Highway budget calls for hikes in state gas taxes 1.3 cents per gallon increase proposed

AUGUSTA – As Mainers drive over the usual mud season crop of potholes and frost heaves, the Legislature is quietly working on a $676 million two-year highway budget whose funding depends on a pair of gasoline tax increases adding up to 1.3 cents per gallon.

Only one diesel fuel tax increase – 0.2 cent per gallon – is envisioned in the highway spending plan.

The increases would be on top of Maine’s current per-gallon taxes of 25.2 cents for gasoline and 26.3 cents for diesel.

Gov. John Baldacci’s $5.7 billion general fund budget, with provisions seeking to increase fines for not using seat belts, impose canoe and kayak fees and allow limited Sunday hunting, has been drawing most of the attention in the State House.

In the meantime, the Transportation Committee has been refining and building consensus on a roads-and-bridges spending plan that assumes gas tax revenues that are indexed for inflation. State law pegs automatic adjustments in Maine’s fuel taxes to shifts in the Consumer Price Index.

“All indexing does is maintain the buying power of the budget,” Bruce Van Note, deputy transportation commissioner for operations and budget, said Friday.

The budget bill has solid support of the Transportation Committee and faces House and Senate votes in the next few days. It calls for a 0.7 cent per gallon increase in gasoline taxes as of July 1, and another 0.6 cent on July 1, 2006, for a total of 1.3 cents.

The committee agreed to ease the impact of indexing for those who buy diesel fuel – primarily truckers – by disallowing an increase this year and authorizing an increase of only 0.2 cent per gallon in July 2006.

The smaller increase in diesel taxes acknowledges higher fuel consumption of big trucks and rising costs many truckers are facing, state and industry officials said. In addition, the committee wanted to make gasoline and diesel taxes match by the end of the biennium.

With proposed increases in both taxes, state taxes will amount to 26.5 cents per gallon for gasoline as well as diesel fuel as of July 2006.

Maine’s indexing law raised the state’s fuel excise tax by 0.6 cents per gallon last summer, putting Maine among about a dozen states that imposed fuel tax increases during the second half of 2004. Two states, Texas and West Virginia, had decreases, according to an analysis by the Washington State Department of Transportation.

The national average state and local gasoline tax during the second half of 2004 was 23.72 cents per gallon, says Washington’s analysis, which is based on figures from the Commerce Clearing House State Tax Guide.

In addition to the highway budget, the Transportation Committee has sent to the full Legislature a $57.25 million bond package, Van Note said.