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Will state candidates face drivers' wrath this fall?

By Keith M. Phaneuf, Journal Inquirer
08/22/2006

Motorists across Connecticut have watched the price of regular gasoline jump 60 cents to 80 cents per gallon over the past year.

If you believe the polls, they're mad about it - mad at everyone from big oil firms and oil-producing nations to President Bush and people who drive gas guzzlers.

Given that Connecticut imposes higher taxes on gasoline than all but one other state, the cost of fuel has the potential to become a hot issue this fall in the races for governor and state legislature - even though it's drawn little attention so far.

And with legislative leaders from both parties admitting that a special session on gas prices is a possibility and some rank-and-file lawmakers unveiling relief proposals, the high cost of filling up could become an increasing factor in the races as the fall approaches.

"Whether you're rich or poor, a Democrat or a Republican, a man or a woman, black or white, Americans are feeling the pain of rising gas prices," says Maurice Carroll, director of Quinnipiac University's Polling Institute. A Quinnipiac poll in June found 72 percent of voters nationwide consider gas prices a "serious" problem.

"Plenty of blame to go around"

"There's plenty of blame to go around, but more Americans think the worst villains in the explosion of gas prices are the oil companies," Carroll says.

The poll found 90 percent blame oil companies, followed by: oil-producing countries at 82 percent; normal supply-and-demand pressures, 69 percent; President Bush, 64 percent; and Americans who drive gas-guzzling vehicles, 52 percent.

The poll doesn't address state taxes, but Connecticut has a 25-cents-per-gallon flat tax and a 6.3 percent gross receipts tax on wholesale petroleum transactions that adds another 17 cents per gallon, according to industry officials' estimates.

At a combined 42 cents, Connecticut's gasoline tax burden ranks nationally behind only California by a few pennies.

To make matters worse, the gross receipts tax, which stood at 5 percent in June 2005, twice has increased since then and is slated to rise twice more, reaching 7.5 percent by July 1, 2008.

"I don't believe most people are even aware" that the gross receipts tax exists, let alone is in the midst of a four-year increase schedule, says House Minority Leader Robert M. Ward, R-North Branford.

Not surprisingly, neither Democratic nor Republican state officials are emphasizing that in their re-election campaigns this summer, since the tax hike passed in 2005 with overwhelming bipartisan support.

That tax was planned to help pay for a massive, multibillion-dollar, long-term overhaul of the state's congested transportation system.

Gas tax windfall

But thanks to international and national forces that have sent gasoline prices spiraling upward since the tax hikes were approved in May 2005, state government has found itself sitting on a gas tax windfall.

Rather than scale back the tax or cancel future increases, lawmakers and Republican Gov. M. Jodi Rell decided instead to speed up the pace at which transportation projects will be done, dramatically increasing the amount of gross receipts tax revenue devoted to that purpose.

But as some candidates for state office are starting to point out, about half of the gross receipts tax revenue goes for purposes other than transportation.

And given the painful situation at the pumps, they say, state officials should be able to lessen the tax burden without even touching the revenue earmarked to unclog Connecticut's highways.

"This tax increase has added insult to injury for Connecticut motorists because they are paying for both the cost of gas, which has been increasing and this higher tax," says Sam Caligiuri, a former Waterbury mayor running as a Republican in the 16th Senate District.

Caligiuri called this month for the gross receipts tax hikes to be repealed. "If the General Assembly can increase this tax, it can and it should act to decrease it when it becomes clear that it is hurting our families," he said.

Rep. Kevin Witkos, R-Canton, who called this year for a "holiday" from the flat gasoline tax between Memorial Day and Labor Day, says that while he doesn't want the transportation initiative scaled back, lawmakers should look for ways to trim nontransportation spending to reduce the need for the gross receipts tax increases.

"There's no reason why lawmakers could not start working on this tomorrow," he said during an interview last week.

Investigating options

Both Ward and House Speaker James A. Amann, D-Milford, say their respective caucuses are investigating options to provide relief right now.

But they also warn that many officials are worried about even giving the false perception that they are backing off from a transportation problem that is clogging highways and hindering the economy.

"I hate the gas taxes, but we need a transportation system that works," Amann says, adding voters also would be furious if the transportation initiative slows down.

Ward declines to offer any specifics, but Amann says he'd like to see lawmakers consider a fall session to trim a few cents per gallon off of the flat gasoline tax.

With more than $1 billion in the emergency reserve, Connecticut could afford such a tax cut, he says.

Rell has been relatively quiet this summer, issuing news releases venting her displeasure with reports of "obscene" oil profits earned by companies such as Exxon, and urging them to return some of their profits to consumers.

But the Republican governor hasn't issued any call this summer for action by state government, or for any change to the rising gasoline taxes.

"This is just another example of her not getting it," says Derek Slap, spokesman for Democratic gubernatorial candidate John DeStefano Jr.

State government "should absolutely fund the critical transportation infrastructure," Slap says.

But in this fiscal year's budget, that involves only $141 million out of the $298 million in projected gross receipts tax revenues, or 47.3 percent of the total.

That means more than half is being used for other government spending, and Slap adds that given the high prices consumers are facing, Rell should make easing the tax burden a higher priority while still preserving all transportation funding.

Republicans blame Democrats

Rell's budget director, Office of Policy and Management Secretary Robert L. Genuario, says the administration always remains ready to talk about ways to curb general fund spending and ease tax burdens.

The obstacle, he adds, has been the Democrat-controlled legislature, and not the governor.

"This administration is always interested in streamlining the expenditure side of the budget," he says.

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