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Gas tax hike: Economic boon or regressive levy?

May 07. 2013 4:14PM

CONCORD -- A proposed 12 cent-a-gallon gasoline tax hike is a long-shot in the state Senate but that outlook did not stop supporters from trying to change minds during a key committee hearing Tuesday.

House bill 617, which passed the House 206-158 in late March, would increase the state’s gasoline tax from 18 to 30 cents a gallon over three years and the tax on diesel fuel by the same amount over a six-year period.

Chief sponsor Rep. David Campbell, D-Nashua, told the Senate Ways and Means Committee the gasoline tax has not been raised since 1991, roads and bridges in the state are deteriorating and completion of the Interstate 93 project from Salem to Manchester is “$250 million short” in funding.

“Without additional revenue from somewhere, that project cannot and will not be finished,” said Campbell.

Overall, he said, “We have an infrastructure crisis” and while tolls keep the turnpike system is self-sufficient, the highway, local road and bridge system has become a deterrence to economic growth. Revenue,  through the gas tax, has stagnated, Campbell said, while infrastructure construction costs have grown by about 60 percent between 2005 and 2009.

Bridges“are the biggest ticking time bomb in the whole infrastructure,” said Campbell, with 140 of the 2,143 of the state’s bridges “red-listed,” meaning their structural integrity may be compromised.

While lawmakers dominated the list of supporters who appeared Tuesday, truckers, foresters and independent grocers lined up against the bill.

Kevin Murray, director of transportation for the Associated Grocers of New England cooperative, warned, “The effects of this tax will be felt throughout the New Hampshire business community” and will cost independent grocers in New Hampshire about $30,000 in extra fuel costs.

“If we pass it on,” he said, “food costs will rise, or we will have to make it up elsewhere. This is not the time or a tax increase.”

Commissioner of Transportation Chris Clement said the red-list bridge total will grow to 175 by 2016 with the current revenue stream unchanged.

In addition, he said, there are 353 red-listed municipal bridges, requiring more than $80 million, to address.

Campbell presented state DOT estimates that the tax hike would raise $816 million over 10 years, and of that, $183 million would go to municipalities through block grant aid and state bridge and highway aid programs.

He said that when the gasoline tax was raised to 18 cents 22 years ago, it was 16 percent of the average price of a gallon of gasoline, which was $1.13. Now, said Campbell, it is only 5 percent of the $3.60 average price of a gallon in the United States.

And under the current bill, he said, “every penny” of the increase “goes to roads and bridges.” An earlier version that diverted about 20 percent of the revenue to non-highway uses was changed by the House before passage.

“People say, ‘I can take a modest increase in the gas tax as long as I know it’s all going to go to roads and bridges,’” Campbell said.

A cosponsor, Sen. David Pierce, D-Hanover, said a gas tax hike would “enhance New Hampshire’s reputation to be business friendly.

“This bill,” he said, “is a test of our decision of whether to make life better for our constituents,” adding, “Our municipalities are screaming for this aid.”

“New Hampshire’s infrastructure is its game board,” said Rep. Patricia  Lovejoy, D-Stratham. “No game board, no game.”

Several House lawmakers said they support both the gas tax hike and casino gambling, which has passed the Senate and faces a difficult road in the House, where it is expected to be voted on later this month.

Two sponsors of the gambling bill, Sens. Lou D’Allesandro, D-Manchester, and Chuck Morse, R-Salem, sit on the Ways and Means Committee. That bill would send a portion of casino gambling revenue, about $50 million annually, to repair the state’s roads and bridges. Gas tax hike supporters said more is needed.

D’Allesandro said after the hearing the “deterioration of the roads and bridges are quite clear,” but raising the gas tax to address the issue “is a very tough sell at this point” in the Senate.

“But, he said, “we have to do something.”

Several gas tax hike opponents also favored gambling as an alternative.

They included Brian Lewis, vice president at New Hampshire Distributors, a Concord trucking firm.

Lewis said his company operates 23 tandem axle straight trucks and six tractor trailers, and also has 55 gas vehicles that  use 75,000 gallons of gasoline per year.

He said that despite efforts to improve efficiency, the company’s diesel fuel costs have gone from $299,000 in 2010 to  $410,000 in 2012.

“This fuel tax (hike) would cost New Hampshire Distributors $60,000  when implemented over 6 years,” Lewis said.

Commissioner Clement said when the Interstate 93 widening project was begun in the 1980s, its estimated cost was $40 million. Now, with a $250 million pricetag remaining, he said the gas tax hike “would pay the bond of $22 million a year for Interstate 93.”

Opposing the proposed hike was anti-tax activist Tom Thomson, honorary chairman of the Americans for Prosperity-New Hampshire advocacy group and owner of Thomson Timber Harvesting and Trucking.

Appearing with his 9-year-old grandson, Jaden, Tom Thomson said that if the state holds steady with its 18 cents-a-gallon tax, surrounding states will have 8 to 12 cents-a-gallon higher gas taxes, and the “New Hampshire advantage” will continue.

Bruce Bellegarde of Crowley Transportation Services of Ludlow, Mass., said the tax hike would also hurt his business and drivers.

“I find the tax to be regressive, especially for people of lower income and people living in a rural area,” said Robert Berti, a former Rumney selectman who owns Foreco Forest Resources Consultants.

“They tend to drive more and the money they have to spend tends to be less,” he said.

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