California: Governor Proposes Enormous Increase in Gas Tax and Registration Fees


California Gov. Gerry Brown

It’s no news that the California Public Employees’ Retirement System (CalPERS) public pensions are pushing the state to its breaking point, but with the state’s General Fund Budget in a deficit by $1.6 billion, Gov. Jerry Brown is proposing a 42% increase in gasoline taxes and a 141% increase in vehicle registration fees.

Previous attempt to raise vehicle registrations fees and gas taxes were met with extreme opposition by the general public, including the successful campaign to recall Gov. Gray Davis.

The fact that Gov. Brown’s is willing to raise gasoline taxes by 17 cents a gallon and tack on an extra $65 on vehicle registration fees show just how dire the financial situation is in California. Brow’s draft budged for 2018 asks for a $524 million increase in public pension spending, an 11% increase over last year’s costs.

Gov. Brown doesn’t have many other realistic avenues for expanding tax revenue. California already has the highest personal tax rate in the nation, 13.3% of income, as well as one of the highest corporate tax rates in America.

The pension program, which cost the state $5.3 billion last year, is completely unsustainable. The CalPERS board decided late last year to reduce the $305.5 billion pension fund’s assumed rate of return from 7.5% to 7.375%, causing the state’s contribution to the pension fund to go up by $2 billion in the 2019-‘20 fiscal year.


CalPERS board member J.J. Jelincic

“I think the number is too high,” said CalPERS board member J.J. Jelincic in an interview with the LA Times. “I think it was more a political decision to aid [government] employers.”

Over the last 20 years the fund averaged only 6.9%, and returns for the previous year were only 2.3%.

According to calculations using Stanford University’s “U.S. Pension Tracker,” if the actual rate of return were 2.75 percent, a more realistic goal in the foreseeable future, the state would have an unfunded debt equaling about $92,748 per household in the state.

In short, Gov. Brown is between a rock and a hard place, and Californians are going to have to pay the price for the bloated system of the state’s public pension system.

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