[L]ow gas prices have put more cash in Vermonters’ pocket books, but falling prices at the pump are coming at a cost to the state’s transportation budget.
As gas prices have dipped over the past year, so have the tax receipts that fuel the Transportation Infrastructure Bond fund.
As a result, the fund, which is used to back bonds for road repairs, is $6.6 million short.
The state collects a 2 percent assessment on the retail price of gas for the Transportation Infrastructure Bond.
When the Transportation Infrastructure Bond was established in 2009, gas prices were about $4 a gallon. At the time, the 2 percent levy was sufficient, according to Chris Cole, deputy secretary of the Agency of Transportation.
This year the dramatic decrease in gas prices has left the state in a bind.
One week after Gov. Peter Shumlin released his 2016 budget proposal, the transportation revenue forecast was downgraded to reflect the $6.6 million shortfall in the Transportation Infrastructure Bond fund.
To stop the drain on the TIB fund, the transportation committee proposed to establish a floor. If the price of gas drops so low that the amount the state collects for the TIB is less than 4.15 cents per gallon, the state will continue to collect the TIB at that amount.
In other words, if the price of gas drops down to around $2 per gallon, the TIB assessment will hold steady at 4.15 cents per gallon, even though that is more than 2 percent of the retail price.
Cole said the change in the assessment formula would not be noticeable to most Vermonters.
“It stops the bleeding any further,” Rep. Patrick Brennan, R-Colchester, chair of the House Transportation Committee, told the Appropriations Committee on Thursday.
A similar model is in place for the portion of the gas tax that subsidizes the Transportation Fund, which has a floor set at $3.86. Cole said that the model is working — in January, the revenue forecast from the gas tax was upgraded to $2.7 million.
Meanwhile, gas receipts are declining overall because fuel consumption is dropping across the state, according to documents Brennan presented. In the period between January and March 2009, the annual statewide consumption rate was 335.89 million gallons. That figure dropped to 307.8 million gallons in January of this year.
If the number of gallons of fuel sold in Vermont remains at the same level next year, the Transportation Fund could lose $8.6 million.
The transportation bill includes a $1 million reduction in personnel costs. Brennan told the committee he anticipates some of the staff savings will be achieved through vacancies.
The state will also cut $1.5 million from the road paving budget, Cole said.
The transportation bill includes what Brennan characterized as a “boots on the ground” approach to stormwater runoff.
The bill establishes a Town Highway Clean Water Program within the Agency of Transportation. The program will give grants to municipalities and towns to support projects that would reduce runoff from roads, with funding of $1 million. The state is under pressure from the federal government to reduce phosphorous pollution in Lake Champlain and other waterways. Road runoff contributes to the phosphorous problem.
The bill found almost $1 million in a reduction in the amount transferred from the Transportation Fund to the central garage. That amount is drawing on surpluses from internal service funds from recent years, so Cole said the cut will not impact equipment replacement in the central garage.
The transportation bill went to the House Ways and Means Committee on Thursday afternoon and will likely be in House Appropriations on Friday.
