Utah lawmakers reportedly are on the verge of a gas tax compromise that would begin tackling highway and transit needs estimated at more than $11 billion over the next 25 years.
This is good news, and it comes with considerable political risk. People don’t like tax increases, but few things can hamper economic development and the flow of commerce quite like daily gridlock. Government has a legitimate responsibility to effectively fund improvements that keep up with population growth.
The Wasatch Front has gained a reputation for forward thinking over the last 15 years through the expansion of I-15 and the construction of effective light- and commuter-rail services. Current and projected growth will strain state budgets, and the state’s gas tax has remained at its current 24.5 cents per gallon level since 1997, losing ground each year to inflation. It is entirely proper for lawmakers to be debating new revenue.
Whatever emerges, however, needs to be fair and effective while maintaining a high level of accountability with taxpayers.
The House and Senate have been divided between two separate plans. The House version would tie the gas tax to a formula that uses the average price of gas during the previous year, with a guaranteed lowest price of $1.75 per gallon. It also would allow counties to impose a 0.25 percent sales tax for transportation, subject to a popular vote.
The Senate version simply would raise the gas tax by 5 cents per gallon. It would also raise the tax one cent each year over the next four years.
Sources say a compromise might result in a variation of the House’s percentage formula that initially would raise the tax by the equivalent of about 5 cents per gallon. The formula might be drafted in such a way as to guarantee that revenue would not drop from year to year. Also, the local-option sales tax might remain.
The concern with this formulaic approach is that gas taxes would rise automatically over time while diminishing the public’s ability to hold anyone accountable for the change. Also, neither plan would change how a portion of state revenue currently is earmarked for transportation, which also diminishes accountability.
The Utah Taxpayers Association has proposed a solution similar to the truth-in-taxation law that currently governs local property taxes. Simply put, it would allow state government to adjust gas taxes annually to keep revenues steady from year to year, with some allowance for natural growth based on total miles driven within the state. Any increase in revenue would require legislative action.
This sensible approach would keep the needs of taxpayers in mind.
Significantly, none of the current proposals accounts for the rise in alternative-fuel vehicles, or for EPA fuel-efficiency standards that are bound to require automobiles to go longer between fill-ups as time goes by. Drivers who rely on electricity, for instance, would largely escape responsibility for paying their share of road maintenance.
We prefer some sort of long-term market-based solution to highway funding based on variable tolls, or perhaps a taxing scheme based on miles driven, rather than fuel consumption.
The compromise expected to emerge during the current legislative session sounds like a good short-term solution to pressing highway and transit needs. But it can’t be the end of the discussion. Long-term solutions will require much more study and innovative thinking.