Republican state senator proposes linking N.H. gas tax hikes to inflation

Last modified: 12/7/2013 12:16:48 AM
A Republican state senator will lead the charge next year for an increase in New Hampshire’s gas tax, which has stood at 18 cents per gallon since 1991.

A bill this year to raise the gas tax by 12 cents, phased in over several years, passed the Democratic-controlled House before being rejected, 18-6, by the GOP-controlled Senate.

But Sen. Jim Rausch, a Derry Republican and chairman of the Senate Transportation Committee, has a new proposal that would link future increases in the gas tax to the rate of inflation, starting with a roughly 4-cent hike in 2014.

“I’m doing this because I feel I have an obligation to solve a problem,” Rausch told reporters yesterday.

Rausch’s bill, which he’ll introduce in January when the Legislature returns for 2014, is likely to put him at odds with the many Republican lawmakers who argued vehemently this year against increasing the gas tax – including Senate President Chuck Morse.

Morse, a Salem Republican, said yesterday he doesn’t plan to block Rausch’s bill from being introduced. But that’s about as far as he’ll go.

“I continue to oppose any increase in the gas tax; I believe it hurts the families of New Hampshire who can least afford it and it burdens our businesses trying to make ends meet in a fragile economy,” Morse said in a statement. “I recognize there are senators who may disagree with the sentiment, and I look forward to the discussion next session.”

Gov. Maggie Hassan, a Democrat, “appreciates the constructive ideas put forward by members of both parties . . . to invest in critical road and bridge projects,” including Rausch’s bill, said spokesman Marc Goldberg in a statement.

“She will continue to work with both Republicans and Democrats to reach a consensus path forward to address our infrastructure needs and help build a more innovative economic future,” he added.

Linked to inflation

Rausch’s bill would raise New Hampshire’s gas tax in line with inflation as measured by the Consumer Price Index for urban consumers in Greater Boston, formally known as the CPI-U for the Boston-Brockton-Nashua area.

In 2014, the increase would reflect CPI change between 2003 and 2013, and going forward, the rate would be automatically adjusted every four years starting in 2018.

“This was my effort to solve a problem that was logical, and it’s based on trying to restore purchasing power that has eroded since the last tax increase in 1991,” Rausch said. “And rather than just pick a number out of the air, I wanted to do it based on . . . the Consumer Price Index, how the dollar has eroded.”

Three states – Florida, Massachusetts and Maryland – have laws linking their gas tax rates to inflation, and a dozen other states have variable-rate taxes based on other measures such as the price of fuel, according to the National Conference of State Legislatures. (Massachusetts’s inflation indexing law, passed this summer, takes effect Jan. 1, 2015.)

Final CPI numbers aren’t yet available for 2013, but Rausch estimated the 2014 increase would come in at a little above 4 cents, and that future increases would be “a penny or less” based on the current inflation trend.

He said each 1-cent increase means roughly $7 million more a year for the Department of Transportation, which has said it desperately needs more funding to maintain a deteriorating statewide network of roads and bridges and continue big-ticket capital projects such as the widening of Interstate 93 in southern New Hampshire.

Co-sponsoring Rausch’s bill is Rep. David Campbell, a Nashua Democrat and chairman of the House Public Works and Highways Committee, who led this year’s effort to raise the gas tax.

“The money is desperately needed in order to fix our roads and bridges and invest in our transportation infrastructure,” Campbell said.

Despite years of legislative debate over finding more money for the DOT, he said, the state’s transportation network has continued to deteriorate.

“I think we’re now almost in a catastrophic situation,” Campbell said.

Starting in the Senate

Campbell’s bill this year would have increased the gas tax by 12 cents, to 30 cents per gallon, over three years for gasoline and six years for diesel fuel. It passed the House, 206-158, in March, but it went down in the Senate in May, with five out of 11 Democrats and all 13 Republicans voting to kill it.

At the time, Rausch pledged that the debate over transportation funding would continue, and he said on the floor he would vote against the bill “only because I have assurances that next year, not next session but next year, we can have legislation that is different but pertinent to the resolution and solutions of our infrastructure needs.”

Campbell said he was happy to back Rausch’s bill this time around.

“It has to get through the Senate,” Campbell said, “so that’s a good place for it to start.”

Rausch said he hoped his approach can win support in the Republican-majority Senate, despite this year’s lopsided vote and the upcoming November election.

“I am acutely aware that there are individuals that will have some difficulty because it’s an election year. I am not going to try and put anyone in harm’s way,” Rausch said. “I’m going to let each and every senator decide on their own whether or not they are comfortable supporting this.”

This year’s Senate vote came just a day after the House voted down a Senate bill to allow a single casino in the state. Rausch said yesterday he still supports expanded gambling as a source of revenue for the state, including DOT projects.

“I view this as a component of two things that are necessary, and certainly having a nontax source, such as gaming, I believe is also very, very important,” he said.

(Ben Leubsdorf can be reached at 369-3307 or or on Twitter @BenLeubsdorf.)

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