December 17, 2012

Inside Tucson Business: After 21 Years, PAG Says It’s Time to Raise the Gas Tax

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Original Post

January 6, 2011

By Garry Duffy

Arizona’s gasoline tax has stood at 18 cents per gallon for 21 years. Factor in an average rate of inflation of 2.67 percent over those years, and that 18 cents is now worth what a dime was in 1990. Or, looking at it another way, if the rate of inflation had been kept up, that 18 cents tax would be 31 cents today.

Either way, money from the Highway Users Revenue Fund (HURF) coming into seven jurisdictions in the Pima Association of Governments is buying less these days.

PAG, as it has done for the past several years, is proposing to raise the gas tax by 5 cents per gallon to 23 cents per gallon with an annual inflationary adjustment over the next five years. The request was included PAG’s annual policy submittal to the state Legislature, which begins its 2012 session next week.

A new study released by the Institute on Taxation and Economic Policy, based in Washington, D.C., found that 36 states, including Arizona, have fixed tax rates that do not account for inflation and that the buying power of the gas tax in those states has fallen 27 percent since 2000.

“The ongoing decline of the gas tax is troubling in large part because of the tax’s enormous importance to the efficient and safe operation of state transportation systems,” according to the report. “Gas and diesel tax rates would have to rise over 6 cents per gallon, on average, to return them to the level of purchasing power they had the last time they were raised.”

Adding to the declining buying power of the gasoline tax, lawmakers have taken HURF funds intended for counties, cities and towns and used the money to help balance the state’s budget.

In a memo to supervisors, Pima County Administrator Chuck Huckelberry says more than $11.1 million of HURF money has “been diverted from Pima County to fund state agencies” over the past four years.

Pima County also gets hit because the state HURF distribution formula favors municipalities over unincorporated areas of counties. Cities and towns get 23 percent of HURF dollars with a 3 percent bump on that going to cities with populations over 300,000. Counties get 19 percent of the overall annual distribution to fund projects in unincorporated areas. The rest goes to the Arizona Department of Transportation.

Maricopa County, with a population of more than 3.8 million in the 2010 Census – 60 percent of the state’s total poulation of 6.4 million – has 25 municipalities that take in all but 6 percent of the population. Pima County, with a population of 980,263 in the latest Census, has five municipalities with 36 percent of people living outside of any of them.

Besides the state gas tax, there is a federal tax of 18.4 cents per gallon. That figure hasn’t changed since 1993. The federal dollars are distributed to state and local governments and generally can be employed in a wider use range than state or local funds.

Garry Duffy, a former reporter for the Tucson Citizen, is a consultant to the Pima Association of Government’s Regional Transportation Authority.



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