stem cell agency, which voters narrowly opted to keep alive in 2020 by approving as much as $5.5 billion in bonds. When voters greenlighted the ballot measure, they also gave state lawmakers power for the first time over financial royalties from therapies and inventions financed by the agency, Capitol Weekly reports. And although $600,000 may not sound like much — lawmakers are allocating it to the agency to develop a patient assistance program — it’s just the tip of the iceberg: Another $15 million in royalties remains available in state coffers, according to Capitol Weekly.

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