Three New England states pursue fuel tax increases

By Keith Goble, Land Line state legislative editor | 4/23/2013

Lawmakers in statehouses across the country are taking steps to raise revenue to benefit road and bridge work. In New England, three states could soon charge higher taxes at the fuel pump.

In Vermont, the Senate voted 23-5 to advance a transportation budget bill that would increase the state’s fuel tax rates on gas and diesel. The plan differs from the House-approved version, which didn’t include an increase for truckers.

Both plans would raise about $600 million for transportation work.

The state excise tax now is 19 cents per gallon on gas purchases and 29 cents on diesel.

Senate lawmakers endorsed a plan to increase the gas tax by about 5 cents this year and about 7 cents next year. The tax on diesel would increase by 4 cents over two years.

The House plan didn’t include a higher tax on diesel. The chamber did endorse a 2 percent sales tax on gas purchases. The change would add nearly 7 cents to the per-gallon tax rate this year. In 2014, the tax would increase another 7.8 cents.

House lawmakers endorsed tying the tax rate to the consumer price index, which would allow for regular increases. The Senate proposal excluded the automatic adjustment.

Sen. Dick Mazza, D-Grand Isle, said the diesel tax increase was needed to avoid tying the tax rates to inflation.

If Vermont lawmakers are unable to reach agreement on a final version of the funding bill – H510 – a conference committee would be needed to work out their differences.

Across the state line in New Hampshire, a proposal to nearly double fuel taxes is halfway through the statehouse.

The state’s 18-cent-per-gallon tax has not increased since 1991.

House lawmakers sent a bill to the Senate that would increase the tax rate by 12 cents per gallon.

The gas tax rate would increase to 30 cents over three years. The diesel tax rate would be increased over six years.

Rep. Patty Lovejoy, D-Rockingham, said she supported the bill because good infrastructure is essential for the state to compete with other states for business and jobs.

“New Hampshire’s highway system is our economic lifeblood, supporting commerce, tourism and our everyday lives,” Lovejoy said in written remarks.

The 10-year, $750 million bill would protect the new money from being used for anything other than state and local roads and bridges. The state would continue to route a portion of the existing tax to other state agencies.

HB617 awaits consideration in the Republican-led Senate where another funding method is favored. Specifically, GOP lawmakers prefer a plan to pay for transportation work by licensing a casino.

Gov. Maggie Hassan recently testified in support of the plan. She told lawmakers that it would inject “new, non-taxpayer based revenue into the equation to fund items left unaddressed.”

In neighboring Massachusetts, state lawmakers are pursuing plans to raise about $500 million annually to pay for needed road, bridge and transit work.

House and Senate lawmakers have endorsed initiatives with differing methods to raise revenue. However, they support increasing the state’s 21-cent-per-gallon fuel tax rate by 3 cents. In 2015, the tax would also be tied to inflation.

Gov. Deval Patrick has called for more money from lawmakers to meet the state’s immediate and long-term needs.

“I want to be clear that I cannot support another effort to kick the can down the road, and I won’t,” Patrick said in a press release.

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