West Virginia governor staring at another call to freeze fuel tax

| Wednesday, August 30, 2006

With wholesale costs for motor fuels in West Virginia above last year’s level, Gov. Joe Manchin may again be staring at a taxing situation this fall.

West Virginia law ties the diesel and gasoline tax to the average wholesale price of fuel. The tax can change at the first of each year because it is based on the average wholesale price between July 1 and Oct. 31.

Manchin stepped in last year to temporarily freeze the tax and prevent an expected increase of 3.8 cents per gallon this past Jan. 1. The governor again is being pressed to act.

Despite the calls for action, Manchin spokeswoman Lara Ramsburg said it’s too early to talk about any increase because there are still two months remaining in the current calculation period.

Early estimates indicate the current wholesale price of 6.5 cents per gallon could increase as much as a nickel Jan. 1, 2007, The Associated Press reported.

An act by the governor to again freeze the tax could be met with stiff opposition from officials who are concerned about another hit to highway funds. Fuel taxes are funneled to the state Road Fund and pay for road work and repairs.

Each penny in the state’s wholesale fuel tax generates about $14 million, The AP reported. As a result, last year’s tax freeze cost the state about $53 million.

Opponents say the money is needed because the state’s highway program needs as much as $200 million annually in new revenues to maintain and build roads.

During the legislative session this spring the Legislature rerouted $11 million from the state’s general revenue fund to highways, The AP reported. Manchin had asked for $25 million.

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