- Idaho lawmakers introduced an official statement condemning a Utah gas tax proposal.
- The Utah sponsor said bill would shift the gas tax burden from consumers to refineries.
- Following Idaho backlash the bill will no longer put a new tax on exported fuel, he said.
Utah House Speaker Mike Schultz thought he was taking on the oil industry to make fuel more affordable for Utahns. Instead, he ignited a war of words with one of the state’s closest neighbors.
Prior to the legislative session, Schultz told the Deseret News he wanted to cut the state’s gas tax — one of the highest in the country — by shifting taxes to the oil that refineries send out of the state.
Mostly to Idaho.
News of the proposal — which has still not been made public — sent top political leaders in Idaho reeling. It spurred a statement calling out Schultz by name and sparked a series of retaliatory threats.
But on Wednesday the sponsor behind Utah’s still-secret gas tax reduction, Rep. Cal Roberts, told the Deseret News he had backed away from any proposal that would negatively impact Idahoans.
“We value our partnership with Idaho,” Roberts, R-Draper, said. “Removing of the gas tax exemption for fuel that leaves the state is not part of the current discussions. ... That’s just not being considered.”
Why is Utah looking at the gas tax?
This was not always the case.
For months Schultz had railed against Utah gas prices, which sometimes rise above the national average. He shared anecdotes of traveling over the border and paying significantly less at the pump.
As part of an initiative focused on family affordability, Schultz threw his full support behind Robert’s proposal, which Roberts described as “rebalancing” the tax structure by removing oil industry tax breaks.
“Should we look at reevaluating some of those exemptions — let’s call them subsidies and breaks — in favor of the consumer?” Roberts said at a Utah Taxpayers Association event. “Our argument is that we should.”
For years Utah sought to increase oil output. Now it was time to recognize some of the “negative externalities” that came along with oil production by changing where the tax burden falls, according to Roberts.
By removing the exemption on fuel exported from Utah, lawmakers would be able to broaden the tax base, and lower the tax rate of $0.38 per gallon for regular Utahns, Schultz told the Deseret News before the session.
Idaho pushes back on Utah tax plan
On Jan. 30, Idaho lawmakers signaled all-out hostility toward Utah’s gas tax with Idaho Speaker Mike Moyle introducing an official resolution opposing fuel export taxes that would disproportionately hit Idaho.
Roughly 75% of the fuel exported from Utah goes to Idaho. Taxing this would violate constitutional provisions on interstate commerce, similar to a failed Washington State policy from 2022, the statement said.
Speaking with local news stations, Moyle said the proposed tax would cost Idahoans $250 million. He promised a “tit for tat” response, including withholding water that would have gone to the Great Salt Lake.
The state has rights to 125,000 acre feet on the Bear River that is not fully utilized, Idaho Senate Majority Caucus Chair Mark Harris said. But he said he would prefer to avoid a tax-water showdown.
“It’s not a good position to be in. We’re kind of suspicious of each other now,” Harris told the Deseret News. “The possibility that it would raise Idaho’s gas tax 30 cents a gallon, is not helpful.”
Schultz points the finger at petroleum industry
On Monday, Schultz rejected the idea that Utah’s gas tax policy would have an impact on Idahoans and warned that “threatening to kill the Great Salt Lake does not end well for Idaho.”
But Schultz expressed openness to working with the Legislature to the north and said Roberts had already made significant changes to the bill. As for the blow-up among Idaho leadership, Schultz blamed Big Oil.
“The petroleum industry, it’s sad, pitted Utah against Idaho. I feel really bad about that. That’s not what the intent was,” Schultz said. “What was told to Idaho was not accurate and even close to accurate.”
In an interview with the Deseret News, Roberts added that he believed lobbyists in both states had intentionally “stirred the pot” between Utah and Idaho in an effort to “politicize” his gas tax proposal.
The Utah Petroleum Association said in a statement it is not actively fighting the proposal. Idaho leaders reacted to public comments from Schultz and Roberts, association president Rikki Hrenko-Browning said.
What will Utah’s gas tax bill do?
All of this controversy erupted before Roberts even had final language for his bill. Roberts hopes the bill will be made public this week. But the proposal will no longer include an end to refinery tax exemptions.
Roberts repeated concerns voiced by Idaho lawmakers that placing a tax on fuel leaving the state would have “commerce clause issues.” The goal is still to decrease the gas tax by 50% but he did not specify how.
What he did make clear is that as West Coast states, particularly California, close down refineries it is more important than ever for Utah to shore up its own oil supply in a way that lowers prices.
“We want to have a bill that’s going to incentivize production at the refineries,” Roberts said. “And we also want to find a way to drive down the gas tax. ... I’m optimistic we’re going to find a way.”
Roberts said he is looking “at all potential options to reduce the gas tax.” Those options, according to Roberts, will ensure Utah “comes out better partners with Idaho because of all of this.”
During a press conference on Thursday, Utah Gov. Spencer Cox told reporters he was involved in conversations with Idaho leaders and wanted to make sure the final product benefitted both sates.
“We represent the people of Utah, and that’s our first priority for sure, but this doesn’t have to be a zero-sum game,” Cox said. “I’m much more interested in trying to lower the price of gasoline everywhere.”