by Nat Rudarakanchana March 4, 2013 vtdigger.org The House Transportation committee is set to vote early next week on phasing in a 4 percent sales tax on gas over two years, in an attempt to blunt the impact of the increase on drivers’ wallets.
The Shumlin administration proposed a 4 percent sales tax on gas for fiscal year 2014. The increase would raise about $28 million and would enable the state to avoid sending back about $56 million in federal funds for state infrastructure projects to Washington, DC.
Lawmakers have devised a more subtle package of tax hikes and cuts as an alternative. There’ d be a new 2 percent gas sales tax in June 2013, with no decrease in the excise per gallon tax. Then, in 2014, the sales tax would rise to 4 percent, just as there’ s a 6 cent reduction in the excise tax, which is now 19 cents per gallon.
By bonding in 2014 for $10.3 million, cutting $4.4 million in transportation programs and projects, and reducing the transportation fund’ s contribution to state police by $5 million over two years, lawmakers hope to secure the needed $36.5 million to avoid losing out on federal funds.
Rep. Patrick Brennan, R-Colchester
House Transportation committee chair Rep. Patrick Brennan, R-Colchester, who outlined the legislative proposal to VTDigger, said that though his committee has exhaustively explored other ways to raise revenue, they keep returning to some sort of gas tax.
Trends spurring the gas tax hike include declining gas use, with drivers consuming 40 million gallons less now than in 2005. That decrease in consumption is a result of Vermonters driving less and better fuel efficiency. The shift in behavior translates to $7.5 million less in revenue to maintain the state’ s deteriorating roads and bridges.
With this fix, Brennan said, they hope to fix the gas tax conundrum once and for all, leaving the Transportation Fund in better shape so that the Agency of Transportation can address the state’ s slowly crumbling infrastructure.
There will be problems in future, Brennan said, ‘ if we don’ t do something now.’
‘ I don’ t like raising taxes every year, but this proposal pretty much accomplishes everything,’ Brennan said. ‘ So hopefully you won’ t see transportation coming back in four years looking for another gas tax.’
The Legislature imposed a 2 percent transportation infrastructure bonding assessment on gas in 2010. The proposal now on the table would raise the gas tax by about 6.7 cents in the first year, and 7.5 cents in the second year.
As for the $4.4 million in potential cuts, Brennan said where they’ d fall remained uncertain, since they haven’ t been finalized by the committee. The administration has proposed cutting town highway programs by $1 million and reducing the infrastructure maintenance budget by $1.5 million, among other cuts.
Brennan pledged to block the administration’ s proposed cut to town highways. He said the $4.4 million cuts could be designed in such a way that they will not have a noticeable effect on average Vermonters. Lawmakers may institute the new gas tax a month early to blunt the cuts, he said.
‘ We’ re going to fix it so that you won’ t notice it,’ said Brennan of the cuts. ‘ We have a plan, put it that way.’
Reducing the transportation fund’ s contribution to the state police from $25 million to $20 million will coincide with $5 million more in transfers from the general fund, so police budgets won’ t suffer at all, said Brennan.
Deputy secretary for the Agency of Transportation Sue Minter told VTDigger that the administration definitely supports the phased-in plan, because it would better cushion the blow on drivers.