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December 16, 2013

Truckers, diesel users propping up DOT funding

HBJ Photo | Pablo Robles As cars have become more fuel efficient, Connecticut has more than doubled the diesel tax rate to keep motor fuel tax collections on pace with transportation needs, levying a greater burden on the trucking industry.

The funding of major and minor Connecticut transportation projects is increasingly relying on diesel fuel users — namely, truckers — who are facing higher taxes, as everyday motorists drive more efficient cars and use less regular gasoline.

“The trucking industry is forced to subsidize projects that don't benefit the trucking industry,” said Mike Riley, president of the Motor Transport Association of Connecticut. “What's frustrating for our members is the predictable congestion that happens every day on the roads in this state only gets worse while the funds supplied by the diesel tax are tapped to provide expensive transit subsidies.”

The Connecticut Department of Transportation had a capital budget of $1.8 billion in 2013 to maintain and improve the state's highways, bridges, transit system, and maritime infrastructure. Half that funding came from the federal government while the rest came from Connecticut's Special Transportation Fund.

The STF is largely made up of collections from Connecticut's 25 cents per gallon tax on gasoline and 54.9 cents per gallon tax on diesel fuel. The fund does not include collections of the state's gross receipts tax, which is an additional 23 cents per gallon levied on gasoline; that money goes into the General Fund.

Much like with the federal transportation fund, Connecticut has seen decreasing returns from its gasoline tax as motorists switch to electric vehicles and use more fuel efficient cars. Over the past nine years, gasoline tax collections decreased 10.4 percent to $359 million.

Yet, while gasoline tax collections suffer, the transportation fund grows. In the last five years, the total funding in the STR rose 18.3 percent to $1.2 billion.

A main reason for that increase is the diesel tax, which has more than made up for losses from the gasoline tax. Less diesel fuel is being sold in the state than 10 years ago, but Connecticut has more than doubled the diesel fuel tax rate from 26 cents per gallon in 2004 to 54.9 cents today.

“The increasing diesel tax rate has propped the motor fuels tax up since overall consumption has declined,” said Brian Tassinari, leadership associate for the state Office of Policy & Management, which forecasts the budgets for the STF.

The 54.9 cents per gallon is the highest in the nation.

“Diesel costs a couple of years ago exceeded the costs of labor,” said Chris Herb, president of the Connecticut Energy Marketers Association, which represents gasoline stations and heating oil dealers that use diesel trucks to deliver fuel. “The diesel costs do eat away at the bottom line of heating oil dealers.”

Truckers that operate in Connecticut can't avoid the diesel tax, either. Unlike motorists that can drive across the border to lower cost gasoline states, the International Fuel Tax Agreement requires logistics companies to pay the diesel tax rates of all the states and countries they operate in, based on the number of miles they log in each location.

“Because you have to pay diesel fuel tax wherever you go and Connecticut has the highest diesel fuel tax in the nation, trucks that operate in Connecticut pay more than anyone else does,” Riley said.

The greatest frustration in paying higher taxes is the problems still plaguing highways and bridges, which are vital pieces of trucking firms' Connecticut logistics network. Issues like congestion and aging infrastructure go largely unresolved, Riley said.

“Connecticut is very truck-dependent … More than 90 percent of the goods in Connecticut are moved by truck,” Riley said. “We are dependent on trucks, but we don't make it easy for the trucks to come to us.”

Meanwhile, transit projects take up a significant chunk of the DOT capital budget — 25 percent in 2013. That includes projects like the multi-year, $567 million CTfastrak busway between Hartford and New Britain, but also the day-to-day financing of transit routes to keep the cost of fares low.

“These transit programs are very expensive, and they are not heavily used, and they suck money out of what would be used to improve highways,” Riley said.

Because federal funding has been stagnant for the past eight years, the Connecticut DOT's list of unfunded projects continues to rise annually. For the current five year plan, DOT has $15.3 billion in unfunded initiatives with the majority — $12.4 billion — coming on highway and bridge renovations like the replacement of the I-84 viaduct in Hartford and the Route 3 Putnam Bridge in Glastonbury.

“Our infrastructure is reaching its silver years, so to speak, and we are going to need more than vitamins,” said DOT spokesman Kevin Nursick. “At some point, you take on major costs of replacement.”

Having stable funding is critical not only to get these major projects done but to have the DOT operate its regular maintenance on a planned, consistent basis, Nursick said.

“One the federal side, that is something we have been looking for, for a long time, and we haven't gotten there,” Nursick said.

With the greater push for electric cars, hybrids, and more fuel efficient gasoline cars, gasoline tax collections will continue to drop, calling for other funding — like diesel tax — to make up the difference, Nursick said.

With truckers playing a bigger role in paying for improvements, they want money going for projects that help business, Riley said.

“Businesses want additional capacity on the roads, and congestion is their No. 1 concern,” Riley said.

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