Fuel tax relief pursued in nine states
A growing number of statehouses across the country have legislation to change how much fuel tax is collected from motorists and truckers.
California
On the heels of California Gov. Gavin Newsom unveiling his budget plan, which includes freezing the state’s fuel tax rates, one legislative proposal would take an extra step.
The tax freeze is part of Newsom’s plan to spend a $45 billion state surplus.
The governor’s proposed budget includes information on a suspension of the expected inflation-related increases this summer to the state’s fuel excise rates.
The state excise rate on gas is 51.1 cents and the excise rate on diesel is 38.9 cents.
An annual inflation adjustment is set to take effect on July 1. Newsom’s plan is to delay the adjustment for a minimum of one year.
The governor’s office said a pause is expected to decrease fuel tax revenue by $523 million in 2022-23.
“We’re going to backfill it in terms of the tax itself to transportation projects so that there’s no direct impact to investments,” Newsom said at a news conference announcing the plan.
One state legislator would go even further than what the governor is proposing.
Assembly member Kevin Kiley, R-Rocklin, introduced a bill to completely suspend collection of fuel taxes for six months.
To compensate for lost tax revenue, AB1638 calls for transferring money from the state’s general fund to the state’s transportation tax fund.
Colorado
Less than one year after inking a massive transportation funding deal that includes a new 2-cents-per-gallon fee on gas and diesel, Colorado Gov. Jared Polis wants to apply the brakes.
Tax and fee increases included in the funding deal are estimated to raise $5.4 billion over 10 years. The increases are scheduled to take effect on July 1. Annual penny increases to the fee on gas and diesel are set to follow each year through 2028.
When announcing his transportation plan a year ago, Polis said, “It’s time to finally fix our damn roads.” Fast forward to the beginning of this year’s regular session, he says now is not the time.
“What I think we can all agree on now is now is not the time. … Let’s show people relief at the pump,” Polis said at a Jan. 10 news conference.
Instead, Polis wants to bid on competitive grants through the federal infrastructure bill.
The legislature must approve his plans.
Maryland
One Maryland House bill would take action to prevent automatic adjustments in fuel tax rates.
Maryland law authorizes fuel rates to be adjusted each July based on the consumer price index. Since July 1, 2021, the gas tax is 36.1 cents and the diesel rate is 36.85 cents.
HB144 would repeal the rule for annual adjustments.
Delegate Matt Morgan, R-St. Mary’s, told the House Ways and Means Committee increasing fuel prices makes the change necessary.
“Our constituents are having an enormous increase for everything from the price of gas to food on grocery shelves,” Morgan said. “At this time, it would be helpful to pass tax relief onto consumers – the ones who need it the most.”
Tennessee
A Tennessee House bill would provide truck drivers and others fueling in the state some relief at the pump.
Rep. Bruce Griffey, R-Paris, is behind a bill to return the tax rates to where they were prior to a 2017 state law that raised the gas tax by 6 cents and increased the diesel rate by 10 cents.
Instead of relying on the additional fuel tax revenue to fund transportation and infrastructure projects, HB1650 would reroute funds from the state’s budget surplus to roads and bridges.
In fiscal year 2021, Tennessee collected $3.1 billion more in taxes than the legislature budgeted, Griffey said.
“The state would continue to fund transportation and highway projects at the same financial level while at the same time giving tax relief to its citizens,” Griffey said in a news release. “We wouldn’t miss a beat with our infrastructure projects because Tennessee has the money.”
Missouri
Multiple Missouri legislators want to reverse course on a recent fuel tax increase.
A 2021 law raises the 17-cent fuel tax rate by 12.5 cents over five years.
Since Oct. 1, the state is collecting 19.5 cents per gallon on fuel purchases. The tax rate will climb to 29.5 cents by July 1, 2025.
Rep. Sara Walsh, R-Ashland, and Sen. Mike Moon, R-Ash Grove, are behind legislation to repeal the tax increase.
The main point of contention for the increase is whether legislators worked around the Hancock Amendment to the Missouri Constitution. The amendment mandates that any proposed tax rate increase above a certain amount must go before voters.
The bills are HB1594 and SB782.
Florida
Florida Gov. Ron DeSantis is pursuing a six-month gas tax holiday. He said the relief is necessary to help offset rising fuel prices.
“Gas prices have been rising due to inflationary pressures from bad federal policies, so we here in Florida need to step up and provide relief to our citizens,” DeSantis said in a news release.
The tax holiday is touted to provide more than $1 billion in gas tax relief.
Ohio
An Ohio Senate bill would provide relief for truckers and motorists from a recent increase in fuel tax rates.
In 2019, the legislature approved a transportation budget deal that included raising the 28-cent fuel tax rate to 38.5 cents for gas and from 28 cents to 47 cents for diesel.
SB277 would return the gas and diesel tax to the 2019 rate.
The rate reductions would begin no later than July 1, 2022. The tax rate would remain unchanged for five years.
Virginia
Virginia Gov. Glenn Youngkin has called for pressing the pause button on fuel tax rate increases.
Action underway at the statehouse pursues his goal. The first bill, SB541, would lower the tax rate on gas and diesel on July 1, 2022.
The gas tax rate would be trimmed by a nickel from 26.2 cents to 21.2 cents. The diesel rate would be reduced from 27 cents to
20.2 cents.
The tax rates would be the same as they were prior to July 1, 2021.
Rates would return to their current amounts on July 1, 2023, and be indexed beginning July 1, 2024.
The second bill, HB1059, would suspend collection of the state and regional taxes on gas and diesel until July 1, 2023.
Another bill, HB297, would suspend the imposition of any regional fuels tax in the state until July 1, 2023.
Washington
One Washington state lawmaker wants to provide a year-long reprieve from state fuel taxes.
A bill from Sen. Simon Sefzik, R-Ferndale, would suspend the 49.4-cent fuel rate through the end of the year.
To make up for lost revenue, SB5897 would use funds from the state’s $8 billion surplus. Specifically, $1.3 billion would be transferred from the general fund to the state transportation account.
“The state has so much money right now that the legislature probably would have trouble spending it all,” Sefzik stated. “Well, I’m saying we shouldn’t. We should give some of it back to the taxpayers, in the form of lower gas prices, at a time when it could really make a difference.” LL