Sliver of gas tax indexing survived repeal effort
It is just the sort of thing that opponents of automatic tax hikes railed against last year — on a substantially smaller scale.
On Jan. 1, the day a provision of tax law took effect, the Department of Revenue ratcheted up a 2.5-cent per-gallon fee on gasoline to keep up with inflation. Now instead of paying $250 for 10,000 gallons of gasoline, service stations owe $253.95.
Indexing of the underground storage tank fee to inflation was a surviving statute from a 2013 tax package. After a nearly strict party-line vote, lawmakers swiftly repealed a "tech tax" provision of the new law and a year later voters nixed another big section of the law that had hitched the gas tax to inflation.
What the ballot question neglected to address was the 2.5-cent fee that is part of the per-gallon charge to motorists. The 2013 tax law — aimed at boosting revenues for transportation — had hitched both the regular 24-cent state gas tax and the 2.5-cent underground storage tank cleanup fee to inflation, while the repeal effort only targeted the gas-tax indexing.
The state made the calculation upping the fee less than a week before Gov. Deval Patrick left office, and the current law requires Gov. Charlie Baker's administration to repeat that action early next year. The fee is overseen by the Department of Revenue.
Though he had allowed recreation fee hikes initiated by the Patrick administration to take effect under his watch, Baker has been adamant about the need to improve the operations of the MBTA before increasing taxes to pay for the transit service.
"I'm not talking taxes, period. Not talking taxes, because as far as I'm concerned we have a long way to go here to demonstrate to the public, to each other and to everybody else that this is a grade-A super-functioning machine that's doing all the things it should be doing," Baker said at a Dorchester press conference about winter preparedness in September.
When arguing in favor of repealing the gas tax indexing, activists compared the 2013 state law to British imperialists' imposition of tea and paper taxes on colonists more than two centuries ago. Activists involved in the 2014 effort now say they did not consider repealing the gas fee indexing.
"I don't think there was a conscious decision to leave it out," Steve Aylward, a leader in the attempt to repeal the gas tax inflation-adjustments, said in an interview. Asked whether he had known that the gas fee is still linked to inflation before a News Service inquiry on Friday, Aylward said he could not say for sure.
Holly Robichaud, a Republican operative and Boston Herald columnist who worked on the repeal campaign said "we didn't realize" that the fee was also indexed. Robichaud pointed to the relatively short window between the tax law's passage and the deadline for ballot referendums.
Lawmakers overrode Patrick's veto to pass the bill into law July 24, 2013, and proposed ballot questions were due two weeks later.
"It was a very short timeframe," said Robichaud. The political strategist returned a message left for Rep. Geoff Diehl, who was a chief proponent of the repeal and is now a candidate for Senate.
According to the Baker administration, about 2.955 billion gallons of gasoline and diesel were sold in Massachusetts in 2014. By that metric, the slight increase factored into the underground storage fee earlier this year would add up to about $1.1 million.
"It's a drop in the bucket," said Massachusetts Taxpayers Foundation President Eileen McAnneny. Using back-of-the-envelope math, McAnneny said the increase would add up to less than a dollar per driver.
Rafael Mares, vice president of the Conservation Law Foundation, said the increase would be important as the MBTA considers moves such as ending a ban on liquor advertisements to boost revenue.
"Even small amounts such as this one are really helpful in the short-run," said Mares, who argued that in the long run anyone who doesn't have their "head in the sand" understands there will need to be substantially more funding needed.
Though it is characterized as paying for cleanups of fuel spills at gas stations, the money raised from the fee was redirected from the special cleanup fund under Gov. Mitt Romney in 2003 and now goes into the Commonwealth Transportation Fund, according to Stephen Dodge, a lobbyist for the American Petroleum Institute.
Dodge said funding for underground storage cleanup is now made through appropriation like any other budget item.
"The concept of user-pay has gone out the window," said Dodge, who said his organization took no position on the gas-tax indexing repeal and he said the fee generates about $85 million per year.
Mares said the Commonwealth Transportation Fund sends money to regional transit authorities, the MBTA and debt payments, and the fund is replenished through the gas tax, sales tax and Registry of Motor Vehicles fees.
Though it wasn't included in their ballot question, Aylward and Robichaud both said they disliked the concept of automatic increases to the fee.
"Any automatic tax increase is not something that we want to see," Aylward told the News Service. Asked if he would seek repeal of indexing the underground storage tank fee, Aylward said, "I wouldn't rule it out."
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