Diesel sales tax holiday coming to California

Legislative leaders in California have announced a state budget agreement that includes relief for truck drivers.

Gov. Gavin Newsom, Senate President Toni Atkins, and Assembly Speaker Anthony Rendon issued a statement over the weekend that they have reached agreement on the framework for the 2022-23 state budget.

The Democratic leaders and the governor have working to get a deal done with a July 1 budget deadline looming. The first of the month marks the start of a new fiscal year.

“California’s budget addresses the state’s most pressing needs, and prioritizes getting dollars back into the pockets of millions of Californians who are grappling with global inflation and rising prices of everything from gas to groceries,” reads a statement from the governor and state legislative leaders.

The governor, Atkins of San Diego, and Rendon of Lakewood, say the centerpiece of the agreement will offer tax refunds to many working Californians. The agreement is part of a $17 billion inflation relief package.

“Twenty-three million Californians will benefit from direct payments of up to $1,500.”

The legislature is expected to vote to approve the deal to give taxpayers a portion of the state’s $97 billion surplus on Wednesday or Thursday.

The tax refunds would be distributed starting in October.

Relief for truck drivers

Truck drivers fueling in the state will get a break from the state’s sales tax on diesel. The state collects a 3.9375% sales tax on diesel purchases.

The tax break will be in effect for one year.

The state will tap general fund money to cover the $327 million in lost revenue for transportation purposes.

Fuel tax relief nixed

Bipartisan pursuit at the California statehouse for fuel tax relief is not part of the budget agreement.

As a result, a scheduled inflationary adjustment on gas and diesel excise will occur on Friday, July 1.

Excise tax collected on gas purchases has been set at 51.1 cents and the diesel rate at 38.9 cents. Starting Friday, the gas rate is up 2.8 cents per gallon to 53.9 cents.

The diesel tax in the Golden State is up 2.1 cents per gallon to 41 cents.

Democratic leaders have said a rebate is a better approach that suspending fuel tax collection. They said in a recent letter that a fuel tax holiday would severely impact funding for important transportation projects and offer no guarantee that oil companies would pass on the savings to consumers.

The state’s budget surplus would be tapped to send rebate checks to California taxpayers making less than $125,000 or families making less than $250,000. The proposed amount for each taxpayer is $200.

Newsom had proposed sending rebate checks to drivers. His plan called for giving $400 per vehicle to drivers, with a maximum of $800 per family.

The plan was not included in the budget agreement. LL

More Land Line coverage of news from California.