TAYLORSVILLE The executive director of the Utah Department of Transportation believes that with gas prices at their lowest level in five years and state revenues down, now might be the time to consider changing the way gasoline is taxed.
"It may be an opportunity to make a switch," John Njord said Wednesday during a meeting of the Utah Transportation Commission.
Commissioners asked Njord his opinion on discussions from the governor's office about replacing the current set tax rate of 24.5 cents per gallon of gasoline to a percentage price at the pump, which has been described as something of a sales tax.
The state is expected to have a revenue shortfall in the hundreds of millions. On Thursday, Gov. Jon Huntsman Jr. will release his budget for next year.
UDOT officials didn't drop any hints Wednesday of what they expect from the governor's budget, but two weeks ago, Njord announced he was suspending all of UDOT's projects that are funded from the state's general fund some 50 projects worth $3.9 billion, including a $2.6 billion I-15 reconstruction project in Utah County and the Mountain View Corridor. Other projects funded by gas taxes, vehicle registration fees and federal money are still going forward.
Njord explained to the commissioners Wednesday that he didn't want to start any projects before he could see the budget for the 2010 fiscal year, and any possible budget cuts. Njord made the executive decision without consulting the Transportation Commission, a move commission vice chairman Stephen Bodily agreed was necessary.
"The action needed to be done quite quickly to avoid putting ourselves into a corner we couldn't buy our way out of," Bodily said. "I think from here on, we have to move cautiously and not move faster than we know we have funding for."
Commissioners also asked Njord whether it was possible that gas taxes could continue to exist under the same formula, but be increased above the current 24.5 cents a gallon. They said that gas prices are so low these days, the public wouldn't feel the difference. On Wednesday, the average cost of a gallon of regular unleaded in Utah, according to AAA, was $1.73 a gallon.
The federal gas tax is assessed as a flat rate per gallon, the same manner in which the state currently assesses the 24.5-cent-per-gallon tax. Few states assess the tax like a sales tax, which is added on as a percentage at the end of a purchase. If the state gas tax is changed to a sales tax, it's up to the Legislature to decide how to assess it and whether it would be added to the final gas bill or whether it would be added to each gallon as a motorist fills up, UDOT spokesman Nile Easton said, stressing that neither Njord or UDOT is presently advocating for a change to the gas tax.
The Association of General Contractors, which represents most of the large construction companies that build the state's roads and bridges, told the commissioners Wednesday that they support raising the current tax by 10 cents by increasing it over time as inflation increases. Njord said the increase could generate $140 million, but not all that money ends up in UDOT pockets. It is shared among counties and cities.
"I think it will be hard for legislators to agree to a gas tax increase," Njord said.