Bid to boost state's fuel taxes advances in Vermont

| Friday, March 24, 2006

The Vermont House has approved a transportation budget that would increase the state's per gallon taxes on diesel and gasoline by 6 cents.

The Democratic-led House voted 90-50 to boost the tax for diesel from 25 cents per gallon to 31 cents and the tax on gasoline from 19 cents per gallon to 25 cents for at least the next five years.

The tax increases would generate $26.5 million a year, the Burlington Free Press reported. The amount is $2 million more than what would be needed to cover shortfalls in Vermont's current tax stream. That revenue stream pays for road and bridge work and meets federal guidelines for the state to claim additional transportation funds.

Lawmakers from both sides of the isle have promised to find money so the state could tap about $100 million earmarked for Vermont during the next five years. Democrats and Republicans in the state have disagreed on how to come up with the money.

Republican Gov. James Douglas has rejected talk about increasing taxes for any purpose this year, the Free Press reported.

Instead, Douglas and other GOP lawmakers want to increase funding for transportation in the state by boosting motor vehicle fees and possibly dipping into the state's education fund. The two steps would raise $24 million a year.

Increased fees at the Department of Motor Vehicles would generate $10 million. The remaining $14 million would come from shifting a portion of the motor vehicle purchase- and-use tax from the education fund and into transportation.

The budget bill – H869 – now heads to the Democratic-led Senate for further consideration.

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