Now is the time to raise gas taxes, Gov. Herbert says

SALT LAKE CITY — Even though there are no tax increases in his proposed $14.3 billion budget, Gov. Gary Herbert is making it clear he's ready to talk about raising taxes on gasoline.

"I'm just suggesting, OK, now is the time," the governor told KSL after unveiling a spending plan that includes plans to divert $94.2 million in sales taxes earmarked for transportation to education spending.

Herbert said lawmakers assured him after overriding his 2011 veto of that earmark it could always be changed. But moving the money also means reconsidering how to pay for the state's transportation needs.

Just how the state should collect more revenue for roads at the gas pump is yet to be decided. The governor said he wants a variety of proposals considered so there can be agreement by the end of the 2015 legislative session.

"Whatever gets us to the finish line is what we need to come together on. We need to build some consensus," Herbert said. "Whether it's 10 cents or a nickel, a sales tax, indexing for inflation, a hybrid approach, phasing it over the next five years."

Lawmakers, though, may not be ready to do more than talk about a tax increase because the state has considerable revenue growth and surplus funds available — a total of $638 million.

House Speaker-elect Greg Hughes, R-Draper, said he doesn't see a tax increase getting very far in the 45-day session that starts in late January, despite the GOP governor's efforts.

"We're a Republican state," Hughes said. "We've seen more tax collections than it takes to run the state. What we're asking is, that surplus needs to be spent and we would like to tax some more. That's a tough proposition."

Legislative leaders have already raised concerns that the revenue growth may not be sustainable, ordering a 2 percent initial budget cut and holding back $116 million of the surplus funds.

The governor acknowledged that "raising a tax coming after those revenues is a hard thing to deal with. Yet, we've got to think in terms of not just this year, but long term when it comes to transportation."

While the governor's proposal to shift transportation funds to education is not expected to stall any current projects, the state has more than an $11 billion deficit in transportation funding through 2040.

Herbert said it's the right time to deal with a gas tax increase because people are paying less at the pump and even a 10-cent hike "would not probably have any negative effect on the marketplace. It would just be absorbed very smoothly."

Herbert's $14.3B budget proposal gives $500M to education

Gov. Gary Herbert proposed a new $14.3 billion state budget Thursday that provides $500 million for public and higher education, including the largest increase in funds going to local school districts in a quarter-century.

Adam Brown, a Brigham Young University political science professor affiliated with the campus' Center for the Study of Elections and Democracy, said the governor has come up with a good strategy to force a discussion about the gas tax.

By announcing a big boost in spending for schools in his budget that requires taking money from transportation, Herbert has put lawmakers in the position where they have to make a tough choice.

"He gets to be the good guy," Brown said, because if lawmakers don't go along with his plan to remove the transportation earmark, they "have to take the blame for giving less money for education than he wants."

And if they do decide to put the $500 million in new money in public schools and higher education that the governor is requesting, they'll likely have to shortchange transportation funding to do it unless they raises taxes.

University of Utah political science professor Matthew Burbank said it wouldn't have done much good for the governor to simply include an increase in the gas tax in his budget.

"What the governor can't do clearly is say, 'Here we need to raise taxes,'" Burbank said. "He knows politically that's never going to fly."

But Herbert's budget could spark interest in alternatives to adding to the state's 24.5-cent per gallon gas tax, such as tying the rate to inflation. While that wouldn't immediately raise money, increases would come automatically in the future.

"There are creative ways to think about how you approach that," Burbank said, that may be more politically palatable to members of the Legislature "who recognize if you don't call it a tax increase, you can talk about ways of raising revenue."

House Minority Leader-elect Brian King, D-Salt Lake, said he voted against the earmark for roads and approves of the governor's recommendation to substantially increase spending on education.

King's not sold, however, on raising gas taxes.

"Obviously, we have ongoing infrastructure and transportation needs and we have to address how to deal with that," King said. "My inclination is if we look at raising taxes to improve our infrastructure, it ought to be for public and higher education."

Besides pushing for action on the gas tax this session, the governor is also recommending lawmakers extend the tobacco tax to e-cigarettes to raise an additional $10 million.

King didn't give that much of a chance with lawmakers because of the powerful lobby behind the smoking devices.

"We're having a hard enough time passing legislation that negatively affects e-cigarettes," the incoming minority leader said. "It would be hard for me to believe you wouldn't have an all-out battle."

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