Gas prices in CT hit record high; Politicians scramble to find relief

Soaring gas prices are pushing Republicans and Democrats to look for options to relieve motorists.

Republican gubernatorial candidate Bob Stefanowski on Wednesday called for the suspension of two state gasoline taxes, while House and Senate Republicans have scheduled a press conference for Thursday at 10 a.m. to unveil a backup plan.

Meanwhile, leaders of Democratic majorities in the House and Senate met with Gov. Ned Lamont’s administration this week to consider options to ease the bottleneck in household budgets at the pumps.

The average retail price for regular gasoline reported Wednesday by AAA hit $4.42 in Connecticut — the highest mark in state history. It’s also 20% higher than it was on Feb. 23, the day before Russia invaded Ukraine, a move that sent oil markets tumbling.

According to the Connecticut Energy Marketers Association, a coalition of major fuel marketers, the wholesale price at New Haven Harbor — the state’s largest fuel import location — has risen 22% since March 1 alone.

“This is the biggest issue currently on the forefront of Connecticut residents,” said House Minority Leader Vincent J. Candelora, R-North Branford. “It’s become a major stressor on household income.”

Rep. Sean Scanlon, D-Guilford, co-chair of the Legislature’s Finance, Revenue and Surety Committee, said the litmus test to judge all proposals will be ensuring households receive real help that doesn’t won’t make things worse in the long run.

“Can we provide meaningful relief to people who: A) are not a gimmick; B) Is it financially viable? C) Won’t we go back on the progress we have made? ” he said.

Stefanowski would suspend the two national fuel taxes

Stefanowski proposed his solution on Wednesday: suspend national fuel taxes until next January 1.

Connecticut currently imposes a flat retail sales tax of 25 cents per gallon on gasoline.

It also taxes wholesale transactions at 8.1% – although a state-approved surcharge effectively raises the rate to 8.81%. And although gas stations are charged for this tax, they factor the cost into the price charged to motorists.

Anytime the wholesale price exceeds $3 a gallon — it hits $3.40 to start the week in New Haven Harbor — a cap enacted in 2012 limits the tax to 26.4 cents, as if the wholesale price doesn’t was only $3.

That means motorists currently pay about 51 cents per gallon in state taxes when filling up.

“Residents of Connecticut pay some of the highest gasoline taxes in the country, and they need immediate relief from this national gasoline price spike that has no end in sight,” a said Stefanowski.

But things may not be so simple.

Governor John Rowland and the legislature lowered the retail gasoline tax between 1997 and 2000 from 39 cents to 25 cents, but the initiative has been plagued by complaints that motorists have seen little or no price relief.

Some service stations did not pass the savings on to consumers. And even those who did still couldn’t guarantee savings when the wholesale price continued to rise.

Stefanowski said state anti-tariff laws should prevent that, and if they lack the teeth to do so, lawmakers should also reform that system.

There is also the problem of the Special State Transportation Fund, which covers, among other things, debt on the loan that pays for much of the highway, bridge, and railroad improvements. Its funding comes largely from gasoline taxes.

The STF is in equilibrium at the moment. But even with increased gas tax revenue, there are questions about whether the fund will be enough to cover a decade or more of rebuilding Connecticut’s aging infrastructure.

The two fuel taxes bring in nearly $680 million over 12 months. Suspending them for nine months, say April through December, could wipe out nearly $500 million in revenue.

Stefanowski noted that the state has $3.1 billion in its emergency budget reserve and can afford the hit without hurting the transportation program.

But others say it’s a steep price to pay when there’s no guarantee motorists will reap the benefits.

Other tax relief proposals in preparation

“We must act immediately on gas prices,” Lamont tweeted Wednesday. “We have to do it right, without sacrificing our infrastructure.”

Scanlon said Democrats are exploring all options that ensure households get all of the relief that is intended.

One option is to create a new credit or rebate within the state income tax to cover fuel costs.

Income tax is already on the agenda of the Finance Committee for this session. Lamont has proposed expanding a credit that helps low- and middle-income households pay local property tax bills, while Scanlon wants to create a new $300 per child credit for those same groups.

Republican legislative leaders did not comment Wednesday on details of the motorist relief package they would propose on Thursday.

But Rep. Tim Ackert, R-Coventry, a member of the Finance Committee, introduced a bill this winter that would try to stabilize state fuel taxes over the long term.

The wholesale tax which currently adds 26.4 cents per gallon to the price of gasoline was worth 21 cents at the start of the year. Just over two years ago, when wholesale prices were much lower, this only added 11 cents to the retail price.

“Let’s make it predictable,” said Ackert, who proposed combining the wholesale and retail levies of 25 cents per gallon into one flat tax.

Ackert noted, for example, that lawmakers could still provide relief now, setting the tax somewhere below the combined 51-cent burden that motorists currently face. And then consumers would know what to expect in the future.

Chris Herb, president and CEO of the Energy Traders Association, also endorsed the idea of ​​removing volatility from the wholesale tax, adding that a percentage-based levy quickly inflates taxes in worst economic times.

And although lawmakers have imposed this cap on the wholesale sales tax, the trigger is so high that the cap rarely comes into play.

“The cap is only effective when we have these outrageous situations, when Wall Street can’t handle the fear that arises because of a war in Europe,” he said.

“It’s literally insane to have a moving target at the pump.”

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