Blog: Dermot Cole
Parnell should look to using gas tax to help deal with road maintenance backlog
Published Thursday, July 16, 2009
Lieutenant Governor Sean Parnell said today that legislators should expand the special session to extend the suspension of the eight-cent-per-gallon fuel tax or repeal the tax permanently.
I've got another idea: The soon-to-be governor and the Legislature should start a statewide transportation program and use a state fuel tax to help cover the cost.
The state is falling behind on transportation spending by more than a half-billion dollars a year and the gas tax would only cover about 5 percent of that shortfall.
I know that dedicated funds are not allowed without a constitutional amendment, but every other state in the country has a dedicated transportation fund to create a connection between fuel taxes and road work. Some people see the fuel tax as a user fee.
A recent study for the Alaska Municipal League said the state is underfunding its transportation system by more than a half-billion dollars every year and that the outlook for the future is that federal funding, which pays for most construction, will go down.
Alaska has the lowest gas tax in the nation, which was suspended a year ago on Sept. 1.
Parnell said that repealing the tax altogether is one option. In my view, a more responsible option would be to use that money to improve the roads.
In fact, there is a good argument for increasing the state fuel tax to chip away at the maintenance backlog.
In addition, if we repeal the tax we're going to have a harder time going to the federal government with pleas that we deserve tens or hundreds of millions more in road money.
The suspension cost the state about $30 million. Others portray it as a $30 million "savings" to consumers, but it's impossible to define the relationship between the tax rate and gas prices.
A year ago the national average gasoline price was 42 cents a gallon lower than the price in Fairbanks, according to AAA.
At that time the eight-cent tax was in effect in Alaska.
Today, we don't have a state tax. The national average price is 53 cents a gallon lower than the price in Fairbanks, according to AAA.
That the relative cost today is not automatically eight cents a gallon lower is because local market conditions are more important in determining prices.
The Alaska Municipal League study found that "There is strong evidence that changes in retail fuel prices are driven by demand and changes in the state's fuel tax rate may only affect who captures the increment of profit from the retail sale of a gallon of fuel."
Parnell said in a press release that he is "asking the legislature to join me in this opportunity to help Alaskans at the pump."
“While gas prices have eased somewhat from last year, they’re still running well above historic norms. Legislators should expand their call for a special session to either extend the fuel tax suspension, or repeal the tax altogether," Parnell said.
Here is a Tax Foundation chart on gas taxes in every state: http://www.taxfoundation.org/taxdata/show/245.html
Here is the Alaska Municipal League study on transportation finance needs in the state: http://www.akml.org/documents/2009TransportationStudy.pdf
I support Parnell's call to repeal the tax.
Gas prices in Alaska are fixed by the lack of oversight along with lack of competition. It is a shame that we are getting bent over a barrel of petroleum. Our petroleum!
Prices havent even come down since the price per barrel of oil went back to $60.00.
Yep, remove the 8 cent a gallon fuel tax and the fuel suppliers raise the profit margin by 8 cents a gallon. hum-m-m...Guess the refiners aren't making enough money with their price gouging.
Makes you wonder if fuel tax is paying for roads in rural Alaska...you know, the places with out a road. Or, if it is going for beautification of certain politicians parking lots.
Yep, the special session is scheduled for one day. I can foresee a couple of days to just get the lobbyist through with their testimony with this "new" idea of giving John Q. Public a break.
Excellent idea!!!
gas is SO cheap in Amerika..what are you all crying and whining about?
Any time we can get a government to reduce or do away with a tax, it should be supported by everyone....
I would rather Drive through a pot hole than have another government program
Dermot we do not need these Legislators getting any bright ideas about changing the constitution. It would be like letting them use money out of the Permanent fund only once. Once they see it is possible they will want to do it again.
They are like spoiled little children and have more important things to do like renaming mountains and making a state dog.
Put the tax back on and let the refineries raise the price until we finally get mad enough to do something about it.
The state will be looking at a state income or sales tax soon enough to offset their lack of fiscal responsibility.
It should be interesting to see if they have enough guts to over ride Palins veto now that she is not going to be the Governor.
They are like a pack of wolves the way they went after Palin after it looked like she might have weakened a little.
They did not go after Palin like a pack of wolves, wolves are intelligent creatures. They went after her like a pack of rat-dogs.
Tax, tax, tax, that's always the answer.
Hey, I've got an idea,
Build our own refinery here in Fairbanks and sell the fuel ( to Alaskans) at 10% profit back to the state, and use that money to build brand new highways over the existing ones......
and a couple of bridges too......
and a 1 way ticket for Mayor Whitacker to, say, Antarctica....oh, Dermot, you can go with him...
Taxes are the slow way to get roads and bridges repaired, maintained, or built.
But alaska getting roads and bridges repaired, maintained, or built is possible. If Parnell honored the voter's votes on a instate gasline being started ASAP. And get the propane to the markets.
Get the instate gasline in ASAP and sell or contract amounts of the natural gas/propane to the E.U.. Who need them. Let the E.U. transport it after buying it. Russia holds the EU hostage with it's pipeline and gasline.
Things are bad everywhere. But natural gas is needed worldwide. Propane is needed worldwide. Alaska has both.
EU Proposes Rules to Help Prevent Gas-Supply Crisis
http://news.google.com/news/more?ned=ca&......
EU to host Ukraine gas loan meeting on Friday
http://news.google.com/news/more?ned=ca&......
EU starts overhauling gas security rules
07.16.09, 06:20 AM EDT
http://www.forbes.com/feeds/afx/2009/07/......
Commission okays UK CRC against state aid rules
http://www.environmental-finance.com/onl......
European Commission,industry jointly invest for greener economy
http://news.google.com/news/more?ned=ca&......
~~
TransCanada/Exxon doesn't sound safe. Plus Canada has spoke for 4 days in DC, telling our congress canada does not want alaska's gasline in before their gasline is in.
Letter warns of more attacks on BC pipelines
http://news.google.com/news/more?ned=ca&......
Let's tax newspapers. Use the money to help stupid people.
One of the reasons why I would love to move to Alaska is the states lack of socialists. Or so I though. Dermot Cole is a real socialist. How disgusting.
I've got an idea:
Raise (from zero) the transportation fuel tax on......Jet Fuel A.
As this year's legislative commission's report on fuel prices in the state made clear to all, the largest single factor in the high prices we residents pay for our fuels relative to those of the rest of the country is because of the incentives given our refineries toward creating a disproportionate share of Jet-A, to fuel esp. those trans-Pac cargo, and other, aircraft.
I can come up with no good economic reason to justify this skewness. It is an excellent example of assisting (subsidizing) one very specific sector at the expense (taxing) of effectively all others. This maldistribution of goods badly affects the state, and redress in THAT direction would go far, far more toward enabling Alaska to improve its roads, and the general welfare of its citizens, than would Mr. Cole's suggestion.
Go away, Dermot.
Good idea Dermont.
This suggestion is not out of bounds. We have a fuel tax for a reason (supposedly), and it was SUSPENDED for a year, not repealed. It is like deferring something during hard times. (How long can you defer an oil change in your car before damage is done?) IF there was a point to having the tax in the first place, how long do we defer it before damage is done? The legislature was wise in not repealing the tax. At least this way there is a chance to discuss it before it goes back into effect, as opposed to having to create the tax through new legislation.
It seems convoluted to conjoin the issue of price gouging with the possible need for a fuel tax.
Finally, if you like over-the-top socialism, then have the state build and own a refinery for the state's royalty oil, and give the product to Alaska residents at a deep discount. That is not a good idea.
8 cents a gallon doesn't amount to diddly squat. I buy maybe 1000 gallons of gas a year total for 2 vehicles, which would be $80 gas tax. I spend more than that eating dinner out with my wife on a Friday night. You have to have some pretty crappy finances to whine about such a small amount of money.
slider- multiply your figure by how many consumers there are in the state. I don't think the idea is to just depend on your money.
We want all the ammenities of civilization, but no one wants to pay for it.
"Don't take those federal funds! They're evil!"
"Don't tax me! That's un American!"
Meanwhile...
"Why are my roads so cr*ppy? Why is my healthcare so expensive? Why ain't there nuthin' bein' done about it?!"
Local gas prices should be lower; however, everyone is suffering from some short term memory loss. Just last year, in interviews done with local suppliers, the reason for high prices was given: "We don't have any competition. We can charge what we want!"
There, folks. Another dichotomy:
"Businesses should be allowed progress! Capitalism is king!"
"Hey! Businesses are gouging me! No fair! *whine*"
You can't have it both ways.
bullseye has the right idea. another idea would be to do away with the bourough goverment and let the city do whatever they want to within the city but leave the rest of us to hell alone.
shok- I guess I don't know what your issue is. I don't have any problem paying a user fee in the form of a gas tax, because I like having snow plowed in the winter and potholes fixed in the summer and I don't mind chipping in to pay for it. There are plenty of other posters here that are going on at length about the extreme hardship imposed by the 8 cent per gallon tax, and all I was pointing out was how little money it added up to for any individual.
An alternative - instead of a gas tax on all of us, the state could lay off 300 people. That would more than make up the difference. Nope, not gonna happen.
It's actually the cumulative effect of taxes on every aspect of our existence by all levels of government. You start adding up your income tax, your payroll taxes for ss and fica, your property tax, your energy tax (soon to skyrocket), your sin tax, your hotel-motel bed tax, your business tax, your capital gains tax, your licensing taxes, your death tax, and whatever else that the local, state, and federal government can ever conceive of and yea, 8 cents is worth bitching about.
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