Senate panel jettisons gas tax idea, bonding for Vermont roads
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By Peter Hirschfeld Vermont Press Bureau - Published: April 8, 2009
MONTPELIER – Vermont can forge ahead with needed improvements to its transportation infrastructure without imposing new gasoline taxes on motorists, a key Senator said Tuesday.
A Senate committee has stripped a pair of gas-tax increases from a House transportation bill that passed through that chamber with wide support last week. Representatives had sought to use a 5-cent-per-gallon increase in gasoline and diesel taxes to leverage $120 million in new bonding over the next three years.
Sen. Dick Mazza, a Grand Isle Democrat and chairman of the Senate Committee on Transportation, said Tuesday that federal stimulus money, combined with a robust increase in baseline spending included in the administration's proposal, provides enough money for now.
"The concern from this committee is we don't want to saturate the market with too much work in a single year," Mazza said. "If we wait, and spread this spending out over a few years, I think we can attack the problem better."
The House's $479 million budget proposal outsized the governor's plan by about $22 million. The additional money – supported by revenue from the new gas tax – would be used to bolster state aid to town highway departments by more than $7 million next year. The House plan also includes $30 million in new bonding for fiscal year 2010 to rehabilitate and replace a number of aging bridges and culverts.
Mazza though noted that the governor's proposal already ratchets up spending by more than 20 percent over the fiscal year 2009 budget. Between that increase and the stimulus money, according to Mazza, Vermont can "turn the corner" without resorting to a gas tax that targets the pocketbooks of rural residents.
"People who live in a rural area have to drive much longer distances are going to end up paying a lot for that tax increase," Mazza said.
The Senate has also eliminated a House provision that would, beginning in 2012, tie the state's underlying 19-cent gasoline tax to an inflationary index. While House lawmakers said the measure allows state revenue to keep pace with rising construction costs, Mazza said he's wary of letting inflation data guide tax policy.
"Over time that figure could get real crazy," Mazza said. "I just think it's something we should continually revisit and reassess as we go."
Mazza said his committee is likely to support some increase in revenues, but that he, like the governor, will look to fees instead of gas taxes. The Senate version of the budget may even dial-down the revenue increase contained in the governor's proposal, which used fee increases at the Department of Motor Vehicles to raise about $17 million in new revenue.
Mazza said that the governor's plan, which he helped craft, offset the financial impact of substantial fee increases by transitioning to an every-other-year vehicle inspection cycle. That plan has been roundly criticized by mechanics and highway-safety officials; Mazza said he's now leaning toward a less dramatic fee increase that would raise about $9 million next year.
Secretary of Transportation David Dill said he favors the Senate's route of using fee increases to offset declining state revenues. Dill said the infusion of federal stimulus money obviates, for now at least, the need for a bonding reserve.
"It's really launching us in the right direction," Dill said.
Both Dill and Mazza said that Vermont faces a long-term revenue problem. In-state revenues from gas taxes and purchase-and-use fees are down by $20 million in the last year, the latest dip in a years-long trend.
Rather than raise taxes now, though, Dill and Mazza said the state can ride the infusion of recovery money until the next federal reauthorization bill, which they both hope will include significant increases in the funding formula for state transportation agencies.
"We're getting stimulus money and that gets us going in the right direction with plenty to push out in the near-term. While we're working on the stimulus, we don't need that bonding reserve," Dill said. "When we really need bonding is when we're through the stimulus, so we can keep the momentum going. And by that time we hope to have a very substantial new federal reauthorization bill … so we can really turn the corner on infrastructure issues."
The Senate has only just begun work on its version of the transportation bill, and will meet in coming weeks to fine-tune the plan. The House and Senate will then reconcile both versions in conference committee before voting on a final plan and sending it to the governor.
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