California lawmakers consider cutting gas tax

March 27, 2000
Web posted at: 9:05 p.m. EST (0205 GMT)

From Correspondent Greg LaMotte

LOS ANGELES (CNN) -- With the most expensive fuel prices in the nation found in car-crazy California, there are rumbles in the state Legislature to repeal -- or temporarily suspend -- the state sales tax on gasoline.

That would cut prices at the gas pump by about 15 cents a gallon. But would that really help consumers?

"It means that each of the 58 counties in California would see a significant reduction in the funds available for mass transit and in rural areas for streets and roads," said Brian Taylor, an urban planning specialist and state legislator.

• An 18.4-cent federal gas tax goes to federal highway projects.
• An 18-cent state gas tax goes to building and repairing state roads.
• A 15-cent state sales tax goes to the state's general fund.

VIDEO CNN's Greg LaMotte looks at the push to give consumers a break at California's gas pumps. Real 28K 80K Windows Media 28K 80K    IN-DEPTH Priming the pump     MESSAGE BOARD Rising oil prices

Lawmakers are pondering whether to get rid of that last 15-cent tax.

"If it's during the peak summer driving season and then it comes back into force -- we could live with that," said economist Jack Kyser. "In fact, it would be good news for the tourist industry.

"But if it's a permanent cut, then that gets to be very, very dangerous, and a couple of years from now people will be screaming," he predicted .

California sets aside about $300 million annually to fund the state's transportation districts like the Los Angeles Metropolitan Transit Authority.

That city's MTA serves about 1.3 million bus and rail commuters each day -- citizens who could be inconvenienced if the state sales tax on gas is permanently repealed.

"In the case of rail, we wouldn't be able to run it as often. And, in the case of buses, you may see some lines canceled or services reduced on lines that are very busy," said David Yale of the Los Angeles MTA.

Most transportation experts seem to agree that there is an even bigger downside to repealing gas taxes.

Lower gasoline prices, they warn, would likely reduce consumers' incentive to buy more fuel-efficient vehicles, use mass transit or join car pools.

That would mean the United States would maintain its dependence on oil from the Organization of Petroleum Exporting Countries.

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