After threatening a veto, Gov. Arnold Schwarzenegger Monday signed bills to implement a fuel tax swap — repealing California’s sales tax on gasoline, but replacing it with an excise tax designed to generate the same amount of revenue.

While the end result is designed to be revenue neutral to motorists who buy fuel, and to the California state government as a whole, the bill is expected to provide $1.1 billion toward closing the state’s $19 billion budget gap, because excise tax revenue will be used to pay for debt service on outstanding general obligation bonds issued for transportation projects.

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