Tuesday, April 13, 2010

Goldwater Institute: Arizona Legislature should avoid a stealth gas tax increase

The House Natural Resources and Rural Affairs Committee recently modified Senate Bill 1154 with a "strike-everything" amendment that seeks to increase the state's gasoline tax. Some years ago, a "temporary" tax of 1 cent per gallon was passed to help clean up leaky underground gasoline storage tanks. That tax is scheduled to end in 2013. SB 1154, as amended, would extend this tax for another five years.

gasolineIt's hard to see how this one-cent fuel tax ever passed state constitutional muster in the first place. Article 9, Section 14 of the Arizona constitution states gas taxes should be dedicated purely to maintaining roads and streets where this tax has been spent on nothing to do with roads. It's doubly hard to see how a tax extension, if passed with less than two-thirds of the Legislature, would not violate the constitution's prohibition on such tax increases.

The ostensible reason for extending this fuel tax is to build up a fund for the Arizona Department of Environmental Quality to have at its disposal for future underground storage cleanups. ADEQ has had 20 years to build the fund to its legal maximum of $60 million, but $58 million has been taken by the Legislature to help balance the budget.

Regardless of the status of the fund, there has been plenty of time for private parties to clean up leaky storage sites. Since 2006, any new leaks must be repaired with insurance purchased by owners of private underground storage tanks. Owners of storage tanks with leaks prior to 2006 have used public funds to subsidize their cleanups long enough. If there are abandoned sites that still need to be cleaned up, the Legislature needs to find the funds from existing sources rather than continue this "temporary" tax simply because they robbed the money generated from that tax in the first place.

Dr. Byron Schlomach is an economist and the director of the Center for Economic Prosperity at the Goldwater Institute.

Learn More:

Arizona Constitution: Article 9, Section 14

Senate Bill 1154: Strike-everything amendment

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