Gas Tax Issue Highlights State Fiscal Confusion

WINSTED — State Sen. Andrew Roraback (R-30) said Wednesday afternoon that he was still feeling bushed after being up until 3 in the morning Tuesday night into Wednesday on the Senate floor, debating a proposed gas tax holiday that would eliminate the state’s 25-cent gas tax for three months.

Confusing to many, the process included proposals from both Democrats and Republicans who have been urged by Gov. M. Jodi Rell to give consumers a break this summer by approving the gas tax holiday.

"We’re anticipating a surplus in excess of $800 million this year and that money will be spent," Roraback said. "Quite frankly, I think it’s cheesy, if you pardon the expression, to send a $50 check back to taxpayers. What we’re saying is, ‘Why don’t we tip our hat in the direction of our beleaguered consumers and get rid of the 25 cent per gallon tax, at least for the summer season?’"

A Complicated Debate

Roraback said even he found it difficult to understand what was going on Tuesday night during the tax break debate. At one point an amendment containing the temporary tax break was attached to a bill, which passed by a vote of 35 to 1, but the legislation was transferred to the Senate Appropriations Committee.

"The Senate Democrats said they were going to pass their own bill eliminating the gas tax for the summer season. Then they engaged in some procedural gymnastics. On the left hand, they passed this bill and said how important it is, and then with the right hand, they sent it off to the Appropriations Committee, which is more often than not a graveyard."

In a statement released Wednesday, Gov. Rell said she was concerned that the gas tax holiday "may not receive serious consideration before the legislative session ends June 6" and that consumers are "crying out for relief," sending her nearly 1,000 e-mails per day.

"I recognize that proposals such as this must go through a process, but to create obstacles and purposely impede the process makes you wonder whether last night’s vote was ‘all show’ and will result in ‘no dough’ for taxpayers," Rell said. "I hope the process can be moved along so this legislation can receive the consideration it deserves before the session ends. The people of Connecticut deserve no less."

The average price for a gallon of regular unleaded in Connecticut this week was $3.35, up from $3.07 last month. In addition to the tax holiday at the pump, the governor has proposed capping the gross receipts tax on petroleum products — increased in 2005 to help pay for transportation infrastructure improvements — at the wholesale price of $1.75 per gallon.

"Everywhere I go people are telling me they want a break," Rell said. "They want to see action — now — whether it is the legislative Republicans’ proposal for the temporary gas tax holiday or my proposal to permanently cap the gross receipts tax."

How To Stretch a Dollar

Roraback said the simple answer to questions about gas taxes is that Connecticut residents are feeling strained and the state does have the money to ease the burden.

"When you combine state and federal taxes, Connecticut has the third highest gas tax in the nation at 55 cents a gallon," the senator said. "For the summer season, we would forego about $125 million in revenue to implement the gas tax holiday. With an $840 million surplus, we’re talking about $4 to $5 in savings each time you fill the tank.

"Most citizens in Connecticut don’t ask a lot of our state government," Roraback continued. "People go to work and they pay taxes and they don’t ask for much in return. Right now people are stretched like they’ve never been stretched before. Their electric bill’s going through the roof, gas prices have skyrocked and here’s an opportunity we have, just to acknowledge that we’re in tough times."

But does a gas tax reduction actually save consumers money? The nonpartisan, Washington, D.C.-based Tax Foundation says no.

"Gas tax holidays are typically bad tax policy," the group reported recently in specific response to Connecticut’s situation. "First, the revenue must be made up somehow, unless the state cuts spending. (In the case of a surplus, that still means that some spending is foregone or some other tax cut is foregone.) Therefore, another tax is going to have to go up or spending will have to be cut. Second, cutting the gas tax may not have much effect in the short run due to relatively inelastic short-run supply, meaning much of the benefit of holidays will flow to the producers (i.e. stockholders of oil and gas companies). The longer the tax cut, however, the greater the benefits to consumers."

But What About Conservation?

At the same time, conservation groups across the country say gas taxes should actually be raised and that tax holidays don’t even begin to get to the root of the problem.

"I think conservation is important," Roraback said. "I think everybody has a renewed focus on conservation and I don’t think anyone thinks a 25-cent reduction in the gas tax is going to make energy cheap. But also understand that for most people gasoline is not a luxury. It’s a necessity for working people who every day have to get in a vehicle and go to work." Roraback said he supports tax abatements for owners of hybrid vehicles and other conservation initiatives, but that taxpayers need a break now.

More disheartening for Roraback and other legislators may be the fact the gas tax debate is yet another hurdle for two parties that have not reached agreement on a budget with just days left in the legislative session. The governor has called for a 7-percent increase in spending while Democrats are seeking 10.5 percent. Early Wednesday morning, Democrats passed a spending bill by a vote of 19-17, which is widely expected to be vetoed by Rell.

"We still haven’t done our budget, we still haven’t done an energy bill and we have no health-care bill, and that’s what really upset us last night," Roraback said. "We worked until 3 in the morning raising taxes — we raised $700 million in new taxes last night — and we know the governor is going to veto the bill."

Asked if he was frustrated, Roraback said he simply wants things to run more efficiently. "I signed up for this job and I’m happy to put in the time," he said. "I’d just like the time to be more constructive."