Campaign 2014: Rolling Back Gas Tax Indexing

Massachusetts voters will decide on Question 1 on Tuesday—an initiative petition to eliminate the automatic, annual indexing of its 26.5-cent gasoline excise tax to inflation, implemented with a three-cent gas tax increase last year.

2 minute read

November 2, 2014, 5:00 AM PST

By Irvin Dawid

Stephen Lee Davis of Transportation for America sees the ballot measure as a "bellwether for efforts to raise state transportation revenue."

About a third of states index their gas taxes to ensure that growing construction costs don’t result in a net loss of funding to maintain and build their networks. [See Kentucky's here.]

As Massachusetts shows, which went 22 years before raising its 23.5 -cent gas tax, it's difficult to get legislators to support raising the gas tax, which is why its being considered on a federal level as the gas stuck has gone 21 years without an increase:

As attractive as indexing is to making transportation funding sustainable, it's also inherently controversial—as reflected in citizens gathering signatures to place the initiative on the ballot. It was dropped from neighboring New Hampshire's 4.2 -cent gas tax increase this year.

As we noted with the Wisconsin ballot measure to also be decided on Tuesday to "protect gas tax funds'', the state's gas tax "rate had been indexed to inflation, increasing from 16 cents to 31 cents between 1985 and 2006, but the indexing was eliminated under Gov. Jim Doyle," according to the Wisconsin State Journal."

One argument in opposition to indexing is that voters don't like automatic increases to the gas tax—preferring that legislators or citizens vote to do so.

A compromise measure is to place a "cap" on indexed gas tax increases as Connecticut did in 2012 when it "capped the taxable portion of the wholesale gas price at $3 per gallon," according to CT News Junkie (and posted here). However, caps can be too restrictive, as some see in Kentucky:

The index, because of the 10% cap, has not kept pace with the average wholesale price and the increase in the gas tax has been limited to slightly more than a penny per year, wrote Mike Helton, Managing Partner of Government Strategies, a government relations and lobbying firm in Frankfort. [PDF].

To listen to a debate on Question 1 on Boston's NPR new station, click here.

[Correspondent's note: Other T4America Blogs posted here are accessible under Transportation for America blog and Transportation for America].

Wednesday, October 29, 2014 in T4America Blog

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