West Virginia lawmakers OK fuel tax tweak

| Monday, November 23, 2009

Truckers and other drivers who fuel up in West Virginia will continue to pay a little extra at the fuel pump. The state’s fuel tax rate now is 32.2 cents per gallon.

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 Sept 30.

The current wholesale rate is 11.7 cents. The base tax on fuel is 20.5 cents.

To address growing concerns over depleted revenues for the state’s roadways, lawmakers meeting during a special session voted to send to Gov. Joe Manchin for his signature a bill that limits the annual changes to the fuel tax that are based on wholesale prices. It also clears the way for the Division of Highways to use some unspent money for secondary roads.

The fuel tax bill – SB4004 – makes permanent a 5-cent tax added in 1993, which was set to expire in 2013. It also sets a 10 percent range for any changes in the variable rate after 2010. The two-way ceiling allows a fluctuation of 1.17 cents in either direction.

Republicans argued the changes amount to a tax increase. The bill prevents the tax from dropping 1.7 cents per gallon the first of the year, as currently projected. Republicans also were opposed to making permanent the nickel-a-gallon portion of the tax, which has been repeatedly extended since it was adopted 16 years ago.

Manchin, who proposed the measure, and his fellow Democrats said the bill will make the state’s chief funding source for roads and bridges more predictable. The governor points out that the wholesale portion of the tax has dropped over the past year as the economy has suffered, leaving the state with fewer funds for road and bridge work.

To make matters worse, they note that twice in recent years lawmakers have frozen the rates when increases where eminent. Their actions cost the state Road Fund an estimated $140 million.

Supporters said that allowing the 5-cent tax to drop off would have resulted in another $60 million in lost money for highways.

Also included is a measure that earmarks $27.3 million for the state’s secondary roads. The cash infusion will come via the general revenue fund.

“This bill makes all the sense in the world. Not only would we be able to improve the roads that connect our towns with the major corridors, but it also limits big jumps in the gas tax,” Manchin said in a statement. The governor also noted the bill helps ensure that the state will have money in the Road Fund to help keep up all roadways.

To view other legislative activities of interest for West Virginia in 2009, click here.

– By Keith Goble, state legislative editor

Editor’s Note: Please share your thoughts with us about the legislation included in this story. Comments may be sent to statelegislativedesk@ooida.com.

 

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