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November 14, 2022

Legislators ready to extend CT gas tax holiday through the winter

CT Mirror High gas prices in West Hartford on March 21, 2022.
By Keith M. Phaneuf, CT Mirror

With Connecticut’s gasoline tax holiday almost halfway through its eighth and final month, an effort to waive that 25-cents-per-gallon break through February or March is in Gov. Ned Lamont’s court.

His fellow Democrats in House and Senate majorities renewed their interest this week in a special session in late November. Republican minorities in both chambers want to extend the holiday — and do more.

But while Lamont hinted one day after being reelected to his second term that he would support more relief at the pumps, the administration hasn’t moved beyond that point — saying only the governor will confer soon with top lawmakers.

“I’ll be there, listening with the legislature all year [to] things we can do to make it more affordable,” Lamont told reporters Wednesday on the Capitol lawn, one day after defeating Republican Bob Stefanowski at the polls.

Saying he remains concerned about inflation “that is slamming the middle class,” the Democratic governor said he was open to helping not only in the regular 2023 General Assembly session, which convenes Jan. 4, “but even sooner than that.”

Democrats and Republicans in the House and Senate say that time is now.

Retail gasoline prices hovered around $4.30 per gallon on April 1 when Connecticut began a retail gasoline tax holiday that was supposed to end June 30.

But as prices kept climbing — Connecticut’s retail peak was $4.98 per gallon on June 14 — Lamont and lawmakers extended the holiday through Nov. 30.

But while prices dropped in late summer and early fall, they’ve begun to climb again.

The $3.79 price the AAA reported Friday for Connecticut is 34 cents higher than that of one month ago and effectively matches the national average.

Without the holiday, Connecticut consumers would be paying more than $4 per gallon.

And since fall began, wholesale prices have fluctuated greatly as the war between Russia and Ukraine continues to destabilize the energy market.

Lamont said he wants to meet with his budget staff to ensure a continued suspension of the 25-cent levy won’t impair the state’s ability to repair its roads and bridges.

“We will be speaking with legislative leaders to review any proposals for a potential special session,” added Chris Collibee, spokesman for the governor’s budget office.

House Speaker Matt Ritter, D-Hartford, said legislators have no interest in being fiscally reckless.

Senate President Pro Tem Martin M. Looney, D-New Haven, noted the gasoline tax holiday also included free transit bus service, which has been vital to helping poor families get to work and school while gas prices are so high.

“We believe in responsible, sustainable relief,” Ritter said, adding that “in light of what’s going on in Europe, it seems like a good idea.”

Ritter and Looney also can point to several numbers that support their argument.

The state budget’s $1.8 billion Special Transportation Fund — which covers Department of Transportation operations as well as debt payments on the borrowing for highway and bridge repairs — is on pace to finish the fiscal year 18% in the black, a surplus of $320 million, according to Lamont’s budget office.

That’s despite the loss of about $30 million each month due to the retail gas tax holiday.

The state still collects a second fuel tax that is baked into prices at the pump, this one equal to 8.81% of wholesale prices. The average wholesale price of regular gasoline at New Haven harbor, the single-largest fuel importing site in the state, opened this past week at $3.13 per gallon, according to the Connecticut Energy Marketers Association.

That’s high enough to trigger a statutory cap on wholesale taxes. Whenever the actual wholesale price exceeds $3 per gallon, the price used for tax calculation purposes is fixed at $3.

Lamont also learned this week that state tax receipts continue to flow in despite a slumping global economy. Based on the latest report from his own budget office and from the legislature’s nonpartisan analysts, the projected surplus for the current fiscal year would approach $2.8 billion. 

That’s equal to a whopping 13% of the budget’s General Fund, which covers the bulk of the state’s annual operating expenses. It also would be the second-largest in state history, topped only by the $4.3 billion surplus Lamont and legislators banked last June.

Most of that windfall was used to help reduce the state’s massive pension debt.

But Republican leaders in the Senate and House say Lamont and his fellow Democrats don’t appreciate how much sky-high inflation — the national Consumer Price Index has topped 8% since March — has squeezed household budgets.

Senate Minority Leader Kevin Kelly of Stratford and his House counterpart, Vincent J. Candelora of North Branford, both called for a gas tax holiday extension, repeal of a new highway mileage tax on trucks set to begin in January, and more than $110 million in state funding to supplement federal winter energy assistance for the poor.

“The state of Connecticut is benefitting from inflation with the higher collection of sales and gas taxes, and they need to give it back to the residents in order to prevent any additional pain they’re feeling at home,” Candelora said.

High energy bills anticipated

The federal government has awarded Connecticut about $90 million for the Low-Income Home Energy Assistance Program (LIHEAP,) roughly $50 million less than what Connecticut got last year. But last year’s allocation was bolstered with emergency coronavirus pandemic aid. Before the pandemic, the state’s allocation was closer to $80 million.

If early demand is any indication, the $90 million Connecticut has gotten will be far too little, said Brenda Watson, executive director of Operation Fuel.

The Hartford-based nonprofit energy assistance group helped roughly 6,500 households cover their heating and other energy bills between July 1, 2021 and June 30 of this year — with the highest demand coming during the winter months.

Operation Fuel’s caseload between July and Oct. 31 of this year already has hit 4,000 — about double those served during the first four months of the last fiscal year.

And winter isn’t here yet.

“I never in a million years have dreamed we would have served double the folks we served last year,” Watson said.

Senate and House Republicans want Connecticut to commit $112 million in state funds to the federal allocation so families know heading into the winter the funds are there.

Lamont and Democratic legislative leaders have said the state should wait to see if Congress adds more funds for LIHEAP during the winter session. If not, state legislators can consider action once their regular session starts on Jan. 4.

But Kelly said that option would preclude any more state funding from being approved until late January or early February at the earliest. By then, worried families will have already cut back in ways they cannot afford.

“They’re going to cut back on their rents,” Kelly said. “They’re going to cut back on their medications. They’re going to cut back on their food — so they can stay warm.”

Lamont and Democratic legislators fared well at the polls Tuesday in Fairfield County and in Connecticut’s affluent suburbs in general, and Kelly suggested the party was losing its sensitivity to working families most in need. 

“I believe they’re listening to a constituency that is wealthier than the middle, working class of Connecticut,” he added.

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