Gas tax debate rekindled in Idaho

There’s good reason Washington license plates are such a common sight at Idaho gas stations near the state line – gas is just plain cheaper in Idaho.

Among the reasons: Washington’s 37.5-cent-per-gallon gas tax is 12.5 cents higher than Idaho’s, which has stood at 25 cents a gallon since 1996.

Idaho Gov. Butch Otter has spent several years unsuccessfully trying to persuade state lawmakers to raise Idaho’s gas tax to boost funding for road maintenance in the state. Now, as he seeks a second term in office, his Democratic challenger, Keith Allred, is proposing the opposite: He wants to lower the tax to 22 cents per gallon, and increase fees on heavy trucks to make up the difference.

The debate in Idaho comes as the state’s long-unchanged gas tax, combined with increased fuel efficiency, has led to stagnant funding for roads despite growing traffic. But the tax isn’t the only factor in differing gas prices.

“There is a price differential – it’s usually 5 or 8 cents,” said Dave Carlson of AAA of Idaho. Coeur d’Alene generally has slightly lower gas prices than the state as a whole; when AAA tracked gas prices headed into the Labor Day weekend, Idaho’s average price was 7 cents a gallon lower than Washington’s average. But, Carlson said, “This summer Washington’s generally had about the third-highest prices in the country.”

Gas prices can vary based on market and business reasons as well, even from station to station in the same area.

Suzanne Budge, lobbyist for the Idaho Petroleum Marketers Association, said Idaho’s gas prices historically have been above the national average. “We are a very isolated marketplace and we don’t have any of our own sources of fuel, so it’s all being transported in,” she noted. Plus, she said, “We also have supply and demand issues this time of year.”

Washington approved a phased 3.5-cent gas tax increase in 2005. Oregon just upped its fuel tax by 6 cents a gallon to 30 cents, a move approved a year ago but just now taking effect, and Alaska just ended a temporary, two-year suspension of its 8-cent-per-gallon gas tax.

Reductions in gas tax rates have been rare; Florida had a one-month decrease in its gas tax of 8 cents a gallon in August 2004, according to Mandy Rafool, an analyst with the National Conference of State Legislatures.

“In the past year, nobody’s raising taxes,” Rafool said. “It’s an election year, and there’s been very little activity.”

After Idaho lawmakers refused two years running to approve Otter’s proposed transportation funding legislation, which included both gas tax hikes and big increases in vehicle registration fees, Otter last year appointed a task force to look into the long-term issues and report back to him in December, after this year’s election. So far, the task force has indicated that it views a gas tax increase as the best and fairest way to raise more money for Idaho’s roads.

However, the task force also received a new state-commissioned study showing that Idaho drivers of cars and light pickups pay far more than their share for upkeep of roads in the state, while drivers of heavy trucks underpay. That’s part of what spurred Allred’s proposal.

“Idaho families can’t afford to subsidize the heavy trucking industry in times like these,” Allred said. “My gas tax cut is an important step in providing relief and fairness for Idaho families.”

Otter dubbed Allred’s proposal unrealistic.

The average state gas tax nationwide is 20.9 cents per gallon, but it’s 26.4 cents if local taxes also are counted in, according to a comparison conducted by the Washington Department of Transportation. Neither Idaho nor Washington has local gas taxes, but 13 states do.

There also are 10 states that apply some or all of their sales tax to gas, in addition to their gas tax. That idea has been tossed around in Idaho, in part because collections from a percentage sales tax would rise with inflation and the cost of gas, unlike the flat 25-cent-per-gallon tax. Budge said Idaho petroleum marketers oppose such a move because it makes the tax more complicated and difficult to collect and remit. “The system that’s in place is very workable for the industry,” she said.

Carlson, of AAA, said his group testified in favor of Otter’s proposal for a 10-cent gas tax increase to boost road funding. But AAA also is concerned about equity between truckers and motorists, he said. “While we are basically supportive of the notion of getting everyone in the state to pay more because of the huge underinvestment, we’d probably want to see how those numbers play out proportionally,” he said. “Equity has got to be one of the bigger considerations before moving forward.”