Dropping variable gas tax ‘terrible,’ says Helmick

By Mannix Porterfield
Register-Herald Reporter

CHARLESTON January 12, 2009 10:54 pm

— West Virginia and other states are holding any ideas for generating road money in limbo until President-elect Barack Obama unwraps his infrastructure plans, but one key lawmaker isn’t counting on much.
“I’m not putting that much hope in them,” Senate Finance Chairman Walt Helmick, D-Pocahontas, said Monday.
The new president has indicated he plans to move forward with an ambitious road program but details have been vague, at best, which means West Virginia lawmakers aren’t eager to rush into any homegrown projects right out of the chute.
“I can’t see how a situation would develop that we would be even moving forward until we know what’s happening with the stimulus package,” Helmick said, after Finance Subcommittee C got its final report on the future of the state road fund.
Dr. Tom Witt, director of the West Virginia Bureau of Business and Economic Research, issued his final report, one that painted a grim scenario for dwindling sources of revenue.
Witt outlined a number of potential options, including dropping the fuel tax in favor of taxing motorists based on miles traveled, as is being done experimentally in Oregon.
While lawmakers are waiting to see Obama’s plans, Helmick was definite on one matter — that it was “a terrible mistake” for West Virginia to scrap the variable, or built-in escalator, in the state tax on gasoline.
First by executive order, then by a legislative act, the state dropped the tax that is computed annually between July and October and based on the average retail sale of gas.
Helmick said the state sacrificed $60 million when the tax was abandoned two years ago, then lost another $80 million the past year.
With prices at the pump leaping past the $4 mark, he asked, “What is five cents out of that scenario?”
“I know hindsight is obviously 20-20, but we would have had $140 million that we could have used on our roads,” he said. “It was a lesson in what we did. And the lesson is, don’t do it. It’s too much in flux. We should stay the course. We’d have been better off.”
Witt told the panel that West Virginians are driving less and making fewer purchases of new vehicles and all that translates into smaller bucks going into the highway fund.
For instance, he said, state drivers logged some 1.82 billion miles in 2007 but only a little more than 1.76 billion last year.
“We’re getting some major trends out there and those trends will continue,” he said.
Regardless of how the Obama administration approaches dwindling road dollars, Helmick said the state must brace itself for cutbacks because of the shaky economy.
“We’re going to look at reductions,” the finance chairman said, without elaborating. “We’re going to look at different ways of doing things.”
— E-mail: mannix@register-herald.com