Lawmakers weigh governor's proposal to triple Alaska's gas tax

Published: Feb. 1, 2017 at 2:20 PM AKST
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Alaska drivers pay the lowest per gallon gas tax in the country, but that may soon change. Lawmakers are again taking up a proposal from the governor to triple the tax rate for highway, aviation, and marine fuels.

The House Transportation Committee on Tuesday gave H.B. 60 its first hearing. The legislation strongly resembles the tax hikes Gov. Bill Walker first suggested a year ago.

Under the plan, the highway fuel tax would double in July to 16 cents per gallon, and the rate would jump again to 24 cents per gallon. That would make the Last Frontier's per gallon highway gas tax No. 29 nationally, according to data from the federal Energy Information Administration.

The marine fuel tax would also triple by 2018 to 15 cents per gallon, and the tax rate levied for the purchase of jet fuel and aviation gas would also triple. Overall, the Revenue Department projects an additional $80 million in revenue from the overhaul if fully implemented.

Walker sees the move as one small piece of a broader solution to the state's multi-billion dollar budget gap, with a broad-based tax on individuals and use of Permanent Fund earnings to help pay for government filling the much larger portion of the budget gap.

However, the governor needs to convince lawmakers -- who may face pressure from the aviation and fishing industries -- that the industry specific tax hikes are a necessary piece of a larger fiscal plan.

Another part of the sales pitch is to get the public on board.

While the state's highway gas tax is the lowest in the country, because the state has few refineries, Alaskans pay well above the national average for a gallon of gas. AAA's daily state gas price report puts the cost of a gallon of gas in Alaska at $2.75 cents per gallon, 48 cents above the national average on Wednesday. According to Gas Buddy, residents of just three states are paying more at the pump than Alaskans right now: Washington, California, and Hawaii.

Deputy Revenue Commissioner Jerry Burnett in the transportation committee hearing offered an example of what the increase would mean in real terms. Imagine a Mat-Su Valley resident who drives a sports utility vehicle that gets 15 miles per gallon and commutes to Anchorage five days a week.

For that commuter, the increase called for in H.B. 60 would mean their gas tax payments would jump from $133 per year to $399 annually.

Beyond the sales pitch for the proposed tax hikes, one portion of Walker's proposal would actually increase the state budget deficit. His plan includes an increased tax credit for people who buy motor fuels exclusively for off-road use.

Rep. Mark Neuman, R-Big Lake, questioned how the Revenue Department would deal with increased interest in the program as the size of the credit goes up.

"You could have literally tens of thousands of Alaskans like myself who use four-wheelers and snow machines," Neuman told the deputy commissioner. "What would it take at the state level to deal with that? How many more state employees (would it take) to try and deal with this credit?"

At the conclusion of the hearing, the transportation committee held the bill to continue vetting the proposals.