Updated (5:14 p.m.): Gov. M. Jodi Rell today asked legislative leaders to expand the legislature’s special session next week to allow for a vote on postponing the July 1 increase in one of the state’s two gasoline taxes.
“I cannot control the price of crude oil. I cannot control OPEC. I cannot force the President or Congress to take action – though I have repeatedly urged them to do so. The one thing I can do – with the Legislature’s help – is to postpone the increase in the Gross Receipts Tax,” Rell said in a press release.
Earlier this week Rell said in order to postpone the half percent increase in the gasoline gross receipts tax the legislature would have to help her find $25 million in spending cuts to make up for the lost revenue, a suggestion that has one former Democratic state legislator crying foul.
Jonathan Pelto, a former state legislator turned public relations specialist, said in an email that already the gross receipts tax is bringing millions more into the state than initially anticipated in 2007 when the current state budget was passed.
He said when the legislature passed the budget it expected to bring in $287 million in 2008 and $311 million in 2009 on the gross receipts tax. Because the tax is a percentage of the wholesale price of gasoline, the budget estimates were based on the wholesale price of gas at $2.41. He said today the wholesale price of gas is $3.40, which means it will bring in at least $53 million more than expected this year.
“Even if gas prices don’t increase at all from this point forward—the most basic simplistic assessment reveals that in FY 09, the General Fund will not receive the $311 million (that was projected last June) but will actually receive well over $410 million,” Pelto said in an emailed statement titled, “Reality Check on Gas Tax Issue.”
But Rell seems to be more worried about the overall budget picture.
“Last month the Office of Policy and Management advised Governor Rell that the next fiscal year – which begins July 1 – was projected to face a shortfall of about $150 million. Postponing the Gross Receipts Tax increase would add about $25 million to that deficit,” the press release stated. “Rell told legislative leaders today that rescissions and other cost-cutting moves she is planning will likely reduce much of that shortfall but will not eliminate it all.”
The delay in the scheduled increase from 7 percent to 7.5 percent is expected to save motorists about 3 to 4 cents per gallon.
“The difference between gas prices in Connecticut and our neighboring states is due almost entirely to the difference in our gas taxes,” Senate Minority Leader Pro Tempore Leonard Fasano, R-North Haven, said in an statement Thursday afternoon. “At current rates, Connecticut state gas taxes cost motorists more than 50 cents per gallon of gasoline.”
“I applaud Governor Rell for lending her support to help re-open the debate on state gas taxes. It is my hope that the majority party will now give serious consideration to the plan put forth by Republicans in April to stop the scheduled gas tax increase and permanently cap the Gross Receipts Tax,” Fasano said.
Senate President Donald Williams, D-Brooklyn, said that his caucus is on board with addressing the increase in the gross receipts tax, in addition to doing something about home heating fuel increases.
“Gov. Rell and Senate Democrats share the same concerns about the energy crisis in Connecticut,” said Williams. “We have also reached out to our colleagues in the House. They have similar concerns and there is mutual interest in addressing the crisis. I look forward to working with her and legislative leaders in the coming days to reach agreement on a responsible plan to help Connecticut families.”
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