Looking for Revenue, Locales Turn to Higher Gasoline Taxes

Published April 18, 2010

To fill budget holes, some localities are considering raising fuel taxes, including places in Michigan, Illinois, Iowa, Ohio, Massachusetts, and New Hampshire. 

But many local officials are finding raising the tax politically difficult.

“Since gasoline taxes are one of the least popular taxes at all levels of government, lawmakers are typically leery of increasing these levies, especially during a time of high fuel prices,” said Jonathan Williams, director of the Tax and Fiscal Policy Task Force of the American Legislative Exchange Council.
Some local leaders are less leery than others. Several suburban Chicago communities, including Des Plaines, Glenview and Oak Park, recently levied local motor fuel taxes or increased existing ones. Naperville, one of the largest communities in Illinois, doubled its tax to 4 cents a gallon in March.

Maybe Temporary, Maybe Not
“These revenue sources will be reexamined by the City Council in two years to determine if they are still needed,” said Naperville Community Relations Manager Nadja Lalvani. She said the 2 cent increase in the local motor fuel tax will be used solely for city roadway maintenance.

The village does not fear the higher gasoline tax burden will send people elsewhere to buy. “We will remain competitive with our surrounding communities,” Lalvani said. “Each of the surrounding communities has a slightly different set of taxes on their motor fuel sales, including city and county motor fuel taxes and home rule sales taxes.”

Morton Grove, Illinois has a 2 cents-a-gallon gasoline tax. “Obviously, when we are making a decision such as this we do research to get a pulse on how a decision will affect local businesses,” said Trustee Dan DiMaria. “Our gas stations would be competitive with stations in other neighboring communities. I am always a proponent of lower taxes if such a measure can be taken. Sunset clauses, etc., are good ways to revisit a situation and evaluate a tax need,” he added.

Opposition in Wichita
Wichita, Kansas city council member Sue Schlapp says she opposes such measures.

“I personally do not believe in raising taxes to pay your bills. There would have to be a much bigger crisis than this to make me consider this as an option.”

Fellow Wichita council member Jim Skelton agrees. “I have not considered raising fuel taxes,” he said. “Additional taxation on a sluggish economy is an oxymoron. Additional taxes could provide additional drag to the already retarded economy. The answer to balancing budgets is cuts.”

Chip Faulkner, associate director of Citizens for Limited Taxation, a taxpayer association in Massachusetts, said the special election victory of Republican Scott Brown to the U.S. Senate seat held by the late Democratic Party Senator Ted Kennedy last January has local and state officials “running scared” of raising taxes.

“These incumbents, in my view, are too terrified to vote for a fuel tax increase this year,” Faulkner said.

‘Bad Idea’
“Raising any tax during a recession is a bad idea, particularly one that disproportionately impacts the people struggling the most to make ends meet,” said Charles M. Arlinghaus, president of the Josiah Bartlett Center for Public Policy, a New Hampshire-based think tank. “While a gas tax is more of a user fee than most taxes, the first step should be to make sure that gas taxes and other highway user fees are not being diverted to other budget purposes. Gas taxes cannot be considered without strong safeguards to ensure money is not siphoned off to non-highway purposes.
“A general budget crisis is not an excuse to take more money from people who are hurting. Until serious and substantive changes are made to examine spending and establish government priorities, taxes must be off the table,” Arlinghaus said. “Recessions force everyone to prioritize. There is no rationale for making government an exception.”

Sarah McIntosh ([email protected]) teaches constitutional law and American politics at Wichita State University in Kansas.