Governor Joe Manchin
Governor Joe Manchin and West Virginia Democrats are quietly pushing a gas tax on the residence of West Virginia. The Governor’s proposal will stop a scheduled reduction in the gas tax in 2010 and completely remove a 5-cent reduction in the tax in 2013.
The West Virginia Legislature is considering legislation (HB 404 and SB 4004) which the Governor proposed to establish a floor on the portion of the gasoline tax which readjusts on a annual basis.
The Charleston Gazette explains the gas tax very well…
“The gas tax is a combination of a base rate of 20.5 cents a gallon and a rate equal to 5 percent of the average wholesale price of gasoline for the previous July-October.”
“That part of the gas tax currently is set at 11.7 cents a gallon. However, because of low gas prices this year, that tax rate is poised to adjust downward by about 3 cents a gallon on Jan. 1.”
“Under the proposed legislation, the adjustable portion of the gas tax could not drop below the current 11.7-cent a gallon level.”
Republican Delegate Jonathan Miller (R-Berkeley) described the legislation by saying…
“This bill locks in a minimum gas tax rate of 32 cents per gallon, which is the 11th highest in the nation according to the Tax Foundation. If we don’t pass this bill, our citizens would pay 3 cents less per gallon all of 2010. Also, this bill removes a scheduled 5 cent reduction in 2013. So, this is a tax increase because it eliminates two scheduled tax reductions for our citizens: one for 2010 and one for 2013.”
Delegate Miller went on to point out that this is the second time this year that Manchin has raised taxes on West Virginians. Manchin raised the unemployment compensation tax during the regular legislative session earlier this year.
Manchin said the gas tax legislation will help stabilize the budget for the Department of Highways. The Highways budget fluctuates by $10 million for every 1-cent change in gas tax.
Two potential 2012 Democrat gubernatorial candidates have also weighed in on the gas tax. Senate President Earl Ray Tomblin and House Speaker Richard Thompson have both said their caucuses are in agreement on a gas tax increase.
Senate President Earl Ray Tomblin:
“We caucused, and really didn’t have any problems with anything on the agenda,” said Tomblin
House Speaker Richard Thompson:
“Everything seems to be going smoothly. It appears that there’s pretty much consensus on the need to do the legislation,” said House Speaker Richard Thompson.
The House Republican Caucus has come out strongly against the proposal. House Republican Leader Tim Armstead said, “There’s a great deal of opposition in our caucus to that [proposal]. People will be spending more at the pump if this bill passes, than they would under current law.”
West Virginia Republicans should pay close attention to the vote on this legislation. It’s expected that several of the moderate Republicans in the House will be primary challenged next year. It’s time for Republicans to speak with a united conservative voice and oppose this tax increase.
Bigger picture…..follow my math…..gasoline in most of WV tends to sell at about a 55-70 cent premium per gallon to whatever wholesale price you see all day on CNBC; roughly 2.01 a gallon on the exchanges today. The price for retail gas here in Wood County is in the 2.60 ballpark today, which falls within normal parameters. What the law describes as “wholesale price” will generally fall at the number you see on CNBC, with maybe a nickel or less of premium/profit booked beyond that.
If the floating part of the tax rate is locked in at 11.7 cents or more, that means the assumed wholesale price of gas they are banking on is $2.34/gallon.
Right now, if the tax were adjusted down based on today’s wholesale price (2.01 + or -)on the exchanges, taxpayers would save about $15 million……..that’s the applause line in this speech (Give it up for me.).
Obviously, the wholesale price is far below that $2.34 today. If gas drops back to where we were last Christmas and early spring (as low as $1.60/gallon in my neighborhood retail, and wholesale under a buck), this amounts to as much as a 7 cent per gallon tax increase.
This passing means I will then buy my gas in Ohio as well, in addition to my tax-free groceries, and my $1 sweet tea at McDonalds, and a new car battery, and getting my tire rotated, and buying stamps…….and all the things I intentionally do in Belpre or Marietta if I can.
The good news is that WV finally ranks above the lowest percentile in something! Our gas taxes are right up there with some of the more prosperous states. In fact, we have the 14th highest gas prices in the country. If these Dems keep at it, we might just make it into the Top Ten.
http://www.gasbuddy.com/GB_Price_List.aspx?cntry=USA