State gas tax may be frozen again
The Charleston Gazette, March 11, 2009
CHARLESTON, W.Va. - In 2007 and 2009, Gov. Joe Manchin and the Legislature froze automatic increases in the state gas tax, to give consumers a little price relief at the gas pump. Legislators are being asked to extend the freeze into 2010 - but this time to keep the gas tax from dropping.
Under current law, the state gas tax has two parts: A base rate of 20.5 cents a gallon, and an additional tax equal to 5 percent of the average wholesale cost of a gallon of gasoline for the previous July through October. The wholesale portion of the gas tax changes each Jan. 1.
Because of high gas prices in 2006 and 2008, Manchin and the Legislature froze that part of the tax for the following year. Currently, the freeze saves consumers about a nickel a gallon - but Department of Transportation officials note that the two tax freezes combined will cost the state Road Fund about $142 million in lost revenue.
However, with gas prices projected to remain at around $2 a gallon this year, the Jan. 1, 2010 adjustment would result in about a 3-cents per gallon drop in the state gas tax, which is currently 32.2 cents a gallon.
State transportation officials are asking the Legislature to extend the freeze, to avoid another hit on an already severely under-funded state Road Fund.
"We will see a $40 million to $50 million reduction, unless the freeze is extended," Transportation Budget Division director Alice Taylor told the House Finance Committee Tuesday.
In the 2009-10 budget, gas tax revenue will account for $380 million of the $1.4 billion state Road Fund budget.
Meanwhile, transportation officials note that the state has more than $25 billion of highway construction projects pending for a lack of funding.
