Crumbling Local Roads Fuel Talk of a Vermont Gas Tax Hike

Chris Viens has watched with dismay as the roads in Waterbury have steadily deteriorated under his feet.

His town’s underfunded highway crews, facing greater maintenance needs and stagnant state aid, have for years been spinning their wheels on short-term fixes such as patching potholes instead of building lasting upgrades, he said.

Now Viens, an excavation contractor and chair of the Waterbury Selectboard, says towns like his are reaching a crisis point. More roads are crumbling beyond the point of repair, forcing road crews to rebuild them completely at exponentially higher costs and with borrowed money.

“The governor wants to get more people to move here,” Viens said last week. “But who wants to live in a house that’s falling down around them?”

The exasperation of local officials who struggle to maintain roads with existing funds is fueling a renewed drive for a controversial solution: hiking the state gas tax.

Rep. Kari Dolan (D-Waitsfield) said she plans to propose a five-year, 4-cent-per-gallon increase in the tax on gasoline and diesel fuel, with the funds dedicated exclusively to cities and towns for road maintenance.

The bill has the support of the influential Vermont League of Cities and Towns, which lobbies for the interests of the state’s 246 municipalities. The group estimates the tax hike would raise about $10 million per year for municipal roads.

Vermont drivers pay nearly 50 cents per gallon in state and federal gas taxes and fees based on January’s average prices, according to the American Petroleum Institute. State taxes and fees amount to 31 cents per gallon, while federal taxes, which have been static since 1993, remain at 18.4 cents per gallon.

While the league has supported unsuccessful bids to raise the gas tax before, this year is different, said VLCT lobbyist Karen Horn.

Gov. Phil Scott’s 2020 budget proposes a $6.2 million cut in a key chunk of state aid that helps towns and cities pay for certain roadwork, primarily stormwater upgrades aimed at improving water quality.

Local officials were surprised by the nearly 10 percent decrease and found it “pretty appalling,” given that the proposed reduction coincides with new state requirements for local governments to carry out stormwater improvements, Horn said.

“I was stunned,” Horn said. “If they are going to put new obligations on us to help clean up the waters of the state, they need to give us some money to do it.”

The governor’s overall proposed transportation budget would increase funding by 1 percent, to $618 million, but aid to municipalities for local roads would stay flat, at $26 million. It would be allocated based on the number of road miles each community maintains.

The $6.2 million reduction reflects the fact that previous budgets included a temporary boost in federal highway money for stormwater projects, but that extra funding is drying up, said Wayne Symonds, director of the state’s highway division.

Viens described the cuts as “a hand grenade coming in from left field.” He said he and other local officials had been discussing possible funding fixes before Scott made his budget plan public. The proposed cuts, he said, have left them little choice but to ask legislators to boost the gas tax.

He and John Freitag, a Strafford Selectboard member, penned a letter pointing out that 70 percent of the state’s roads, or 11,382 miles, are maintained by cities, towns and villages. Stagnant assistance from the state means that the burden of keeping up with maintenance costs puts upward pressure on property taxes.

They urged members of city councils and selectboards throughout Vermont to contact their legislators to support the tax hike and attend meetings of the House and Senate transportation committees in a show of force on February 14.

“If we can pack the committee room with like-minded local officials who are passionate about fixing the failing infrastructure that we constantly hear about, perhaps we can get the legislature to do something to help our cause,” they wrote.

Freitag acknowledges that there are well-reasoned and long-standing objections to increasing the gas tax, including that it is regressive, hitting low-income residents harder than the well-off. Many lower-income people live in rural areas and drive long distances to jobs and commercial centers, leaving them highly sensitive to such a tax increase, he said.

But rural roads are also the ones hit the hardest by a changing climate, with wider winter temperature swings that wreak havoc on roadways, Freitag argued.

“The reality is, if you tear out the bottom of your car, it’s going to be a hell of a lot more money than you’re going to be paying in this tax,” he said.

Bill Shepeluk, Waterbury’s longtime municipal manager, said it makes more sense for drivers to pay taxes to maintain the roads than bills for car repairs. Someone driving 20,000 miles per year in a 20-mpg vehicle would pay only $40 more annually in gas taxes, he noted. Compare that to $400 to repair a broken tie rod, and the tax increase doesn’t look so bad, Shepeluk said.

His town’s $1.6 million highway maintenance budget has increased by 64 percent in the last decade, while the state’s contribution has risen a mere 4 percent.

The shift to hybrid and electric cars leads to good questions about whether the gas tax is the fairest way to fund highway repairs. But, according to Shepeluk, it’s still the closest thing to a use tax for roads.

“I’m pretty darn sure that 90 percent or more of what is used to power vehicles around Vermont’s roads is still fossil fuels,” he said.

While the increase seems reasonable to him, Shepeluk said he’s well aware that it may face more than a few obstacles.

“I don’t have any illusions that this is an idea that the legislature as a whole or the governor is going to wrap their arms around,” Shepeluk said.

Despite his willingness to increase some taxes and fees this year, Gov. Scott remains opposed to increasing the gas tax, believing it “would have a particularly harsh impact on rural Vermonters,” said Rebecca Kelley, the governor’s spokesperson.

The idea is nevertheless getting some traction.

One of the first committees the tax would have to pass through is House Transportation, where it would get a favorable reception from the new chair, Rep. Curt McCormack (D-Burlington).

McCormack, who doesn’t own a car, said he supports the idea of giving people an incentive to choose transportation options that are less fossil-fuel intensive.

“With gas prices so low, I don’t even think most people would notice,” McCormack said.

Vermont’s gas taxes are near the middle of the pack compared with other states. The American Petroleum Institute ranks the state’s 31-cent-per-gallon gas tax the 22nd highest in the nation, far below Pennsylvania’s 58 cents but well north of Alaska’s 14 cents.

The last time the state increased the gas tax was in 2013, when it tacked on a 6 percent sales tax, phased in over two years, paired with a reduction in the per-gallon excise tax. The goal of the change was twofold. It raised matching dollars needed to preserve $56 million in federal highway funding, which was sorely needed as the state continued to recover from Tropical Storm Irene. The sales tax was aimed at preserving revenue despite declining consumption as vehicles become more fuel-efficient.

The downward trend in gas tax receipts is expected to continue, with revenue forecast to fall $1.9 million, or 2.4 percent, by 2024.

Scott has previously proposed a mileage tax that would apply to all vehicles regardless of fuel type, but the idea has stalled.

If another increase is in the offing, the state would be far from alone.

Since 2013, 28 states and the District of Columbia have approved gas tax increases, according to the National Conference of State Legislatures. McCormack said he fully expects, however, that boosting the gas tax would face opposition from those who would mischaracterize it as a carbon tax.

Horn said she expects the idea to get a favorable reception from many members of the House, given the heightened awareness of climate change and the clear disparity between local needs and the governor’s budget. But she also believes it may face tough sledding in the Senate.

“If this isn’t the answer, fine,” Viens said. “What’s their solution? You can’t keep throwing pennies at million-dollar problems.”

This article appears in Feb 13-19, 2019.

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