The automatic indexing of fuel taxes is gone

By Rep. Rich Cebra

Last fall, I submitted a bill for this legislative session to eliminate the automatic, annual “indexing” of fuel taxes. Indexing, of course, is the polite word for a tax increase. The bill, LD 383, was written in response to one of the most common complaints I have heard in my seven years in the Maine Legislature. People hate the fact that the gas tax goes up every year on “autopilot.”

If you’ve ever pumped gas in Maine, you’ve probably seen the sticker distributed by the Maine Energy Marketers Association explaining how much we pay per gallon in fuel taxes. We’re not talking peanuts. The indexed increase costs motorists more than $5 million a year — on top of the hundreds of millions of dollars we pay in the preexisting state and federal gas taxes.

Maine’s gasoline tax now stands at 31 cents per gallon, and the feds hit us for another 18.4 cents per gallon. The federal government, in fact, makes more money from the sale of gasoline than the oil companies make. That could explain the feds’ intense dedication to ethanol. Ethanol reduces gas mileage, forcing drivers to buy much more gasoline than they did before the ethanol mandates kicked in.

After the election last November, I was appointed House chairman of the Joint Standing Committee on Transportation. I immediately requested that our new governor include the same language in the Highway Fund Budget as I had in LD 383 — my bill to eliminate the hated gas tax indexing. Gov. LePage included it in the budget, which gave the proposal the full weight and support of his administration.

During the public hearing for LD 383, and again in the budget work sessions, I spoke about several problems with the tax. Most importantly, I spoke about the public dislike for the tax and the way many people, including myself, considered the automatic indexing a form of taxation without proper representation.

When the Transportation Committee held the work session for LD 383, I decided that since the proposal was still viable in the Highway Fund budget, we could kill my original proposal and focus on the state’s fiscal blueprint. We did that and continued our committee work on the Highway Fund budget, knowing that this important change in law was included in the governor’s proposals.

In mid-June, the Transportation Committee completed a line-by-line, item-by-item review of the Highway Fund budget. It included the removal of the fuel tax indexing and the elimination of 76 Highway Fund positions at Maine Department of Transportation (MDOT) and the Secretary of State’s office. It also included funding for 600 miles per year of highway maintenance surface treatment — a vital aspect of the long-term care of our roads. Funding at that high level has not always been accomplished.

It’s also important to note that the highway budget fully funds MDOT and its two-year work plan without borrowing a single dollar in bonding.

With all these high points, the Transportation Committee, for the first time in a decade, voted unanimously, 13-0, for passage of the Highway Fund budget, which came in at $637 million. In the first year, fiscal 2012, the elimination of the fuel tax indexing will save Maine motorists $5.8 million. In future years, the savings really begin to add up because the tax compounds on itself. In 2013, the removal of this despised tax increase will save Maine motorists $10.75 million. In fiscal 2014, the savings spike to $15.73 million.

All that money is better left in the pockets of Mainers in these tough economic times.

State Representative Rich Cebra resides in Naples.

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