After a day-long debate marked by defeated amendments and many speeches, the Vermont House eventually backed a new 4 percent sales tax on gas, 105-37, over repeated Republican objections.
The debate today clears the way for a final formal vote in the near future, likely later this week. Much substantive debate came today, but the legislation eventually survived intact and only slightly altered from a Shumlin administration proposal from late January.
The legislation phases in a 4 percent sales tax on the pre-tax price of gas over two years, but also lowers the state’s per gallon excise tax by 5.9 cents per gallon, from 19 cents per gallon to 13.1 cents per gallon.
The bill calls for $10.38 million in bonds and over $5 million in transportation spending cuts, including a $1.8 million cut to maintenance programs, about $600,000 to paving and $600,000 to rail programs. Nine rail projects would be cancelled under the plan.
The proposal is set to raise about $36.5 million in new revenues from the gas sales tax, without which the state will lose about $56 million in federal matching funds. It’s also intended to address volatile gas prices and declining gas consumption by providing a blended revenue source.
Overall, Vermonters will see a 7.5 cent increase in gas taxes, by 2014, with the first phase of the tax coming this May. There’s a minimum floor, so that Vermonters will never pay less than 13.4 cents of gas taxes, even if gas prices go below $3.88 a gallon, and a maximum ceiling, so people won’t pay more than 19 cents per gallon, even if prices rise to $5.30 a gallon.
House Transportation Chair Pat Brennan, R-Colchester, pitched the increase as a needed one-time fix to maintain the state’s crumbling infrastructure, avoid losing federal money and mitigate the effects of long-term declining gas consumption.
On the House floor, Brennan recalled the happier days of 2005, when gas cost $1.86, and when the state’s drivers used 39 million gallons more gas, a plus for state coffers.
“It was not an easy choice to move in this direction, and we didn’t make this decision lightly,” said Brennan. “We explored anywhere between 15 to 20 different funding options, and we ended right back here every time.”
Meanwhile, House Republicans and some Democrats made it apparent they’d oppose parts of the package, branding it “regressive.”
Four Republican amendments failed roundly on the House floor. Two attempted to eliminate tying the gas tax to inflation, or levied new taxes and registration fees on electric vehicles. Others cut state subsidies to Amtrak by $7.65 million, upped bonding from $10.3 million to $16.6 million, or prevented future transfers from the Transportation Fund for other state programs.
By tying the gas tax to inflation, or the CPI index, the state could have raised about $27 million more annually than it does now, according to mid-February Joint Fiscal Office committee documents. But taxes would have also grown about 8 cents between 1994 and 2012, with average increases of less than a cent per year.
Some lawmakers blasted this as an “escalator” automatic increase, which wouldn’t be scrutinized or voted on yearly.
Rep. Cynthia Browning, D-Arlington, argued that the tax should be imposed only for one year, to safely secure the federal funds, but then repealed. She said lawmakers could then take more time to permanently solve transportation funding problems, including a $240 million annual budget transport gap.
“When the price of gas goes up, the inflation will go up, the tax on gas will go up, and the burden on working Vermonters’ budgets will be greater,” Browning said. She said she understood the need for transportation revenue, but wanted lawmakers to show the same kind of concern for impacts on the budgets of the poorest Vermonters.
She argued that the federal funding crisis was being used as an “excuse” to put through a substantial permanent gas tax increase.
To make their points, both sides also brandished documents. Brennan circulated color photos of the state’s poorly maintained roads and a Newark bridge, while Rep. Ron Hubert, R-Milton, wanted an anti-gas tax petition signed by 13,000 Vermonters entered into the legislative record.
Throughout the day, three House committees – Transportation, Ways and Means, and Appropriations – repeatedly backed the initial package, in decisive votes, taking the wind out of potential amendments.
In a House Democratic caucus to outline the proposed amendments, Rep. Diane Lanpher, D-Vergennes, who sits on House Transportation, said only once in the past had the state failed to take enough federal funds.
“We’ve only once in the history of Vermont left any federal dollars on the table, and everyone was fired the next year,” Lanpher told the caucus, to laughs.
Deputy Transportation Secretary Sue Minter believes that lapse happened under the Kunin administration, with the then-Transportation secretary fired for failing to secure those funds, though she isn’t sure of the details.
The last time the state faced a similar crisis to draw down federal funds was in 2006, Minter said.
After the defeat of all the amendments, House Republican Leader Don Turner said: “We did the best we could. We have only 45 people here, but we’ve made our case. I hope we showed you that there are other choices to be made in the transportation budget.”
House Speaker Shap Smith told VTDigger he supports the tax because the federal revenue is sorely needed. Smith couldn’t preside over the debate because he had to act as governor in the afternoon. Both Gov. Peter Shumlin and Lt. Gov. Phil Scott were out of town.