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As gas prices plunge, gas taxes may rise

Utah officials may use a hike to fund transportation work

Utahns soon may be paying more for gas — even though prices at the pump have fallen — because state officials are looking at a tax increase to pay for transportation projects.

Gov. Jon Huntsman Jr. is considering changing the way gas purchases are taxed in his new budget, set to be released Thursday, so Utahns would pay a percentage of the price at the pump rather than the current set rate of 24.5 cents per gallon.

Huntsman spokeswoman Lisa Roskelley was reluctant to call the proposal a tax increase. "It would depend on how it was assessed," she said. "Transportation is a different sort of situation because it is a user fee."

The rate could be adjusted so that Utahns wouldn't be paying more for gas as long as prices — currently the lowest in years — stay the same. But once gas prices start to climb again, so will the amount they pay in state gas taxes on every purchase.

It's time to talk about raising the tax on gasoline, said Senate President-elect Michael Waddoups, R-Taylorsville. Waddoups wants the governor to call a special session of the Legislature quickly to restore some state transportation projects recently put on hold.

Waddoups said that could mean a boost in the gas tax or an increase of 1/10 of a cent or so in the state sales tax toward paying for the nearly $4 billion in projects the Utah Department of Transportation announced last week would be suspended.

He said he believed there would be support among lawmakers as well as the public for a tax increase once they realize how much of an impact setting aside projects like the Mountain View Corridor connecting Salt Lake and Utah counties will have on the economy.

"A lot of us will say we don't want it," Waddoups said. "But when we see the ramifications, it might be different."

The House, though, may be more reluctant to raise taxes.

"That is a desperate last resort, and I'm a long ways from that position," said House Speaker-elect Dave Clark, R-Santa Clara.

Clark said the governor's proposal "may be more palatable now when gas is not a high of $3 to $4 a gallon, but it is still fundamentally an added tax that hurts people," especially those already hurt by the declining economy.

Clark does support a special session to deal with additional cuts to the current budget. Lawmakers have already sliced $272 million from the budget year that ends June 30, 2009, in a September special session.

"The revenue numbers continue to shrink," Clark said. "We addressed a shortfall in September and now we're looking at one that could be even bigger ... It's much better to solve that when we have seven months to work with."

Waddoups, too, said he doesn't want to wait until the 2009 Legislature starts in late January to make more budget cuts. Waddoups said he agreed with outgoing Senate President John Valentine, R-Orem, that the next round of cuts could be twice as deep.

Huntsman, though, is not sold on the idea of a special session. Roskelley said the governor's budget announcement next week will deal with the current budget shortfalls as well as those anticipated in the upcoming budget year.

"The goal is to put forward a budget proposal that can provide a pathway forward that wouldn't necessarily require a special session," Roskelley said. "That's not to say we wouldn't entertain that conversation with the Legislature."