Legislature adopts ‘circuit breaker’ on gas tax

The House and Senate voted unanimously Wednesday afternoon to adopt a circuit-breaker measure that would freeze state fuel taxes for the next 15 months, giving some protection to consumers who pay the nation’s highest gasoline taxes and some election-year cover to state legislators.

But majority Democrats in both chambers also rejected Republican amendments to cancel a gas tax hike slated to take effect in July 2013. While the circuit-breaker will shave about 1.4 cents off the state’s fuel tax burden, the next tax increase would add nearly 4 cents per gallon.

The House of Representatives voted 146-0 to adopt the circuit-breaker measure after a one-hour debate that ended shortly before 5:20 p.m. The measure, which cleared the Senate on a 36-0 vote, now heads to Gov. Dannel P. Malloy, who is expected to sign it.

“The governor is obviously concerned about the rising cost of gas and its impact on Connecticut residents and businesses,” Malloy spokesman Andrew Doba said. ” … This proposal may be somewhat helpful in that it could potentially slow the increase of gas prices, and so the governor is supportive. That said, we need to be realistic about the limitations of what this legislation will achieve. What we really need are state and national policies that move us toward energy independence.”

Despite the bipartisan support in Wednesday’s debates, election-year politics was top of mind.

“Today we have taken a baby step when we had the opportunity to take a giant step,” said Sen. Andrew W. Roraback, R-Goshen, a candidate for Congress.

But Sen. Eileen M. Daily, D-Westbrook, said approving any relief beyond what was adopted Wednesday “is just not a prudent or responsible thing to do.”

Daily noted that the July 2013 tax increase was one of five approved simultaneously in May 2005 by the legislature and then-Gov. M. Jodi Rell, presumably to fund a major new transportation initiative.

The petroleum products gross receipts tax is slated to rise by one-sixth in 15 months, imposing an effective rate of 8.81 percent on wholesale purchases and collecting an extra $55 million for state government, according to nonpartisan legislative analysts. The circuit-breaker that was adopted Wednesday will save consumers about $5 million per year.

And Daily noted that rail and highway project costs have risen significantly since 2005. “We need to take a careful look at the monies we need to pay those bills,” she said.

But Daily didn’t mention a point that critics of those gas tax hikes have raised repeatedly since then: fuel tax revenue frequently is spent on non-transportation programs.

According to state budget records, in the first five years after those tax increases were ordered, 60 percent of the nearly $1.5 billion raised by the wholesale tax was not spent on transportation.

Though Malloy has worked to wean non-transportation programs off gasoline tax revenue since he took office last year, nearly 40 percent of the tax from this year’s wholesale levy, about $146 million, still is expected to end up in the general fund.

But Senate Minority Leader John P. McKinney, R-Fairfield, said, “We have enough money to support our roads and bridges. We have all failed in making sure all of that money goes into transportation.”

The best solution, McKinney said, is to use all fuel revenue to support transportation programs and to find spending cuts to balance the rest of the state budget.

The state has two taxes on gasoline — one responsive to usage, the other to price.

The state imposes a fixed, 25-cents-per-gallon tax when consumers fill up. But first a wholesale tax adds another 7.53 percent to the cost of gasoline — an expense built into the price paid by motorists. Based on the average wholesale price recorded last week — $3.18 per gallon — the wholesale tax adds another 24 cents per gallon.

Connecticut’s combined 49 cents per gallon tax ranks first among all states.

The circuit-breaker the Senate adopted Wednesday would use an artificial price of $3 per gallon to calculate the wholesale tax whenever the actual price exceeds that mark.

Democrats defeated Republican amendments to cancel the July 2013 tax hike in votes largely along party lines, 22-14 in the Senate and 94-53 in the House.

“We will be in a better position to look at these issues next session,” said Rep. Joseph Taborsak, D-Danbury, co-chairman of the General Law Committee.

One issue Democrats may face next session is a projected deficit tied to the $20.7 billion budget Malloy proposed in February for the 2012-13 fiscal year. That plan, according to administration numbers, is balanced next year, but runs $424 million in the red in 2013-14 — and that was based on the assumption that the next gasoline tax hike would take effect.

“We don’t want to tie our hands now … with the fragility of the budget situation that we have,” said House Majority Leader J. Brendan Sharkey, D-Hamden.

Republicans noted that Malloy and the legislature imposed more than $1.6 billion in new state and local tax increases last spring to help close a mammoth-sized state budget deficit, arguing that now is the time to impose fiscal discipline.

“Any way you slice it folks, it’s a tax increase,” said House Minority Leader Lawrence F. Cafero Jr., R-Norwalk.

“Next year is the worst time we can deal with this issue,” said Rep. Sean Williams of Watertown, ranking GOP House member on the Finance, Revenue and Bonding Committee. “We need to give certainty to our constituents.”

The circuit-breaker plan comes as national polling shows an electorate angry over gasoline prices, which have jumped about 30 cents per gallon in the past month to an average of $3.90 at the pump. A Reuters/Ipsos online poll Tuesday found two-thirds of Americans dissatisfied with President Obama’s handling of gas prices.

A March 2011 Quinnipiac University poll found more voters opposed to a plan to add 3 cents per gallon to gas taxes than were opposed to income and sales tax hikes.

Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn, said consumers should expect any large change in gasoline prices, noting that most of the forces affecting the price at the pump are beyond state control.

“Overall the price of gasoline is driven by those external forces, …  speculation abroad and on Wall Street,” he said.

Republican Sen. John A. Kissel, whose hometown of Enfield borders Massachusetts, noted that Connecticut also has the highest state fuel tax burden in the nation, and it drives shoppers over the state line.

Neighboring states “are all looking around at us wanting to take advantage,” he said. “Let’s defend ourselves.”

According to the Connecticut AAA, the average retail price of regular gasoline Wednesday stood at $4.03, a price topped by only six other states and the District of Columbia.