Another View: Why raising the state's gas tax takes taxpayers for a ride
As we begin to build our state budget spending plan for the next two years, two camps have emerged regarding how to increase funding for our road and bridge projects: One insists that raising our gas tax is the answer, while the other looks to protect taxpayers by establishing a totally new source of funding.
As Senate Finance Chairman and the veteran of several budget battles, I am convinced we need to move forward on this funding issue in a manner we can best handle financially with the least burden to taxpayers. That is why I could not be more opposed to HB 617, filed by Rep. David Campbell, D-Nashua, that seeks to increase our gas tax by fifteen cents per gallon.
This would mean an eighty-three percent increase, totaling one billion dollars over ten years, in our gas tax and the timing could not be worse. Prices at the pump are heading back up at the same moment New Hampshire is beginning to show signs of climbing out of the current recession. This is exactly the wrong recipe for improving our economy.
When fully implemented, this tax will cost drivers in my hometown of Salem nearly $2 million a year. Nashua drivers will contribute an additional $5.2 million, and Manchester motorists will pay in over $6.3 million more a year. In return, our communities will receive less than 20 percent of those funds for local road and bridge repairs; the rest will be funneled to bureaucracy of our state's Dept. of Transportation.
There are additional reasons why raising the gas tax is bad policy:
We are currently living in a time of high gas prices and a stagnant economy. These are the two main obstacles to raising the gas tax in recent years.
As gas prices/taxes increase, consumers drive less, purchase less gas and as a result, tax collections decrease.
Supporting an increase in the gas tax is one thing, being honest about who is footing the bill is another. Since most gas in New Hampshire is bought by New Hampshire drivers and businesses, we would not be passing this increased cost along. Example: $22 million of diesel fuel was purchased last year in New Hampshire and New Hampshire businesses/individuals bought $21 million of it.
An increase in the gas tax is bad for commerce and small business because it makes energy more expensive. These increased costs cut into a business's bottom line and are often passed on to consumers.
Once any tax is raised, the state becomes dependent upon it.
And if those arguments aren't convincing, try this: If we pass an increase in the gas tax as Rep. Campbell suggests, it would nearly double the amount of revenue our Dept. of Transportation collects when fully implemented.
If every department took this approach, state government and the taxpayers would go broke.
Instead, I believe funding roads and bridges with money generated by expanded gaming is the better approach for two reasons. First, under Senate Bill 152 (legislation that I am sponsoring), gaming money generated by a casino located near the Massachusetts border will go directly to the source, i.e., bettering roads/bridges, paying off bonds. And second, there will be no additional taxation of New Hampshire citizens.
Specifically, this legislation guarantees the state gets 30 percent of the net revenues a casino generates from its slot machines. Twenty-five percent of that money pool is split between roads and bridges, higher education, and North Country economic development. The town where the casino is built, as well as adjacent communities, would benefit from three and one-percent shares respectively. The final one percent is set aside to support problem gamblers.
Here's the bottom line, to pay for needed road and bridge work the legislature can either create pain at the pump by nearly doubling the gas tax and thus reducing disposable income and hurting commerce in the state; or go with a plan that protects taxpayers by establishing a new, non-tax source of revenue that could raise more than $50 million a year - a plan that also has the green light from Gov. Hassan.
I think the choice is pretty clear.
Chuck Morse, a Republican, represents District 22 in the New Hampshire State Senate and is a resident of Salem.