New Mexico, Alaska take strides to make big fuel tax changes
February 4, 2020
Efforts underway at the statehouses in New Mexico and Alaska pursue additional road revenue via the collection of higher fuel tax rates.
The Owner-Operator Independent Drivers Association believes increasing the fuel tax is the most equitable way for states to generate additional revenue.
New Mexico bill to raise fuel rates
The state of New Mexico now collects a 17-cent excise tax on gas and a 21-cent excise tax on diesel.
The last gas tax increase occurred in 1993. It has been reduced twice since then. The diesel tax was last raised in 2003.
The House Taxation and Revenue Committee has voted 8-4 to advance a bill to increase the excise tax on gas and diesel by a dime next year. The gas tax would increase from 27 cents to 27 cents. The diesel rate would be raised from 21 cents to 31 cents.
Sponsored by Rep. Matthew McQueen, D-Santa Fe, HB173 would impose additional rate increases of a nickel each year through 2026. At that time, the gas rate would be 52 cents, and the diesel rate would be 56 cents.
Revenue from the increases would be allotted to the state road fund, a new clean infrastructure fund, and a new fuel excise tax rebate fund for low-income people.
Rep. Akhil Abbas, D-Albuquerque, described the bill as proposing a “modest increase” that is long overdue.
Rep. Jason Harper, R-Rio Rancho, said he supports a modest increase but a 10-cent increase is not modest. Instead, he said the state could tap existing revenue to help bolster the road fund.
“We made the good move last year to start sending some of the gas tax to the road fund,” Harper said. “Really, all of that should be going to the road fund. That would be a huge help.”
Abbas suggested an option to raise revenue would be taxing tires used by large trucks.
The bill’s next stop is the House Appropriations and Finance Committee. If approved there, it would head to the House floor.
Alaska fuel tax increase effort
One bill getting attention in Alaska would increase the state’s lowest-in-the-nation fuel tax rate for the first time in half-a-century.
Sponsored by Sen. Click Bishop, R-Fairbanks, the bill would raise money for transportation purposes. Specifically, SB115 would double the current 8-cent tax rate for gas and diesel to 16 cents per gallon.
A proposed amendment from the bill sponsor would increase biennial registrations for electric vehicles by $100. Hybrid vehicle registrations would increase by $50.
The tax and fee increases are estimated to raise $35 million annually. Increased fees on alternative fuel vehicles would initially be about $900,000 yearly.
The Senate Finance Committee discussed the bill during a Monday, Feb. 2, hearing.
Bishop told the panel the state is long past due for a rate increase.
“After adjusting for inflation, an 8-cent fuel tax rate in 1970 is the equivalent in purchasing power to 52 cents today,” Bishop said in prepared remarks. “In other words, Alaska’s fuel tax has lost 82% of its purchasing power since 1970.”
He added that adjusting the state’s tax rate “will take a meaningful step toward our ability to fund the state’s backlog of transportation infrastructure and maintenance needs” along with improving the state’s fiscal stability.
Sen. Bert Stedman, R-Sitka, said it is hard to argue the state does not need to collect more revenue for roads. He added that it would be up to the Legislature to ensure the new money is applied for road work.
“Somehow, if we go forward with this tax, we need to be assured that it’s an additive, not supplementing other funds. Otherwise, we have no maintenance net gain on our highways,” Stedman said.
The committee did not take immediate action on the bill.