Capitol debate powered by gas

Filed: 03/16/2000

SACRAMENTO (AP)  Every California motorist knows it  gasoline prices around the state are nearing and even topping the scary $2-a-gallon threshold.

And since this is an election year, California lawmakers are scrambling to look like they are doing something about it.

Assembly Republicans tried unsuccessfully Thursday to force a floor vote on two proposals to reduce the taxes paid on gasoline, but were blocked by majority Democrats.

GOP lawmakers were backing a bill to exempt gasoline from the state sales tax, which varies from 7.25 percent to 8.5 percent around the state. They also wanted to ask Congress to repeal 4.3 cents of the 18.3-cent-a-gallon federal excise tax on gasoline.

The Assembly's Democratic leader, Speaker Antonio Villaraigosa, said he will propose suspending the sales tax on gasoline over the summer travel months, but says a permanent end of the tax would hurt funding for items such as roads.

"I think the Republicans' proposal to repeal the tax is irresponsible," Villaraigosa said. "It would undermine the entire infrastructure system in this state."

Democrats have their own additional proposals aimed at improving gasoline supplies over the long term.

Gasoline prices statewide averaged $1.74 cents a gallon for regular on Monday, said the California Energy Commission. That was up from $1.60 the week before and $1.19 a year ago.

San Francisco's average of $1.90 a gallon is the highest in any major U.S. city, a California State Automobile Association study found.

Reasons for the increase include high crude oil prices, reduced refinery production due to planned repairs, market speculation due to rumors about refinery problems and low west coast inventories, said commission spokeswoman Suzanne Garfield.

In the Assembly, Republicans failed Thursday to persuade majority Democrats to quickly pass the GOP tax proposals. Democrats said the bills should be considered by committees, along with their own plans.

The sales tax collected on gasoline increases as the price rises and "is feeding the biggest state budget surplus in state government history at the expense of huge deficits in family budgets," said Assemblyman Tom McClintock, R-Simi Valley.

If the state exempted gasoline from the sales tax, there would be no guarantee that oil companies, which pay that tax, would cut gas prices accordingly, countered Assemblyman John Longville, D-Rialto.

Eliminating the sales tax on gasoline will not address the cause of the price hike, said Philip K. Verleger, an oil markets expert with the Brattle Group, a Cambridge, Mass., research company.

Because only a few refineries produce the special "clean" gasoline mandated by California, the state is especially vulnerable to shortages and price hikes, he said.

"Passage of the measure right now would do nothing for the price of gasoline. That price has to do with the current shortage of gasoline in California," Verleger said.

http://www.bakersfield.com/cal/i--1258877521.asp

-- Martin Thompson (mthom1927@aol.com), March 17, 2000