Gas tax revenues continue to drop

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(Host) Vermont’s gas tax revenues continued their downward spiral last month.

Receipts for July were off 10% because Vermonters have cut back on their driving.

Administration Secretary Mike Smith says this trend has serious implications for the state’s transportation system.

VPRs Bob Kinzel reports.

(Kinzel) You can almost make a direct link between the rise in gas prices and the decline in state gas tax revenues.

That’s because the state gas tax is a fixed amount per gallon, it’s roughly 20 cents. So a drop in the amount of gas sold has a direct impact on the amount of money that comes into the state’s Transportation Fund.

In July, gas tax revenues were down just over 10 percent.  Administration Secretary Mike Smith says the trend is clear. The question is when the situation will bottom out.

(Smith) “That’s what we’ve seen as fuel prices have gone up. Consumption has gone down and revenues correspondingly have been reduced in that."

(Kinzel) The State’s Transportation Fund is facing an $8 million revenue shortfall in the new fiscal year. Smith wants to transfer $4 million from the General Fund over to the Transportation Fund as part of an overall budget reduction plan.

A number of lawmakers are opposed to this transfer because they feel it will make problems in the General Fund even worse.

Without the transfer, Smith says the Transportation Agency will have to consider some unpleasant cutbacks.

(Smith) “Because of the sort of the disproportionate revenue reduction in the Transportation Fund, the reductions that would have to take place in the Transportation Fund without General Fund assistance would be fairly significant and those are things that I would like to try to avoid."

(Kinzel) Smith thinks the trend linking reduced consumption with higher prices makes it clear that boosting the gas tax to generate more money isn’t the right strategy.

(Smith) “It confirms and reconfirms the thing that we don’t want to do is raise gas prices and raise it by increasing the gas tax. I think clearly that shows that doesn’t work. It just will make the problem even worse as consumption drops even further and probably faster."

(Kinzel) Negotiations between the Douglas Administration and legislative leaders over the specific details of $25 million dollar budget cutting plan will continue for the rest of the week.

The Joint Fiscal Committee will then review this package at their meeting next Tuesday.

For VPR News, I’m Bob Kinzel in Montpelier.

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