Alaska gas tax increase tests legislative resolve
The House Finance Committee meets Friday at 9 a.m. to consider a proposal that would increase the Alaska gasoline tax by eight cents a gallon, a raise so small that most Alaskans would not notice, given the constant fluctuation in fuel prices.
Raising the tax from 8 cents to 16 cents would leave Alaska with one of the lowest state gas taxes in the nation. Those who say that “now is not the time” are in denial.
The fate of the gas tax increase will not show whether Alaska’s elected officials are prepared to solve the fiscal crisis, but it will show if they are able to take a tiny step in that direction.
Here is a column by veteran Alaska journalist Larry Persily that puts the situation in context:
The last time Alaska changed the state tax on motor fuel, gasoline cost about 36 cents a gallon at a Lower 48 pump, the average home price in the United States was $24,000, and the average price of a new car was about $3,500.
The motor fuel tax rate in Alaska in 1970 was 8 cents a gallon, about half the price of a cup of coffee.
Gasoline now runs about $2.50 a gallon in the Lower 48, $3 in Anchorage, and closer to $4 a gallon in California.
The average home price in the country is over $300,000.
The average price of a new vehicle in the country tops $38,000.
And back in Alaska, after 50 years, the state motor fuel tax is still 8 cents a gallon. People pay more than 50 times that much for a cup of custom-brewed coffee.
Glaciers have receded, sea levels have risen, volcanoes have erupted, Alaska is on its 11th governor since 1970 and the gas tax still hasn’t budged.
Stubbornness is one thing, maybe a virtue in some circumstances. But Alaska’s refusal to accept the truth that road maintenance costs money is irresponsible stubbornness, which is no virtue.
Legislators and even a few governors have tried over the years to boost the tax by pennies a gallon to help pay for road maintenance, repairs and snowplowing. But the anti-tax forces have prevailed every time, defeating all reasonable efforts to bring the tax rate into this century.
Alaska has another chance, but time is running out. The House Finance Committee on Friday is scheduled to hear House Bill 104, which would boost the rate tax by 8 cents a gallon.
Maybe the committee can move the bill. Perhaps the no-taxes-on-my-reelection-watch crowd in the House can just for a minute think about drivers and highway safety instead of their own campaign rides. Maybe the Senate can agree — all before the May 19 adjournment deadline.
If the stars and the sun and the moon and the tire treads all align, this could be the year we stop pretending that no self-respecting oil-producing state should collect more taxes on gasoline.
Tell that to Texans, who pay a state tax of 20 cents a gallon at the pump. North Dakotans pay 23 cents. It hasn’t ruined either state.
Alaska’s motor fuel tax rate is the lowest in the nation; less than one-third the average of the other 49 states. The national average of the 50 states is 25.68 cents a gallon, according to a Jan. 1 report from the American Petroleum Institute.
The bill, if approved, would raise more than $30 million a year for the state general fund that could be used for highway maintenance. As for vehicle owners who use the roads but don’t fill up at the pump, the bill would create a new $50 fee, good for two years, for plug-in electric hybrids that use some motor fuel, and a $100 biennial fee for all-electric vehicles that use no gas.
The motor fuel tax hike will not solve the state’s fiscal problems. But it would be a start. At least we could shift into drive instead of sitting in our driveway with the emergency brake pulled tight.
Larry Persily is a longtime Alaska journalist, with breaks for federal, state and municipal service in oil and gas, taxes and policy work. He is currently owner and editor of the weekly Wrangell Sentinel newspaper.