10¢ gas tax hike coming?

A tax watchdog group warns that Utah may be headed for a big gasoline tax hike — possibly 10 cents per gallon — but legislative leaders say it won't happen in 2004.

The Utah Taxpayers Association, a group mostly funded by businesses, says that by 2006 Utah will need to raise its current 24.5 cents-per-gallon motor fuels tax by as much as 10 cents a gallon — a 29 percent increase — if lawmakers and Gov. Olene Walker "raid" the $65 million Centennial Highway Fund during the 2004 Legislature.

Walker won't release her 2004-05 recommended state budget until next week. But she has already said she doesn't want to raise any taxes next year and hinted that she can find more money for public education by looking at other revenue sources — like transportation funds.

However, House Speaker Marty Stephens, R-Farr West, said Tuesday he doubts legislators in the 2004 general session will raise the gasoline tax or take more General Fund money out of the Centennial Highway Fund, created in 1997 to pay for reconstruction of I-15 in Salt Lake County and other road projects.

"I'm against taking any more sales tax monies out of the CHF," said Stephens, who is looking at running for governor next year.

Most legislators won't want to do that either, Stephens predicts.

"We have a (legislative) transportation funding task force that won't make its final recommendations until the fall of 2004," he said. "I think we'll wait until we see what they say" before raising the gasoline tax, last increased by a nickel a gallon in 1997 to help fund the CHF.

"It makes little sense to raise the gas tax by three cents (per gallon) this year just to have the task force say we really need a five-cent increase, and then to increase it again by two cents" in 2005, Stephens said.

Because the state gas tax is a per-gallon tax, it only brings in more revenue as more gallons of gas are sold. In fiscal 2003-04, the state Tax Commission estimates the gas tax will bring in $237 million.

Historically, gas tax revenue has not kept up with inflation, and so it does need to be adjusted upward periodically to bring in enough money to keep up with road building and repair demands, leaders say.

Stephens adds that lawmakers and former Gov. Mike Leavitt already have taken as much money out of the CHF "as we can and still be able to pay off the bonds we've already issued out of the fund."