With state coffers overflowing thanks to another big surplus, Gov. Brian Kemp is once again suspending the state’s gas tax to cut the cost of motor fuel to Georgians.
Kemp can only suspend the tax one month at a time through his state of emergency executive order, and the new suspension — which starts at midnight — will run through Oct. 12. But he can continue the tax break on a monthly basis through executive orders, and the governor said that’s what he plans to do.
“Suspending the gas tax is a way to get that money back in the pocket, or at least keep it from coming out of pocket, of hardworking Georgians, small business people like yourself, but also Georgia-based families,” Kemp said at a tourism conference at the Jekyll Island Convention Center.
Kemp, a Republican, has been a consistent critic of the Democratic President Joe Biden’s administration, blaming it for rising prices. Inflation was at 3.2% in July, down from 8.5% the same month in 2022, according to the government’s Consumer Price Index report.
Fuel prices have been rising lately partly because of oil production cuts that Saudi Arabia, the Organization of the Petroleum Exporting Countries and its allies ordered earlier this summer, as well as soaring summer demand.
The U.S. Energy Information Administration on Tuesday said it expects global oil inventories to decline by almost a half-million barrels per day in the second half of 2023, which means oil prices will likely rise the remainder of the year.
The federal government projects U.S. crude oil production will hit an all-time high this year. But while the U.S. is the leading crude oil producing country in the world, more than 80% is produced elsewhere.
The average price for a gallon of gas in the U.S. on Tuesday was $3.83, according to AAA. In Georgia, the price was $3.57, down from $4.33 in mid-2022 but up from $3.24 a gallon this time last year. At this time last year gas taxes weren’t being collected. If the gas tax hadn’t been reimposed in January, today’s prices would be about the same as this time last year.
State Rep. Ruwa Romman, a Gwinnett County Democrat, said she’s concerned that Kemp is abusing his powers to suspend the gas tax without consulting lawmakers.
”There is no justification for the way the governor is circumventing the legislative branch on the budget. Georgians are unable to afford health care, hospitals are shutting down, and teachers are leaving the profession in droves,” Romman said. “We should be addressing those challenges.”
The Atlanta Journal-Constitution reported in July that the state ended fiscal 2023 on June 30 with a surplus of more than $5 billion in tax revenue. It marked the third big annual surplus in a row, and in the previous two fiscal years, Kemp returned money to Georgians with income and property tax rebates and, through much of 2022, a suspension of the state tax on gas.
Even before this year’s surplus, the state had more than $10 billion in various reserves.
Kemp last year suspended the gas tax — currently 31.2 cents a gallon for gas and 35 cents per gallon for diesel fuel — in an effort to lower the price to Georgians when fuel prices skyrocketed. He lifted that suspension Jan. 10, at a time when prices were below $3 per gallon.
The governor signed a law in March 2022 that cleared the Legislature with the backing of most Democrats and Republicans to allow him to suspend the gas tax through May of that year, but he announced extensions each month, benefiting from a wave of media coverage each time as he ran for reelection.
The suspension costs the state — and saves drivers — $150 million to $180 million a month. Kemp said Georgians saved $1.7 billion during the previous suspension.
Gas tax money goes for roads and other transportation projects, but Kemp and lawmakers previously backfilled the lost revenue with excess tax money that the state collected.
“I applaud Gov. Kemp’s suspension of motor fuel taxes to keep our people and our economy moving despite Washington’s inaction on rising fuel prices,” said Georgia House Speaker Jon Burns, R-Newington. “Georgia’s success story is no accident — it is the result of conservative policies enacted to keep Georgia the nation’s best state for business.”
Kemp said gas prices are “something that people have to deal with almost every single day, unlike a tax rebate or property tax relief, where you get it one time.
“I have three daughters who are traveling all over the place all the time. Somebody in our family is going to the gas station just about every day,” Kemp said. “I think this is going to have a big effect on our state, and it’s a great way to just kind of keep us going and help people keep fighting through 20-year-high interest rates and other things that people are having to deal with.”
He later told the AJC: “We want to give people help right now. If you watch oil prices, they continue to go up.”
Prices at the pump won’t necessarily plummet immediately.
Motor fuel taxes are excise taxes on distributors, rather than sales taxes on consumers. So the suspension means fuel distributors that supply gas stations will stop collecting the tax.
Any fuel that gas stations already had before the fuel tax suspension takes effect is fuel they’ve already paid the tax on. And gas they ordered before the fuel tax suspension takes effect is also taxed, so the price of that gas won’t change.
The governor is expected to propose more tax rebates in coming months to refund part of the fiscal 2023 surplus. He also has told state agencies they can request more spending in the coming year, a rarity for a fairly tight-fisted governor.
Staff writers Greg Bluestein and Adam Van Brimmer contributed to this article.