Don’t Expect Much Movement on Gas Tax in 2014

There’s going to be a lot of talk about raising or reworking Utah’s lagging gasoline tax this coming Legislature, but very little actual action.


So say House Speaker Becky Lockhart and Senate President Wayne Niederhauser.

The two GOP leaders spoke at Monday’s Utah Taxpayer Association annual pre-legislative conference, this one held in the Grand America Hotel.

Rep. Jim Nielson, R-Bountiful, said he was going ahead with his 7.5-cent per-gallon gas tax hike bill – which would be phased in over five years.

“That would only be 1.5 cents (per gallon purchased) per year,” Nielson said.

Sen. John Valentine, R-Orem, said he supports a restructuring of the gas tax – drop the per-gallon tax of 24.5 cents per gallon to around 13 or 14 cents per gallon and then start a sales tax portion of the tax that would grow automatically as the price of gasoline went up.

Valentine said the idea is to make that change revenue neutral – not an overall tax hike the first year.

But as gas prices naturally climb (yes, they do go down every now and then, but the trend is upwards), more money would come in for state and local roads.

Also this session there will likely be a suggestion made by local governments to either give them their own power to place a sales tax on gasoline and/or change the current 70/30 (70 percent state, 30 percent local) share of the state-gathered per-gallon tax.

The Valentine proposal (actually carried by other lawmakers) does nothing right away to eat into the estimated $11 billion revenue shortfall over 25 years now facing transportation planners, said Nielson.

While some say an election year, as 2014 is, is not a good time to raise a tax, he added, “I say now is a very good time” to get state and local road revenue on more solid footing.

(Nielson said that may be easy for him to say, considering he’s not seeking re-election. An architect, Nielson told UtahPolicy in an interview that with two of his firm’s partners looking to retirement, he has to leave the House and spend more time at his private job.)

Niederhauser, R-Sandy, said should the Legislature decide not to take gas-tax action this 45-day session, which starts Jan. 27, then he still hopes for some “adjustment” to the current vehicle registration fee, which also goes towards roads.

Most conservatives like the idea of a user of government services paying for those services directly, said Niederhauser.

But for some reason when it comes to roads, there are some “no-nos” that Utahns don’t like – such as a gas tax increase and/or toll roads.

“The gasoline tax is the most hated tax after the property tax,” the president noted.

But in reality, said Lincoln Shurtz of the Utah League of Cities and Towns, over time nearly all cities and counties have been subsidizing their meager 30 percent share of the state gas tax with property tax revenues.

And is that fair? Shurtz asked.

Actually, that is very bad tax policy, said Utah Taxpayer Vice President Royce Van Tassell.

Niederhauser said he would oppose a remix of the 70/30 formula and/or giving locals the power to place a small sales tax on gasoline sales if the state’s road revenue shortfall is not addressed at the same time.

And that time apparently won’t be this session, said Lockhart, R-Provo.

With all 75 House members up for election this year, now is not a good time for a tax hike, she said.

Nielson said it’s too bad that citizens don’t view natural revenue growth in the state income and sales taxes as tax hikes, while historically they see the periodic, but needed, adjustment in the per-gallon gas tax as an increase.

If the Utah gas tax were placed on fuel sales, and not on gallons pumped, then the road tax revenue would have grown since the last per-gallon tax hike approved by the 1997 Legislature (which, by the way, was NOT an election year).

Niederhauser said its true, if unfortunate, that raising more revenue for roads now is a political decision, rather one made on data and real need.

“We need a (gas tax) that is more robust and reflects (the increased cost) of asphalt – that is the proposal we like,” said Valentine, speaking of the dual approach – part per-gallon and part sales tax on gasoline.

Niederhauser said infrastructure funding will be “a big part” of the upcoming session. Maybe some compromises can be reached, in theory.

But the 2014 legislative incumbents seeking re-election this year – and maybe facing right-wingers in their county and state party conventions — will not be harnessed with the term “tax-hikers.”