House advances gas tax increase
By Peter Hirschfeld
Vermont Press Bureau | March 21,2013
Albert J. Marro / Staff Photo
The Legislature is considering a gas tax increase. Petitions and signs against the increase are all over the state, including at the Mobil pumps on South Main Street in Rutland.
MONTPELIER — Politically challenging as it may be back home, House lawmakers gave preliminary approval Wednesday to a tax increase projected to add nearly 7 cents a gallon to gas prices this summer.
Higher prices in 2013 are only the beginning for motorists, who will see the new tax ratchet up alongside the price of unleaded if the legislation becomes law. For the first time ever, the gas tax will be calculated as a percentage of retail costs, a departure from the fixed surcharge of 19 cents per gallon used now.
While the controversial mechanism will help revenues keep pace with the rising cost of road and bridge maintenance, it also cost the fiscal year 2014 transportation bill, of which it is a provision, a few votes on the House floor Wednesday.
“We are abdicating our responsibility as legislators, taking away the people’s voice and indexing a tax we will never again vote for,” said Rep. Michael Marcotte, a Newport Republican who said he would have otherwise supported the higher gas tax.
Rep. Paul Poirier, a Barre independent, went so far as to call the indexing a “coward’s way out.”
“We should not be afraid to stand here and vote when we need to raise taxes,” he said.
Poirier’s charge was one to which Rep. Patrick Brennan, a Colchester Republican and chairman of the House Transportation Committee, took exception. He said the static nature of the gas tax is one of the primary reasons lawmakers find themselves facing the unpalatable task of raising rates on constituents this year.
“I think it’s courageous,” Brennan said. “I think it looks to the future, I think it has foresight, and I think it ensures people won’t have to make some of these tough decisions in the near future.”
The $657 million transportation budget passed by an overwhelming margin thanks not only to almost unanimous support from Democrats but also to the 12 Republicans who joined them. Rep. Tom Koch, a Barre Town Republican, said he has no interest in raising the gas tax on voters in his district. But he said that “the alternative is to vote ‘no’ and let our roads and bridges deteriorate even further.”
“And I will not support that,” Koch said.
The bill is scheduled for a final vote in the House today, after which it heads to the Senate. Senate President John Campbell said his body is convinced of the need for the new revenue but that he’ll be seeking explicit assurances the new money won’t be diverted to uses other than transportation infrastructure.
Annual sales of unleaded gas are down 40 million gallons since 2005, a more than 15 percent decline driven by a combination of rising prices and the proliferation of fuel-efficient vehicles. Brennan said transportation revenues have suffered as a result and the state now risks losing out on nearly $60 million in federal money for lack of a state match.
Gov. Peter Shumlin in January proposed a 4 percent tax on the retail price of gas (minus state and federal tax). The House has made some tweaks, but Deputy Transportation Secretary Sue Minter said it achieves the result the administration was looking for.
When the tax is fully phased in — the House version goes to a 2 percent tax this spring and jumps to the full 4 percent in June 2014 — it is expected to raise close to $30 million annually. Based on projections from the Legislature’s fiscal analysts, Brennan said, the estimated per-gallon impact at the pump will be 6.7 cents this year, 7.9 cents in fiscal year 2015 and 8.8 cents in fiscal year 2016.
The House has put a ceiling and floor on the gas tax, protecting state revenues against a steep decline in prices and insulating motorists from significant increases. The per-gallon assessment would top out at 19 cents, a limit that won’t be reached unless prices hit $5.30 per gallon.
Though lawmakers are looking to impose the 4 percent tax on retail sales, the existing 19-cent-per-gallon excise tax won’t go away entirely. When the entirety of the new tax is phased in, the excise tax is to fall to 13.9 cents. It will from then on be automatically adjusted every year based on the consumer price index.
“We know we ask a lot of Vermonters to help us pay for the roads and bridges they use, and it’s never easy to ask for more,” Minter said. “But we also know that Vermonters expect improvement to their roads and bridges.”
Republicans on Wednesday offered a raft of amendments that sought to eliminate the tax increase, remove the inflationary index or sunset the tax after one year. House Minority Leader Don Turner said each of the proposals, through a combination of spending cuts and revenue increases, would have delivered the money Vermont needs to avoid sending money back to Washington, D.C. Each failed by a wide margin.
“We all understand the importance of our transportation infrastructure,” Turner said. “But we also understand working Vermonters are already getting hammered all over the place, so raising the gas tax is the last thing we want to look at.”
Chiefly, Turner said, his caucus wants to “purify” the transportation fund, from which lawmakers currently take more than $50 million annually for purposes unrelated to upkeep of infrastructure. The transfers include nearly $28 million for the education fund and about $25 million for the Vermont State Police.
The House’s version of the bill would permanently reduce the annual transfer to public safety by $5 million over the next three years.
Public outcry over the proposal has taken a number of forms, including petitions urging lawmakers to “say no to the gas tax” on checkout counters at gas stations around the state.
On the floor of the House, Rep. Ron Hubert pulled an inches-thick pile of papers from a folder on his desk, saying it included the names of the 13,000 people who have signed the plea. He offered an amendment that would have minimized the need for new revenues by cutting entirely the $7.8 million subsidy to Amtrak. The amendment garnered only 15 “yes” votes.
Poirier, rarely an opponent of raising new revenues for government programs, said his colleagues are using the most regressive means at their disposal to generate the money needed for roads. Poorer Vermonters can’t afford the newer, more fuel-efficient vehicles needed to minimize the impact of the assessment, he said, nor can they stop driving to work.
“Many people in this room think, ‘What’s 6 cents on the gas tax?’” Poirier said. “Just try being in the seat of a family working for minimum wage, trying to make a car payment.”