Monday, March 4, 2013

Legislature studies 'local option' gas tax

Fuel-efficient vehicles, including hybrids and natural gas vehicles, help reduce pollution and can save drivers money at the pump — but they are also causing a nationwide concern as state governments attempt to make up for lost gas tax revenue.

Several studies, including one from Cambridge Energy Research Associates, shows America’s appetite for oil waning. Since a peak demand in 2007, demand of oil in America has been steadily and dramatically declining, with an expected continual drop of at least 7 percent over the next quarter century. While various factors can be attributed to this phenomena — including an aging population that is driving less —the main factor is that vehicles are becoming more fuel efficient.

According to J.P. Powers and Associates, fuel efficiency is the number one factor people take into consideration when purchasing a vehicle.

The problem comes from the fact that revenue from the 24.5-cent state gasoline tax used for repairing and maintaining roads — called the B and C fund — has been dropping, along with gas purchases. That means less money for the roads. These funds are not used on new projects, but to maintain current roads.

B and C road funds are collected by the state and distributed to counties and municipalities based on miles of road and population. In 2012, Utah spent $124 million for B and C road funds, of which approximately $1.5 million went to Iron County, $1.3 million went to Washington County and $1.5 million went to Garfield County.

With budgets shrinking, the state legislature is mulling ideas to raise more money for roads, including the possibility of a local option gas tax.

Iron County Commissioner Alma Adams said at Monday’s county commission meeting that such a program would see counties and cities opting into a tax to the tune of 5 to 10 cents per gallon. If they opt in, they would get an additional 10 percent in funding while they would lose 20 percent of funding if they opt out.

County Commissioner Dale Brinkerhoff suggested that increasing the tax on natural gas vehicles could be a better alternative. Currently natural gas is taxed at 8.5 cents per gallon as opposed to gasoline’s 24.5 cents per gallon.

Cedar City resident Ryan Gunn believes an increase in price at the pump for natural gas vehicles wouldn’t make it worthwhile to own one, citing increased costs when it comes to initial purchase price, conversion prices and maintenance.

While the final solution may not be popular, Kevin Kitchen, public information officer for the Utah Department of Transportation said something will need to happen to reverse the trend.

“We will do what the legislators tell us,” Kitchen said. “This is a problem every (department of transportation) across the country is facing.” The Spectrum