A group of Connecticut business owners and House Republicans sought Wednesday to build support for repealing a recently implemented highway use tax in advance of a public hearing which they petitioned onto the legislative agenda.
The proposal, the subject of a single-issue hearing before the Finance, Revenue and Bonding Committee on Friday, would sunset a mileage-based user fee on tractor-trailer trucks, which Connecticut implemented at the start of this year as a means to support transportation, highway and bridge repair projects.
Citing the state’s surplus funds, Republicans legislators have called the user tax an unnecessary burden on businesses and have made multiple unsuccessful attempts to repeal it. When the Democratic chairs of the finance panel declined to raise one such proposal for a public hearing this session, 51 Republican lawmakers signed a petition and forced the hearing through a procedural maneuver.
On Wednesday, they hosted representatives of trucking operations, lumber dealers, and farmers who delivered statements about the looming impact of their increased costs, which in many cases, they said will be passed along to consumers.
“Everybody is going to pay for this,” David Palumbo, owner of Palumbo Trucking in North Branford, said. “Everybody in the state of Connecticut is going to pay. To me, this wasn’t thought out hard enough, long enough, with any kind of consensus of how this is going to work, how it’s going to be audited.”
Palumbo, whose company operates close to 100 trucks, said he expected the tax to cost his business as much as $100,000 a year and has forced him to hire a new compliance employee.
User fees assessed on big rig trucks are not uncommon in other states. According to a Wednesday statement from Sen. John Fonfara, a Hartford Democrat who co-chairs the tax-writing panel, Connecticut was until January the only state on the East Coast that did not charge heavy trucks for use of public highways.
However, House Minority Leader Vincent Candelora argued that states like New York have found that as much as 50% of trucking companies, particularly those from out of state, do not pay the fee. He questioned whether the state Revenue Services Department would be able to collect the fee from out-of-state companies.
“It’s not a tax that is fair and the businesses that will be paying it are located in the state of Connecticut,” Candelora said.
According to DRS, the tax brought in $4.3 million in its first month. Of that figure, $3.3 million came from 17,300 returns from out-of-state carriers while the remaining $1 million was paid through 2,200 returns from in-state carriers.
Rep. Holly Cheeseman, R-East Lyme, said the fee, which was passed in 2021, was crafted as the COVID-19 pandemic was changing highway use habits and driving an increase in remote work.
“This was passed in a COVID session. So let’s be serious. We are in a different world with different needs, different technology,” Cheeseman said. “Let’s be smart and proactive and pause this while we have time, while we have a surplus and really look at this.”
The bill, like previous attempts to repeal the fee, this year’s bill to sunset it in July looks unlikely to gain traction.
Gov. Ned Lamont pitched the highway fee as a sustainable funding source that would enable Connecticut to qualify for federal grants and bonding to fund infrastructure projects. On Wednesday, his spokesperson, Adam Joseph, said the fee’s expected revenue represented more than $1.1 billion in bonding capacity over the next 5 years.
“It is incredibly important that Connecticut has the financial resources to rebuild and maintain our bridges, roads, and transportation network,” Joseph said in a statement. “Bankrupting the Special Transportation Fund takes us in the wrong direction and will result in the State being unable to undertake critical projects to improve safety, reduce traffic and get you to where you are going on time.”
Meanwhile, Fonfara suggested the bill would not be voted out of his committee.
“The Republicans have availed themselves of a procedure allowed under our rules, and we will abide by that,” Fonfara said “However, my co-chair, State Rep. Maria Horn, and I have made our intentions clear by not raising this bill in the Finance Committee.”