In June of 2021, the legislature passed the Highway Use Tax (HUT), which is a per-mile tax applied to tractor trailers where the tax rate is higher for the heavier vehicles. There have been a few major developments since that time which warrant repeal of the Highway Use Tax.
One is passage of the federal infrastructure law. On Nov. 15, 2021, President Biden signed the bipartisan infrastructure bill into law, of which Connecticut will receive $5.38 billion. In June 2021 when the state’s highway use tax was signed into law, we had no idea if the federal infrastructure bill would pass or not. The good news is that it has passed, and we now know that the state is going to reap financial benefits from it.
Secondly, the state’s Office of Fiscal Analysis is now projecting that the Special Transportation Fund (STF) will run a surplus for the next several fiscal years. This projection was not known when the HUT was signed into law. In fact, data contained in a OFA presentation given on Nov. 19, 2021 shows that even if HUT revenue is subtracted from revenue estimates for future fiscal years, the STF will still run a surplus every year through fiscal year 2026. Even without the HUT, calculations using OFA data show that at the conclusion of fiscal year 2026, the STF would have a balance of $884.8 million. Additionally, the minimum “debt service ratio” requirements (annual revenue / annual debt service) of 2.0 outlined by OFA in their November 19 report would be met.
As long as the legislature does not divert funds that are supposed to be sent to the STF before they get there, this data from OFA clearly shows that there is no need for the HUT or any other new revenue stream through the conclusion of fiscal year 2026.
Right now, Connecticut and the rest of the U.S. is dealing with a supply chain crisis and rising inflation, which had not yet materialized when the HUT was signed into law. All consumers are paying more for life’s essential products, and it is clear that transportation costs are a huge reason for that. As Bloomberg News recently noted, in the fourth quarter of 2021, trucking freight rates saw their largest increase in about 30 years. “Increased shipping costs are adding to concerns that inflation across the U.S. economy will be slow to dissipate,” Bloomberg stated.
Connecticut’s own small businesses have also explained that this will increase the cost of products. “We can’t absorb it. This is going to have to be passed down to our customers,” said John Pruchnicki of Coastal Carriers of CT, a business that brings gas to gas stations. “We’re playing a critical role right now in the food chain, and we’re in a difficult position to pass these costs on to our retailers,” said George Motel of Bozzuto’s, a business that brings food to grocery stores.
Connecticut residents are already paying more for food and gas than they were a year, or even six months ago. Allowing this tax to take effect will exacerbate the inflation that is already being experienced. Let’s repeal this tax in order to support both our Connecticut small businesses, and Connecticut residents as we deal with the economic fallout of the COVID-19 pandemic.
Joe Sculley is President of the Motor Transport Association of CT