Gov. Joe Manchin, along with the near unanimous support of the Legislature, handed us an extremely modest tax break at this past week's special session by freezing West Virginia's gasoline tax at its current level of 32.2 cents per gallon until at least Jan. 1, 2010.
Without the passage of this law (HB218), the tax would probably have jumped another 6 cents or more come Jan. 1, 2009. But since the retail price at the pump has been going up in increments of 10 cents or more a week at times, it's probably not going to be that big of a deal to most motorists.
It's the second time in three years that Manchin has taken this approach, and apparently he has learned from the experience in 2006 when a 3.4-cent per gallon boost in the state tax was stalled for 12 months. That move cost the State Road Fund some $52 million in lost revenue, which forced many road improvement projects to be delayed.
This time, at least, the governor and lawmakers took steps to help avoid that problem by authorizing up to $40 million of state general tax revenue to help cover this "shortfall" in road user tax receipts. And it was that feature of the administration's proposal that attracted the token legislative opposition.
Sen. Brooks McCabe, D-Kanawha, was the most outspoken about the idea of using general tax money for the Division of Highways, which has its own separate budget financed from not only gasoline taxes but other road user levies such as license plate fees and the privilege tax on vehicle purchases.
McCabe, one of three members of the Senate to vote against the bill, said it's not a good idea to dip into general revenue for highway maintenance. He makes a good point, but since West Virginia is one of a handful of states responsible for its entire primary and secondary road system, this option may be the only alternative.
West Virginia needs to become more imaginative in its efforts to support a well-maintained highway system. Toll roads may well have to be part of the solution. During a recent vacation trip, I gladly paid $6 to travel about 15 miles on a new I-470 expressway around Denver and shelled out $2 to travel about 30 miles of I-70 from the state capital in Topeka, Kan., eastward to Kansas City.
Efforts to raise the tolls on the 88-mile West Virginia Turnpike have become an explosive political issue, but in terms of inflation, even a 20 percent boost in the current rates wouldn't be unreasonable. And folks in Putnam and Mason counties are beginning to realize a modern four-lane U.S. 35 from Nitro to Point Pleasant may only be possible if it is financed by tolls -- paid mostly by willing truckers.
The cost of road construction and maintenance in West Virginia is going to be increasingly impossible to cover with any reasonable tax rates on gasoline, new vehicle purchases and annual license plate renewals. And the large amounts of federal dollars so readily available in past decades won't be as plentiful, either.
-
Meanwhile, at the time there were many who didn't think it was a good idea for West Virginia to cash in its chips in the multi-state tobacco settlement case and let bond buyers assume the risks associated with accepting annual payments from the tobacco companies for several years. But there's no one who faults this state's decision now.
When the $911 million bond sale was completed June 14, 2007 -- the largest in the state's history -- it just made it under the wire and turned out to be the last major issue of tobacco settlement bonds before the market took a severe downturn. As members of this state's Tobacco Settlement Finance Authority learned at their annual meeting last month, the major cigarette manufacturers are experiencing major declines in cigarette consumption.
This will directly affect the annual payments they make to states as a result of the 1998 multi-state lawsuit and means West Virginia's net proceeds from that bond sale of $807 million -- money used to help bring more financial stability to underfunded teachers' pensions in the state -- is looking more prudent than ever.
Whether it was sound financial judgment or merely luck, it has turned out well, and even the most vocal critics of last summer's bond issue must now agree it was clearly the right thing to do.
-
Finally, in case you've forgotten, all of us will get another important state tax cut this week. The state consumer sales tax on groceries drops from 4 percent to 3 percent on July 1 -- the final step in a three-phase reduction approved by the Legislature in 2006.
And with the cost of food climbing so rapidly in concert with the soaring price of gasoline, this tax break couldn't come at a better time for consumers. However, Republican lawmakers will continue to argue that this tax should be repealed entirely, and the sooner the better.
Tom Miller is a retired state government reporter for The Herald-Dispatch. He is a regular contributor to The Herald-Dispatch editorial page.
7-day Archive
