Gas tax would aid economy, fund state programs

Published in The News Tribune, October 9, 2011

After what now seems like a thankfully long respite – four months was it? – state budget cuts are once again on the table.  And it’s the same old story.

The state’s chief economist Arun Raha once again erred on the side of optimism.  In truth, it’s more accurate to say that he was not pessimistic enough – no one dares be optimistic these days.  At any rate, the state budget is once again short — this time it is predicted to have $1.4 billion fewer revenues than when Raha last peered into his crystal ball. So back to the drawing board.  Back to negotiating more budget cuts.


The problem with the state budget is twofold.  While the state’s expected revenue this biennium is expected to rise for the first time in four years, the expenses that the state has committed itself to paying in the future – primarily ones related to health care and pensions – are rising faster than revenue.  In the current biennium (2011-2013) the state expects to collect over $2 billion more than it did last biennium.  Whether or not that expectation holds up when Raha reveals the next revenue forecast remains to be seen.  But even if it does, the state will fall short of its anticipated expenses.

Then there’s the second problem.  Believe it or not, as a share of our collective income state taxes are at an all time low.  The state’s take is now below five percent, compared with seven percent in 1995.  This means that as a percent of our overall income, we’re paying nearly a third less in taxes to the state than we did 16 years ago.  This doesn’t fit well with the premise that governments always raise taxes, but it’s a fact.

There seems to be new hope, though, that this time around budget cuts may be softened by tax increases.   That would be a welcome change.  But as pointed out by the TNT (Editorial, 10-2), taxes always serve to discourage the activity taxed.  Raise sales tax and some people stop buying.  Raise taxes on soft drinks, and people line up at the water fountain.  With the economy in the shape that it is in, a tax that discourages spending is a tough sell.

In this context, the best option we have is to increase the state’s gas tax.  A higher gas tax means people might think twice about driving.  And that’s not necessarily a bad thing to discourage.  The news on the global warming front keeps getting worse, and while higher gas taxes in Washington won’t solve this problem, anything that gets us accustomed to paying more for carbon-based fuels is a step in the right direction.

Critics will argue that a higher gas tax would be regressive.  This is absolutely true, it is – it takes a bigger bite out of the income of those with less money than it does out of those with more money.  I for one rarely pay attention to what it costs to fill up my tank.  For me, a few extra dollars one way or the other just doesn’t matter.  But for those without a cushy state job – maybe without any job at all — any extra expense hurts.

But a gas tax could be in the interest of those with low income.  Low income citizens in our state need access to health care, mental health facilities, community clinics, transportation options, and yes, emergency rooms – precisely the programs that budget cuts will have to target.

Yet these are the sorts of public expenses that need prioritizing.  The national problem of poverty is as dire today as it was four decades ago.  In fact you could say it is worse.  There are certainly more kids growing up in poverty today than ever before.   And the last couple of years have been particularly tough.  New U.S. Census Bureau estimates show that in our state, the number of people below the poverty line is up by ten percent.

While not ideal, a gas tax is the best real option we have for addressing the state’s budget problems as well as pressing needs in our state.