California's gas tax repeal is in danger of losing – and it could could spell trouble for the GOP in the election

Key Points
  • A gas tax repeal measure in California known as Proposition 6 that Republicans had rallied around is losing steam, and that's bad news for the GOP.
  • A new poll released this week finds that 41 percent of likely voters support Proposition 6, while 48 percent oppose it.
  • House GOP leaders have been contributors to the repeal effort, hoping it will boost Republican voter turnout in tight congressional races.
  • Republican John Cox, who is running for governor against Democrat Gavin Newsom, also has made support of the repeal a centerpiece of his underdog campaign.
Adam Jeffery | CNBC

Republicans in California had rallied around a gas tax repeal known as Proposition 6, but the measure is now at risk of failing, according to a new poll. That could mean trouble for some GOP candidates who pinned hopes on gaining votes from supporters of the ballot initiative.

Top House Republican leaders have been contributors to the gas tax repeal effort, hoping it will boost GOP voter turnout in tight congressional races in California. Republican John Cox, who is running for governor against Democrat Gavin Newsom, also has made support of the repeal a centerpiece of his underdog campaign.

"The idea that this thing would galvanize Republicans, get them out in all these competitive congressional districts, doesn't seem to be the case," said Thad Kousser, professor of political science at University of California, San Diego. "It's something that some Californians love, some Californians hate — and it's not completely a party issue."

If passed, Proposition 6 would repeal an increase in gas taxes as well as vehicle fees passed last year by the Democratic-led state legislature. It was part of state Senate Bill 1, a transportation funding package to help pay for a backlog of repairs to roads, highways and bridges. SB-1 resulted in the state excise tax on gasoline rising by 12 cents per gallon, or 40 percent.

A phone poll released this week by the nonpartisan Public Policy Institute of California found 41 percent of likely voters support Proposition 6, while 48 percent oppose it; 11 percent were undecided. The margin of error was plus or minus 4 percentage points. Last month, the institute found 39 percent supported it and 52 percent opposed it.

Repeal proponents, or the "yes on 6" side, contend the increased fuel taxes, which include diesel, are unnecessary because there was already enough money to fix roads and highways.

Some also contend the gas tax hike is a job killer for small businesses since they could hire new employees with the money they are now shelling out in added fuel taxes. Then again, labor unions and construction groups have released studies arguing the new fuel taxes will support thousands of new jobs every year.

Impact on diesel

"I'm voting 'yes' on Prop 6 because the gas tax is just another expense that's hitting me," said Joe Ferrari, a walnut farmer in the state's Central Valley. "If I didn't have to pay these gas taxes, I could probably hire a few more employees."

Ferrari said it's common for residents in the Central Valley to drive long distances, and given that agriculture is the lifeblood of the region, there's a big need for fuel.

"I drive a gas pickup truck, but all my farm equipment is pretty much diesel like my harvesters, tractors and anything for maintenance of the orchards during the year," the fourth-generation farmer said.

Last November, the state's diesel tax jumped by 20 cents, to 36 cents per gallon — an increase of 125 percent. Also, the new law lifted the diesel sales tax rate to 13 percent from 9 percent. That said, farming does have a partial tax exemption on diesel when they use fuel for hauling raw agricultural products to processing plants.

Midterm battle lines

The repeal effort received financial help from the California Republican Party and top House Republicans such as Majority Leader Kevin McCarthy, R-Calif., and Speaker Paul Ryan, R-Wis. Several GOP congressional seats in California are at risk of flipping to Democrats, and some of the Republican candidates have focused on their support of the gas tax repeal as a way to tap into voter discontent with Sacramento's policies.

"The Republican members of Congress who did donate, while we appreciate it, they remain a fraction of what was raised," said Proposition 6 campaign leader Carl DeMaio, a Republican and former member of the San Diego City Council.

A coalition of business, labor, public safety and local government groups is fighting the repeal, pouring more than $40 million into the effort and outspending supporters by nearly 10-to-1. The levy's proponents argue that getting rid of the new gas tax will end up costing Californians even more money as streets and highways will further deteriorate. They also contend the gas tax repeal threatens public safety because more than 1,600 bridges and overpasses are deemed "structurally deficient."

"Gas prices in California are ridiculous — more than anywhere in the country," said Gregory Landis, a Los Angeles-area real estate manager who identifies as an independent voter. "I have to drive 40 miles each way every day, and it adds up. And I don't see the streets being taken care of with the money they're already getting."

As of Thursday, California motorists were shelling out an average of $3.81 per gallon for gasoline, the highest of the Lower 48 states and well above the the national average of $2.84, according to AAA.

According to the Public Policy Institute of California, 53 percent of Republican likely votes support Proposition 6, along with nearly half of independents. Only 28 percent of Democrats want to see the gas tax repealed.

"You have what we would define as a slim majority of Republicans," said Mark Baldassare, the institute's president and CEO.

A matter of language

Support for Proposition 6 is strongest in Orange and San Diego counties but weaker in the San Francisco Bay area, according to the institute's polling. The poll found fewer than half across all demographic groups favor the repeal.

However, Proposition 6 leader DeMaio suggests the polling isn't entirely accurate since likely voters surveyed on the phone are hearing negative aspects of the initiative when they are read the state's official description for the measure: "Eliminates certain road repair and transportation funding."

"The big problem is that the ballot title is false and misleading," said DeMaio, insisting that the state should have allowed it to be titled as a "gas tax repeal" initiative. "Obviously the ballot title hurts, but it's our campaign's hope that a phone poll is not the way in which people are approaching this election. So I think the polls are wildly off on what's going to ultimately be the outcome."

To make his point, DeMaio pointed to a Survey USA online poll released last week that specifically asked likely voters if they want to repeal gas taxes enacted last year. The poll found nearly 58 percent of likely voters plan to cast a yes vote on Proposition 6 and 28 percent no, while 13 percent remain undecided.

DeMaio still believes the repeal will pass, but if it doesn't he insists proponents won't just go away.

"Frankly, I think you're going to have people who are Democrats and Republicans and independents who are going to be livid," he said. "And I think that's going to fuel a movement that will continue for the next two years."

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