Lawmakers say they're just now learning about the Markell administration's plan to index his proposed 10-cent gas tax hike to inflation.
That provision in his plan wasn’t emphasized during press conferences or his budget presentation, nor do legislators remember Markell specifically outlining it to them when he debuted the initiative two weeks ago.
The governor spoke about indexing the gas tax to a nine-member state panel on transportation Wednesday.
It’s all part of his five-year, $500 million transportation plan, which includes $50 million in annual borrowing to bankroll infrastructure initiatives.
A press release issued by Markell’s office in January briefly mentioned that provision, but offered no specifics on when those increases trigger.
Already a tough sell in the General Assembly, Republicans say they want no part of an gas tax increase and many Democrats note that it disproportionately affects poorer Delawareans.
The Markell administration frames it as a necessity, pointing out that legislators haven’t increased the gas tax since 1995.
“I’m trying to avoid 10 or 20 years from now another group having to go through the same thing. If you keep up with it, you don’t lose the purchasing power year after year,” said Markell.
Currently, about $40 million in abandoned property revenue gets earmarked to the Transportation Trust Fund, which typically pays for infrastructure projects and is funded in part by the gas tax.
Certain DelDOT operating expenses also draw on the Transportation Trust Fund, a thorny issue among many lawmakers.
Markell’s proposal eliminates that $40 million annual infusion and shifts it to the general operating fund.
House Minority leader Daniel Short (R-Seaford) and his caucus want to slide all DelDOT operating expenses back to the general fund over a several year period, which has many other revenue streams available to it.
As for indexing the gas tax, Short says debating issues like revenue enhancements is the General Assembly’s job.
“[Indexing is] an easy way out with regard to having to deal with it from a standpoint of where our constituents would be and the people that pay that price,” he said.
“I mean, just to say we’re going to index it and it has an automatic increase, I think that’s why we’re elected: to deal with these things.”
Reception on the other side of the aisle is also lukewarm.
Some there label the proposal as a regressive tax, hitting lower income families much harder than others.
Without Republican support, Democrats currently don’t have enough votes to pass the measure.
House Speaker Pete Schwartzkopf (D-Rehoboth Beach) is laying groundwork, educating caucus members and his constituents about the benefits of more infrastructure spending.
Schwartzkopf, Markell and others all tout higher capital spending as an economic driver, creating blue collar jobs for years to come.
“[There’s] an educational component to this thing that hasn’t kicked in yet and people need to keep an open mind until people know exactly what we’re talking about,” he said.
“I mean, if you hit somebody between the eyes, saying, ‘Hey, I’m going to raise your taxes by ten cents,’ and they don’t know why, they’re going to say, ‘No, don’t do that. Don’t do that.”
Part of that education, according to Schwartzkopf, involves looking at other tax options available to the General Assembly and determining which ones have the biggest effect on state residents.
He says raising the income tax, for example, would strictly target locals, as opposed to syphoning money from summer beach tourists.
“A very big portion of that $50 million will be borne by out-of-state residents, not Delawareans. So if we’re going to do a tax, that’s more of the one that I think, if Delawareans stop and think about it, they would rather [increase the gas tax] than [fully] tax themselves,” said Schwartzkopf.
Four more state revenue forecasts remain before the Joint Finance and Bond Bill committees finalize next year’s spending plans – enough time for a sudden cash windfall to erase the state’s $139 million budget deficit.
It also gives the administration time to lean on opponents who may feel some election year vulnerability as spring gives way to summer.
But unless those conversations bear fruit, Markell’s proposal will stay just that.
