where i stand Connecticut’s gas tax, tolls and reality
Of the many false facts used to sell tolls, the claim that electric cars are cutting into gas tax receipts may be the most outrageous. A recent op-ed (“CT gas tax running on empty”) repeats the mantra, in a manner that is both misleading and factually incorrect.
The op-ed claims that Connecticut and similar states are “running out of transportation funding in part because gas tax revenue is decreasing, due both to increased sales of fuel-efficient and hybrid vehicles, and because tax revenues don’t buy as much as they did in the past because the tax isn’t indexed to inflation.”
Let’s start with the truth: EVs account for just 9,289 of the nearly 2.9 million vehicles registered in Connecticut. That’s about 0.3 percent — roughly three vehicles in a thousand. Naturally, so small a number of cars has had no significant impact on gas tax collection.
In fact, revenue from fuel taxes has increased in recent years. For fiscal year 2018, gas taxes collected jumped by $85 million over 2017. And for the first eight months of fiscal year 2019 (through the end of February) revenues are again up over last year. This is a continuation of the long-term trend that has seen gas tax revenue rise from about $650 million in 2005 to $822 million in 2018.
It would take a spectacular increase in the number of electric vehicles on our roads to seriously threaten fuel tax revenue. That’s far from certain, and something we could address if it ever happened. EVs tend to be expensive, necessitating government tax credits and other incentives to induce people to buy them. Increasing their share of the market creates a Catch-22: Without the subsidies, it’s unlikely many will be sold; but if many were sold, government couldn’t afford the subsidies.
If gas tax revenue is inadequate and unfair, why do toll proponents want to continue and even increase it? The 2016 Transportation Finance Panel Report, which recommended tolls, also called for record-breaking gas tax hikes and big increases in motor vehicle licenses, permits, and fees. Under their plan, the gas tax would increase from $0.25/gallon to $0.39/gallon—a whopping 56 percent hike—and the gross receipts tax on petroleum would go up a full point, from 8.1 percent to 9.1 percent.
That latter tax, unknown to many state taxpayers, is worth considering in this light. First, since it’s a percentage tax on fuel, not a fixed per-gallon tax, it increases when the price of gas goes up. That means that, contrary to the op-ed’s claim, we already have a gas tax indexed to inflation.
Second, we alone in New England have that tax. When advocates point out that all other states in our region have tolls, we might remind them that no other state in our region has a gross receipts tax on fuel oil. Surely its elimination ought to be part of any toll proposal, but that hasn’t been the case.
The case for tolls is as false on the spending side as the revenue side. The shortfall in transportation funding is based on a plan to spend an additional $100 billion over the next 30 years. That figure and timetable were plucked from the air by Gov. Malloy, and adopted by Gov. Lamont without further consideration.
The $100 billion investment is by far the biggest spending decision in Connecticut history. It would come at a moment when unfunded state liabilities are gargantuan, and their impact on state budgets, financing, and the economy will be overwhelming. Decisions are not made in a vacuum. State government is effectively insolvent, and what we do with respect to our transportation system is constrained by our overall financial condition.
Reviewing the documents related to this massive project reveals that less than half of the infrastructure investment is related to roads and bridges, and much of that is dedicated to creating a best-in-the-nation system we just can’t afford right now. A more realistic investment plan — instead of a sky’s-the-limit wish list — would render tolls unnecessary.
I’m beginning to fear that we face an orchestrated effort to convince us that our roads will crumble unless we triple our current level of spending. That scare tactic might make the more gullible believe that tolls are necessary.
Put that new revenue source in place and the budget increases that have caused our fiscal crisis will continue. That’s how they pushed through the state income tax; let’s not let them do it to us again.
Joe Markley is a former state Senator for the 16th District and was the Republican candidate for Lieutenant Governor last fall.