Senate backs gas and diesel tax hike, calling it necessary evil

In a 23-5 vote, the state Senate Friday backed a gas and diesel tax hike set to take effect on May 1. Differences between the Senate and House gas tax hike bills now will have to be worked out.

The gas tax increase amounts to an per gallon hike of 7.5 cents by 2014, levied through a new 4 percent sales tax on the price of gas. There’s a 13.4 cent/gallon minimum floor for the gas tax, with a maximum ceiling of 18 cents/gallon, no matter how the price of gas fluctuates.

The diesel tax is set to increase by 4 cents, over two years.

Several senators argued in floor debate that the gas tax a necessary evil to provide matching funds that will prevent Vermont from losing about $56 million in federal transportation monies to upgrade bridges, roads and other transportation infrastructure. The House backed a similar gas tax hike last month, despite a rowdy debate, several failed amendments and strong Republican opposition.

But the House and Senate versions are different in important ways. Besides including a diesel tax hike, the Senate Transportation committee, led by chair Sen. Dick Mazza, D-Grand Isle, removed a House provision which pegs the gas sales tax to inflation, meaning that there would be automatic tax increases annually without legislative scrutiny. The House had rejected the idea of a diesel tax increase.

The automatic inflation provision suffered much criticism on the House floor.

The Senate committee heard numerous complaints from those opposed to the idea of automatic increases without legislative oversight, Mazza said on the Senate floor.

House Transportation committee chair Pat Brennan, R-Colchester, was disappointed but unsurprised by the Senate’s decision. He hopes to resolve the differences between the House and Senate versions of the legislation informally, without calling in a conference committee to hash it out.

Brennan indicated he’s open to reviewing the inflation index every three years, much as Department of Motor Vehicles and other state agency fees are reviewed on a rotating basis periodically. Still, he pointed out that annual increases under the inflation index would likely be very minor, about a quarter of a cent each year, given past trends.

Transportation Secretary Brian Searles told VTDigger that they’d originally proposed the inflation index because the state had lost purchasing power due to flat transportation revenues over the years. The last rise in the federal gas tax was in 1992.

But Searles ultimately left the decision and the debate up to the two chambers, declining to comment much on the inflator. “We respect that [difference of opinion]. That’s a decision that they have to make,” he said.

Imposing the tax in May, instead of on July 1, the day many state laws take effect, allows the state to collect an extra $1.6 million in revenue in June 2013, which Senate Appropriations has already earmarked for transportation spending in the coming fiscal 2014 budget.

“Their dilemma is that if they don’t make the deadline, then they’ll have to cut $1.6 million out of the budget,” said Searles of lawmakers.

“It’s just a balancing act between revenue and expenditures, and an important one, if you think the $1.6 million is important. And they obviously do,” he continued. The Senate wants to speed the bill along, with Senate President Pro Tem John Campbell moving successfully to suspend normal procedures to ensure its hasty passage.

As a body, the state Senate seemed relatively comfortable with the gas tax hike; the debate was calm compared with the fractious House discussion last month.

But some members, notably Sens. Ann Cummings, Dick McCormack and Anthony Pollina, voted against the measure, arguing that it disproportionately harms working Vermonters, who may have less fuel-efficient cars and lengthier commutes.

Members of the Senate Transportation committee defended the bill, contending that they’d searched hard but unsuccessfully for alternative ways to raise the revenue, arguing that the proposal balances the pain fairly across all drivers.

The bill garnered widespread support as it moved from key Senate panels: Senate Transportion approved the bill 5-0. Senate Finance and Appropriations voted 6-0-1 and 7-0 on it respectively.

While senators were wringing their hands over raising the tax, a move described as a “terrible choice” and a “horrible” political decision in the floor debate, Sen. Richard Westman, R-Lamoille, reminded lawmakers that routine repairs to his car, unwanted but inevitable, will invariably cost him far more than the tax hike does.

Mazza, however, described the tax hike as a fix that would last from three to five years, with a permanent solution required to wean the state off its dependence on gas tax revenues, which over the years have declined as drivers use less gas by driving efficient or alternatively powered vehicles.

Follow Nat on Twitter @natrudy

Nat RudarakanchanaNat Rudarakanchana

Comments

  1. Craig Kneeland :

    Hopefully, the diesel tax will discourage the wasteful trash-hauling on Vermont Highways. Our roads were not built for the many large trash trucks seen on the roads.
    What is generated in Chittenden County should stay in Chittenden County.

  2. Arthur Hamlin :

    I don’t have a problem with the gas tax increase as long as the funds can only be used for transportation uses. Tying the tax to inflation is a bad idea. Gas and food prices are much more volatile than general prices and past trends also include periods of high inflation. Plus, by definition, the 4% sales tax component of this tax automatically increases with the price.

    The diesel gas is more difficult. Big trucks cause more damage to the roads, but will increasing the tax put a break on commerce? Maybe a compromise is needed.

  3. Jim Barrett :

    Oh it was so painful for the representatives and now comes the governor with the same BS. How do you spell THIEVES! This just puts another new bunch Vermonters in the poverty category while that group is growing by leaps and bounds. Just finished reading about VERMONT being one of the most expensive states (out of 6) to tax people in retirement………..no surprise there either!

  4. Jim Christiansen :

    “Members of the Senate Transportation committee defended the bill, contending that they’d searched hard but unsuccessfully for alternative ways to raise the revenue, arguing that the proposal balances the pain fairly across all drivers.”

    Vermonters know that ending the transfer from the purchase and use tax to the education fund would free up more than enough money to draw down all available federal money.

    This type of rhetoric is slight of hand at best, and outright lying at it’s worst.

  5. Mike Feiner :

    Perhaps those legislators who voted for the gas tax increase, wouldn’t mind giving up their TAXPAYER FUNDED mileage reimbursement of 56.5 cents per mile! You see, the rest of us out in the hills of Vermont, have to drive to and from much lower paying jobs that provide NO $61/DAY MEAL ALLOWANCE, NO $101.00/DAY LODGING ALLOWANCE, AND NO MILEAGE REIMBURSEMENT. Try taking all that out of your salary, add in the GAS TAX HIKE and see how you like it then!

  6. Penelope Chevalier :

    Jeez people, gas prices fluctuate much higher than this tax, we need to maintain our roads and this is a reasonable way to replace federal revenue. I would be happy if higher taxes were assessed on all items we should use sparingly…gas, candy, soda, cigarettes, liquor, (weed!), lottery tickets, et al. And I mean really tax, a dollar or more. I buy gas and I’ll pay the price until it gets so high that I’ll find an alternative. We have a good quality of life in Vermont and we need to pay for it one way or another. This makes paying tax as voluntary as it can be. Stop complaining about a few cents in higher taxes, this is one big reason we have such a screwed up government!

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