SALT LAKE CITY — Utahns don’t want to see the state’s 30-cents-a-gallon gas tax increased or major state highways become toll roads, according to a new poll, even though the tax revenues collected at the pump continue to fall far short of what’s needed to pay for roads.
“I’m not surprised. If I was asked the question, I would say, ‘No, I don’t want to pay that.’ But when I understand what the issues are, I say, ‘I don’t like it, but it’s the right thing to do,’” said Wayne Niederhauser, the former state Senate president who sponsored the 2018 law paving the way for toll roads.
The UtahPolicy.com poll found that 49% of Utah voters oppose a gas tax hike, while just 36% support an increase to maintain funding for road construction and maintenance. Toll roads are even less popular, with 68% opposed and only 23% in favor.
The poll was conducted by Y2 Analytics for the online political news sources from July 31 to Aug. 6 among 1,017 registered Utah voters participating in the Utah Political Trends Panel. It has a margin of error of plus or minus 3.1 percentage points.
Niederhauser, a longtime advocate of stopping the annual shift of what’s now about $644 million in sales taxes to transportation spending thanks to a legislative earmark, said that’s at the heart of the state revenue imbalance that the Legislature is currently trying to fix.
But making road users pick up more of the $1.7 billion going to transportation needs hasn’t been much of a topic for members of the Legislature’s Tax Restructuring and Equalization Task Force, expected to continue meeting at least through October before finalizing recommendations.
Sen. Lyle Hillyard, R-Logan, the Senate co-chairman of the task force, isn’t sure what the role of the gas tax will be in correcting the imbalance between the state’s key revenue sources as growth in sales tax revenues that cover general fund needs continues to lag behind the increase in income tax collections used for education.
Hillyard said gas taxes will “probably” be discussed by the task force at some point, but noted future agendas are not yet set. He also said the gas tax didn’t come up much during eight town hall meetings held by the task force around the state over the summer, except when Utahns asked for it to be cut.
“I don’t blame them. I also don’t want to pay any property or income taxes,” Hillyard said. “Everything is on the table until we decide after study which options, if any, can pass. People need to understand the alternatives. We are two or three years before the crisis with shortfalls in the general fund.”
The alternatives getting the most attention from the tax force are imposing new sales taxes on services, restoring the full state tax on food while offering a tax credit to low-income residents, and amending the Utah Constitution to allow income taxes to be spent on more than public and higher education.
Niederhauser said he supports adding sales taxes to services, something lawmakers considered last session but rejected in favor of forming a task force amid protests from the business community, because it will stabilize the shrinking sales tax base.
“But it’s not the problem,” he said. “If we’re really wanting to fix the problem, the problem is that transportation has to pay for itself.”
Everything is on the table until we decide after study which options, if any, can pass.
–Sen. Lyle Hillyard, R-Logan
Voters had an opportunity in last year’s election to back a 10-cents-a-gallon increase in the gas tax to free up sales tax revenues to be spent on schools. However, the nonbinding ballot question that was part of a compromise with the Our Schools Now initiative to raise taxes for education failed.
That’s why gas taxes aren’t getting enough attention in the tax reform process, Niederhauser said.
“If the Legislature decides to look at gasoline tax or something like that, then people are going to say, ‘We told you we don’t like that,’” he said, because they didn’t really understand how sales taxes are subsidizing roads once paid for entirely through gas taxes. “That kind of settled the gas tax question.”
LaVarr Webb, UtahPolicy.com publisher, said that vote may make lawmakers skittish about raising the gas tax but that shouldn’t stop them. He said there was little political fallout when the gas tax was increased 5 cents a gallon three years ago, the first hike since since 1997.
Because of an indexing formula passed as part of that increase, Utah’s gas tax rose this year to 30 cents a gallon from 29.4 cents a gallon and is set to go up to 31.1 cents a gallon in 2020.
““I don’t think politically it’s a big risk to raise the gas tax,” Webb said, since gas prices fluctuate frequently, making an increase harder to notice. “For good tax policy, it would be a good thing to do. Lowering other taxes would keep people whole.”
Legislative leaders set aside $75 million for a tax cut as part of the tax reform effort, and there has been talk of reducing both the sales tax and income tax rates to offset any broadening of the tax base by taxing services such Uber and Lyft rides.
House Majority Whip Mike Schultz, R-Hooper, a member of the task force and the House sponsor of Niederhauser’s toll roads bill, said road user fees should be part of the tax reform discussion although he doesn’t personally favor a gas tax increase because of the impact on Utah drivers.
Toll roads, Schultz said, could be configured to pick up substantial revenue from out-of-state drivers passing through the state known as the “crossroads of the West,” money that could be used to cut income or other tax rates that primarily benefit Utahns.
“I think ultimately we ought to look for ways that create less of a tax burden on the citizens than what they currently have. I get it. It’s inconvenient when you go through a toll road and nobody likes them,” he said, noting tolling is already allowed under the law passed in 2018.
He said the poll results would have been different had Utahns been asked if they favored a lighter tax burden that shifted a share of some taxes to out-of-state drivers.
Niederhauser said solving the transportation funding issue is “politically impossible at this point” given the size of sales tax revenues going to roads. The problem could, however, be solved incrementally over time with increases in the gas tax, registration fees and other changes, he said.
Whether that starts with tax reform remains to be seen, especially since 2020 is an election year for all the members of the Utah House and about half of the state senators. Niederhauser said settling on what services should be subject to sales taxes might be as far as lawmakers get for now.
“They’re taking on a pretty big issue in sales taxes on services,” he said. “That may be all they can do in one big bite.”