Legislation to increase Alaska’s state motor fuel tax rate for the first time since 1970 is in a calendar crunch. It was still in the House Finance Committee as of Tuesday, with lawmakers facing a May 19 adjournment deadline.
The measure would double the state tax of 8 cents to 16 cents a gallon, with the intent — but not a legally binding requirement — that the money go toward highway maintenance. The Alaska Constitution prohibits dedicated funds.
The tax hike is overdue, said the bill’s sponsor, Anchorage Rep. Andy Josephson, who noted the Parks Highway, the main route between Anchorage and Fairbanks, did not exist the last time lawmakers raised the tax on gasoline and diesel fuel.
He also noted that while federal dollars pay for most of Alaska’s highway construction, that money cannot be used for maintenance and snowplowing. That takes state money, Josephson said at the bill hearing last Friday in House Finance.
The measure would raise more than $30 million a year.
Gov. Mike Dunleavy in 2019 closed a major maintenance and snowplowing station on the heavily traveled Seward Highway between Anchorage and the Kenai Peninsula, blaming a lack of funds. The governor later relented to public pressure and reopened the station for the 2020-2021 winter, using temporary funding.
Alaskans are being pulled “kicking and screaming” into the fiscal decisions “we have been avoiding for years,” Dillingham Rep. Bryce Edgmon, who supports the tax increase, said at the Finance Committee hearing.
The state has drawn on savings more than half of the past 30 years to pay for public services, depleting those accounts and pushing lawmakers to consider taxes.
“Obviously, we have a revenue problem in the state,” said Anchorage Rep. Sara Rasmussen. “I’m not sure if increasing the motor fuel tax is the best answer,” she said at Finance Committee hearing.
Maybe toll roads could be a better answer to raising more revenue for highway maintenance, said Rasmussen, who is in her second term in the House and first year on the committee.
Alaska’s motor fuel tax rate is the lowest in the nation, about one-third the average charged by the other 49 states.
The legislation also would raise the tax on marine fuel from 5 cents a gallon to 10 cents, but with a provision that commercial vessel owners could send in their receipts to get the additional 5 cents back from the state each year.
The rebate for commercial fishermen would not apply to sport or charter boat operators, and that did not go over well with several Finance Committee members.
“It doesn’t make sense to me that we’re carving out a spot just for commercial fishing,” said Rep. DeLena Johnson, of Palmer.
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