Gasoline tax hike loses some steam
A split in support by the business community has clouded prospects for a proposed local-option gasoline tax Â of about 10 cents a gallon initially Â pushed by counties and cities to help pay for local roads.
Meanwhile, legislative leaders signaled that beyond the local-option tax they do not expect to consider seriously any other tax hikes for state highways and mass transit next year an election year for most legislators. They say another year is needed to figure how to best fund transportation needs.
Chambers of commerce have been leading a drive for higher taxes to fund an estimated $11 billion over 30 years for high-priority projects identified in the state's unified transportation plan. Counties and cities last month proposed a 3 percent tax on gasoline to fund their local share of that work.
But the Transportation Interim Committee learned Wednesday that the local-option tax is opposed by a new coalition of the food industry, manufacturers, miners, gasoline retailers, retail merchants, beer wholesalers and truckers.
"We are aware that it's often been represented that business in its entirety have been supportive" of transportation tax increases, but "that's not entirely accurate," Todd Bingham, president of the Utah Manufacturers Association, said on behalf of the new coalition opposing the local-option tax.
He said the coalition collectively represents "more than 4,500 businesses, nearly 400,000 jobs in the state of Utah and about $35 billion in economic output."
It opposes the local-option tax in part because it could lead to different tax rates around the state, said Dave Davis, president of the Utah Food Industry Association/Utah Retail Merchants Association. "This adds complexity."
Davis said the group figures the local-option tax would raise the state's 24.5-cents-a-gallon gasoline tax, which has not been raised since 1997. "You're handing it all over to the locals," he told state legislators, saying it complicates fixing statewide needs.
The group worries local governments could use it as a sort of windfall, using gas tax for roads but not lowering other general taxes they have used for local roads and might shift them instead to other services.
Also, Davis said the local option tax is designed essentially to be indexed, or go up automatically with the price of gasoline. "We think that puts tax policy on auto pilot," he said.
But Sen. Kevin Van Tassell, R-Vernal, Senate chairman of the committee, said the gasoline tax loses value every year, because cars get better mileage and pay less per mile Â and the flat rate also loses value to inflation.
Davis conceded there's an argument to be made for boosting the tax.
"Is 17 years too long to wait [to raise taxes]? Yes it is, no question," Davis said, adding the coalition would support increases that are uniform, simple and allow competitive rates with neighboring states.
Meanwhile, the committee also heard Rep. Jim Nielson, R-Bountiful, explain a bill he is sponsoring that separately would raise gasoline taxes statewide by 1.5 cents a year for five years, for 7.5 cents total. It would split that money between state and local governments unless the local-option tax also passes, which would trigger provisions to give all the increases in Nielson's bill to the state.
Nielson said his bill would not solve all the state's problems but is affordable "and it's a start."
Rep. Johnny Anderson, R-Taylorsville, House chairman of the committee, said legislative leaders want the committee to take another year to figure out how to fund state transportation needs Â and focus now on identifying what those needs are.
Van Tassell, though, said the time for delay is running out.
"We will not kick this can down the road for very far," he said. "Within the next year or so, we're going to have something. And nobody's going to like it, including me because I drive a lot."
See more about comments here.