No tax hike on gasoline, says Douglas
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By Peter Hirschfeld Vermont Press Bureau - Published: November 21, 2008
MONTPELIER – Gov. James Douglas on Thursday rejected a newly minted proposal to raise the state gas tax, calling the plan an undue burden on Vermonters already struggling to balance family budgets.
State Treasurer Jeb Spaulding issued a report Tuesday recommending a 5-cent-per-gallon increase on gasoline and diesel taxes targeted at fixing the state's bridges. Declining transportation revenue combined with rapidly deteriorating infrastructure, according to Spaulding, necessitate a new stream of funds.
Douglas, though, said the state can find money within the exist-ing budget to meet transportation needs, and suggested that a federal stimulus package may alleviate the need for additional state revenue.
"This is a time when family budgets are squeezed and they're paying a lot more for various costs," Douglas said Thursday. "We don't need to increase the tax burden at this point on the people of Vermont."
Spaulding's report, commissioned by the Vermont Legislature, spotlights the massive scope of the state's transportation budget shortfall. His analysis, which calculates fiscal needs only for bridges and culverts, found a funding gap of between $30 million and $100 million annually over the next two decades.
Douglas said much of that shortfall could be filled by eliminating the "raid" on transportation monies, in which more than $30 million is siphoned annually from the Transportation Fund to the General Fund for other uses in the state budget.
"I think we should really look at alternatives, such as stopping the raid on the Transportation Fund," Douglas said. "We have to accomplish that before we talk about any other revenue source."
Spaulding said he agrees with the governor in principle, but that huge shortfalls in this year's General Fund will make it difficult to staunch the outflow of money from the Transportation Fund.
Meanwhile, he said, the state's bridges fall further into disrepair. And the cost of replacing or rehabilitating infrastructure increases each year.
"I agree we ought to eliminate the transfer," Spaulding said. "From a practical perspective though, it's a little hard to believe that when the Legislature has $100 million less money this year than they did last year that it's going to happen."
While Douglas criticized any plan to increase gas taxes, he said the state should proceed with a plan to accelerate an increase in fees at the Department of Motor Vehicles.
Secretary of Transportation David Dill said the state can raise $12 million annually by upping the cost of registrations, licenses and the like. Statute dictates that those fees be raised every three years; Dill has requested increasing the fees three months ahead of schedule so as to fill holes in the Fiscal Year 2009 budget.
Douglas said Thursday that it "makes sense" to compensate for inflationary pressures with the triannual fee increase. But Spaulding said fee increases have the same practical effect on withered household budgets as any tax hike. Furthermore, he argued, gas taxes offer a fairer way to distribute the burden. He noted that the state gas tax of 20-cents per gallon has remained static since 1997.
"I think that raising fees all the time is patently unfair," Spaulding said. "I don't see how it's fair to raise fees on an elderly woman who maybe drives her car once a week or once a month, and who contributes little to the wear and tear of Vermont's roads."
Spaulding said the gas tax would help Vermonters pass on costs to out-of-state motorists.
Douglas said he found that argument unconvincing, and said higher gas taxes might repel would-be tourists.
"Why would we want to make it worse, from a competitive standpoint, as we try to attract people to come to our state?" Douglas said.
Spaulding said he is loath to assess a new tax on Vermonters, but barring immediate action, transportation needs threaten to overwhelm Vermont taxpayers. He says his "Motor Fuels Distributor Assessment Index" would generate some $20 million annually and support a roughly $150 million bonding package that would simultaneously fix Vermont's bridges and energize a sluggish economy.
The funding structure, he said, would mitigate any impact on the state's credit rating. And with interest rates and commodity prices so low, he said, now is the time to act.
"I'd like to see the Legislature take this up at the beginning of the legislative season so we can start getting projects out the door this spring," he said." There is a confluence of factors that make this the right time to do this."
Joe Choquette, government affairs director for the Vermont Petroleum Association, said his organization was not dismissing the idea out of hand. He said the group would take the proposal up at its December meeting.
"Everybody is wary of any kind of tax increase in this environment," Choquette said. "Having said that, we also recognize the need for transportation funds out there. I wouldn't dismiss anything out of hand that's been proposed."
Douglas said he appreciates the treasurer's work in the report, and called the document a good jumping-off place for future transportation debates. A joint transportation committee will review Spaulding's report and make additional recommendations to the governor and General Assembly.
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