Cities, counties seek new 3 percent gasoline tax
By Lee Davidson
The Salt Lake TribuneFirst published Oct 16 2013 02:34PM
Utah’s cities and counties asked the Legislature Wednesday for permission to impose a new local 3 percent tax on gasoline — which is initially expected to boost the price 10 cents a gallon.
That would be on top of the current federal tax of 18.4 cents and a state tax of 24.9 cents — pushing the total tax tab past 53 cents a gallon.
Taylorsville Mayor Jerry Rechtenbach said distribution formulas for the current state gasoline tax give cities and counties about 4 cents per gallon for local roads, falling far short of their needs. He said the state gas tax has not been raised in 16 years, while costs have skyrocketed.
"Projects get deferred," he added, "and the costs keep going up."
Rechtenbach noted many cities have raised property taxes or borrowed through bonding to pay for local roads — and still lack necessary funds while siphoning money that could go to other services.
Utah County Commissioner Larry Ellertson concurred that cities and counties want the 3 percent tax on the retail cost of gasoline — minus other taxes added to it — which currently averages about $3 a gallon.
Under this proposal, he said, the Utah Tax Commission would look annually at the average cost per gallon for the previous year, then add a 3 percent tax to the price for the next year. If imposed next year, Ellertson estimated the local tax would be 10 cents a gallon.
By making the new tax a percentage of the cost of gasoline instead of a flat amount per gallon, it would go up — or down — with inflation, Ellertson said.
That avoids some problems the state has with its flat 24.9 cents per gallon tax. That tax has lost value to inflation, making funds stretch less each year.
The proposal also could be easier politically for legislators to pass in 2014, an election year for them. That’s because legislators technically would not raise the tax themselves. They merely would give permission for counties to raise it for themselves and their cities. Ellertson predicted all of the counties would.
The nonpartisan Utah Foundation recently released a report saying that, with current taxes, Utah will have an $11.3 billion shortfall over the next 30 years for planned, high-priority highway and mass transit projects.
Rechtenbach said city and county roads account for about $3 billion of that projected shortfall — and the new gasoline tax hike would cover that share. Other methods would be needed to overcome deficits for state highways and mass transit.
Lane Beattie, president and chief executive of the Salt Lake Chamber, said the proposed tax increase "is critical."
Rechtenbach said the tax boost might save taxpayers money in the long run, allowing early maintenance of roads. That can be 10 times cheaper than deferring work until major rehabilitation or replacement is needed.
Ellertson compared the choice to an old motor-oil commercial that showed a mechanic doing expensive work on a car engine that had not been maintained properly. "As he said, ‘You can pay me now, or you can pay me later,’ " Ellertson said, adding proper maintenance is cheaper.
The committee, which spent the summer examining options to boost transportation funding, took no action.
Some lawmakers raised a few concerns. Rep. Don Ipson, R-St. George, warned that if the tax is too high, many cross-country travelers would skip over the state.
Sen. Kevin Van Tassell, R-Vernal, said he wants to ensure local governments would not get a windfall from the tax.
Beattie responded that local road needs are so great that he is sure the revenue would be spent on that and nothing else.