Fuel tax relief efforts continue at statehouses

April 14, 2022

Keith Goble

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Five states have taken action in recent weeks to provide fuel tax relief for at least certain drivers.

Work continues at statehouses around the country to decide whether to offer cost savings for motorists and/or professional drivers.

Connecticut

In Connecticut, a three-month holiday from paying the state’s 25-cent excise tax on gas took effect April 1. The tax holiday does not affect the 41.1-cent excise tax on diesel.

The gas tax holiday runs through the end of the fiscal year – June 30.

Suspension of the gas tax for three months is projected to cost the state $90 million.

Georgia

Georgia enacted a fuel tax holiday on March 18.

The state collects a 29.1-cent gas tax and a 32.6-cent diesel tax.

The suspension of state fuel taxes runs through May 31.

Gov. Brian Kemp said the state is in a good position to provide a tax break because of a $3.7 billion budget surplus through fiscal year 2021.

Maryland

Maryland was the first state to take action on a fuel tax holiday.

State law authorizes fuel rates to be adjusted each July based on the consumer price index. Since July 1, 2021, the gas tax has been set at 36.1 cents and the diesel rate at 36.85 cents.

On March 18, Gov. Larry Hogan signed into law legislation to suspend collection of the state’s fuel rates for 30 days. The tax holiday took effect immediately and runs through April 16.

Suspending collection of fuel taxes is estimated to cost the state $100 million.

Advocates say the lost revenue would be covered by dipping into the state’s $7.5 billion budget surplus.

The governor said at the time the tax holiday took effect that it may be necessary to extend it beyond the original 30-day time period.

An attempt failed earlier this month to extend the tax holiday through Memorial Day.

New Mexico

New Mexico Gov. Michelle Lujan Grisham has signed into law legislation to provide a gas tax rebate.

During a special session earlier this month, legislation was approved to give single tax filers a $500 rebate check. Joint filers would receive $1,000.

The money will be made available in two separate payments, with the first payment by June 30. The second check will follow in August.

New York

A budget deal reached last week between New York state lawmakers and Gov. Kathy Hochul includes a fuel price break. The $220 billion state budget includes a provision to partially suspend the state’s fuel taxes for seven months.

The state charges about 33 cents per gallon for gas and diesel. There are multiple components that make up the state’s fuel tax collection.

There is an 8-cent excise tax and a 17.3-cent petroleum business tax. Additionally, there is an 8-cent state sales tax.

The deal reached would trim tax collection by 16 cents per gallon. Specifically, excise tax and state sales tax collection would be suspended from June 1 through the end of the year.

New York’s excise tax and the sales tax raise about $485 million each per year.

The tax break is projected to cost the state $585 million in lost fuel revenue.

“We have to look at our people where they are and meet them where they are right now at this time of great stress,” Hochul said at a news conference announcing the budget deal.

Action elsewhere

Efforts continue around the country to provide similar relief from high fuel costs for motorists and truck drivers. Some actions underway at statehouses are included below.

California

Work underway in California would tap into the state’s budget surplus to send rebate checks to all California taxpayers. The proposed amount for each taxpayer is $400.

“We believe a rebate is a better approach than suspending the gas tax, which would severely impact funding for important transportation projects and offers no guarantee that oil companies would pass on the savings to consumers,” a letter from Democratic leaders reads.

The rebate checks would be sent to every California taxpayer, regardless whether they own or drive a vehicle.

The proposal is estimated to cost the state $9 billion. The state’s budget surplus would be tapped to cover that amount.

Democratic Gov. Gavin Newsom has said he supports some relief from high fuel prices.

Newsom said during his annual State of the State address last month that he supports a rebate plan. He also wants to pause a part of the sales tax rate on diesel for one year, and to suspend the inflationary adjustment on gas and diesel excise that is set for July 1.

Newsom wants to send debit cards to drivers of gas-powered vehicles and electric-powered vehicles.

His proposal has a more than $10 billion price tag.

In addition to $9 billion in tax refunds, up to $600 million would be necessary to pause a part of the sales tax rate on diesel for one year. Another $523 million would be used to pause the inflationary adjustment to gas and diesel excise tax rates.

Colorado

A legislative push in Colorado would delay an upcoming fuel tax increase.

One year ago, Gov. Jared Polis signed into law a massive transportation funding deal that included a new 2-cents-per-gallon fee on gas and diesel. The fuel tax increase is scheduled to take effect on July 1.

The governor said at a recent news conference that “now is not the time” to increase fuel taxes.

At the governor’s urging, a bill introduced in the House would delay implementation of the new tax for six months to Jan. 1.

The bill, HB1351, is part of a $157 million fee-relief package that includes a reduction in the state’s vehicle registration surcharge fee.

Delaying implementation of the new fuel tax is estimated to result in a $29.9 million hit to state revenue.

The House Finance Committee is scheduled to hold a hearing on the bill Monday, April 18.

Florida

In Florida, state lawmakers have reached an agreement on a gas tax holiday initially pursued by Gov. Ron DeSantis.

The Legislature approved a state budget that includes a one-month gas tax holiday. The tax holiday from collecting the 27-cent tax rate would be for the month of October.

A portion of the state’s federal stimulus dollars will be used to cover the estimated $200 million in lost gas tax revenue.

DeSantis wanted a six-month gas tax holiday to provide more than $1 billion in tax relief.

New Jersey

Multiple pursuits in New Jersey would provide tax relief.

Sen. Ed Durr, R-Gloucester, is leading pursuit to offer a $250 rebate to single tax filers who make up to $25,000 per year. Joint filers making up to $250,000 annually would receive a $500 rebate.

The plan has a nearly $1.9 billion price tag for the state, according to the New Jersey Office of Legislative Services.

The bill, S2290, is in the Senate Transportation Committee. The Assembly version, A3704, is in the Assembly Commerce and Economic Development Committee.

A separate plan from Sen. Shirley Turner, D-Mercer, would revert the state’s fuel taxes to 2016 levels for 60 days.

The state now collects a 42.4-cent gas tax and a 49.4-cent diesel tax.

Turner’s proposal would temporarily reduce the gas tax rate to 14.5 cents and the diesel rate to 17.5 cents.

“When gas prices increase, it has a ripple effect throughout the economy and increases the costs of everything else at a time when crushing inflation is already causing many people to make sacrifices and forgo even basic necessities, such as food and medicine,” Turner said in a recent press release.

The estimated impact to the state is $180 million to $200 million.

Virginia

Virginia Gov. Glenn Youngkin has sent legislation to the General Assembly to suspend state fuel tax collection for three months.

Virginia collects a 26.2-cent-per-gallon tax on gas and a 27-cent rate for diesel.

The governor is calling for the tax holiday to run from May through July, and to phase it back in slowly in August and September.

Youngkin said the state could absorb the lost revenue by tapping into excess transportation funds. The amount needed is estimated to be about $437 million.

“With gas prices and inflation squeezing families’ pocketbooks across Virginia and the nation and with over $1 billion in unanticipated revenue in our transportation fund, the General Assembly must act now,” Youngkin said in a news release. “Virginia should join numerous other states, led by both Republicans and Democrats, in temporarily suspending the gas tax. Actions speak louder than words, we can lower gas prices now for all Virginians.”

His plan would also cap the annual adjustment to the fuel taxes at no more than 2% per year “to further protect Virginians from the hidden tax increase of inflation.”

The bills, HB6001 and SB6001, can be considered during the special session.

IFTA effect

Pursuit at statehouses for fuel tax holidays that would include diesel has the attention of professional drivers. Truckers want to know what a tax break would mean for paying their fuel tax through the International Fuel Tax Agreement.

IFTA Executive Director Carmen Martorana recently told Land Line Media that drivers wouldn’t have to pay state fuel tax if they are buying and burning the fuel in a state that is not collecting the tax.

Martorana pointed out that drivers who buy fuel in a state with a fuel tax exemption and drive in a state without an exemption would have to pay that tax out of pocket.

She added that if a driver pays taxes on fuel in one state, but then drives in a state that has a tax holiday, they can get reimbursed. LL

Land Line Now Senior Correspondent Ashley Blackford contributed to this report.

More state trends

Keith Goble, state legislative editor for Land Line Media, keeps track of many trends among statehouses across the U.S. Here are some recent articles by him.

Keith Goble has been covering trucking-related laws since 2000. His daily web reports, radio news and “OOIDA’s State Watch” in Land Line Magazine are the industry’s premier sources for information regarding state legislative affairs.