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New gas tax hits Ag’s fragile bottom line

Posted on June 6, 2017 by Sonoma Valley Sun

On April 28, Governor Brown signed SB1 into law. This new California law is a fuel tax that will be placed on diesel fuel and gasoline. Starting November 1st 2017, diesel fuel will go up by $0.20 per gallon and gasoline will go up by $0.12 per gallon. The sales and use surtax on diesel fuel will go from 1.75% to 5.75%. The bill also adds an inflation adjustment beginning July 1, 2020 and every three years thereafter.

Over the last 18 months, agricultural businesses in California have seen an onslaught of new regulations. SB 1513 made ag operations that paid piece rate go back three years to pay for unpaid travel and break time. SB 304 gave three days of paid sick time to all full time employees. AB 1066 will phase out ag overtime from a 10 hour workday to an eight hour work day by 2022.

SB 3 will increase California’s minimum wage to $15/hour by 2023. In Sonoma County, we already pay 20% above minimum wage to have a workforce. To stay relative and keep our workers, we will be paying $18 per hour.

These laws were voted into effect by the California legislature. The legislature that the citizens of California elected into office. These new regulations have a direct impact to Sonoma County ag’s bottom line.

“As always, farmers and ranchers have a disproportionate burden of increased costs, like taxes, because we can’t pass these on,” said California Farm Bureau Federation President Paul Wenger in a recent Ag Alert article. “Farmers and ranchers purchase our inputs on a retail level and sell wholesale.”

Wenger is exactly right with these statements. Agriculture producers usually have no way to pass these costs on and end up taking a hit to our bottom line.

The sad thing is in the case of SB 1, the money is for road repairs and maintenance, but the law doesn’t provide a means for the money generated in Sonoma County to come back to repair and improve Sonoma County’s roads.

I am all for better roads, higher wages, social equitability and doing the right thing, but these shouldn’t be putting family famers out of business. As farmers, we can’t be expected to carry the costs of these new laws and regulations. Consumers need to know it is the laws passed by the legislature they elected that are translating into higher costs at the grocery store or wherever food is sold to the general public. The consumer has to be prepared to pay more.

It will become an important part of the groups and associations that we belong to start educating the public about the realities of their voting power. As members of any association or trade group, you should make this education a priority.

In the future, more and more regulations will create an increasing burden on the family farmer. We need to be engaged and do our best to educate the public and our elected officials; otherwise, we can expect to see our bottom line continue to shrink.

Steve Dutton, President, Sonoma County Farm Bureau 

One thought on “New gas tax hits Ag’s fragile bottom line

  1. This is interesting. Everything described in the negative as “regulations” are actually benefits for workers, workers who in ag, typically don’t get many benefits. Farmers rightly care about their own bottom line, and fairness, to be fair, is an issue here for all parties. Certainly the answer can’t be that ag needs to remain more unfair to workers to make things work. So I agree, more education is needed; step one: stop equating a human benefit as merely a regulation.

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