PHOENIX — Gov. Katie Hobbs says she's willing to consider suspending the state gasoline tax to provide some financial relief for Arizona motorists — even though she admits the state needs the money raised by the levy for road construction and repair.
"It's a complicated issue, for sure,'' the governor said Friday when she was asked about her willingness to suspend the state's 18-cent-a-gallon levy.
Hobbs, running for reelection, said she has been "focused all year on lowering costs for Arizonans.''
"They're continuing to be pinched by higher prices on everything,'' the governor said. And now, with the war in Iraq boosting the cost of crude oil, she said the list has expanded to include fuel.
"We can't take anything off the table,'' Hobbs said. But she suggested that a better approach might be for Congress to suspend the federal gasoline tax.
Only thing is, that would provide only marginally more relief than suspension of the state gas tax: The federal tax on gasoline is 18.4 cents a gallon.
Hobbs isn't the first one at the Capitol to suggest a break in the gasoline tax. Rep. Julie Willoughby has her own plan to suspend the levy from May through September.
But the proposal by the Chandler Republican covers only Maricopa and Pinal counties. They are the two counties that have been required to use a special — and more expensive — fuel blend to reduce air pollution.
And that has shot the price for regular unleaded to close to $5 a gallon. That's about 70 cents per gallon more than Pima County.
Arizona Gov. Katie Hobbs says she is willing to consider a temporary suspension of the state's 18-cent-a-gallon gas tax to help drivers dealing with high prices.
The governor gave no indication of whether she would seek statewide or targeted relief. That could become part of the now-stalled negotiations with Republican legislative leaders over the state budget, Christian Slater, her press aide, said.
There's more to the issue than simply having the state forego the tax revenues. The levy last fiscal year raised about $533 million, with the dollars in the state Highway User Revenue Fund divided up among the Department of Transportation as well as cities and counties.
That raises the question of whether a suspension of any sort would harm the road construction and repair projects that the tax dollars fund.
"If you ask anyone who drives our roads if they think our roads need more investment, then I think that's the answer to your question,'' Hobbs responded.
Still, the governor said, the issue of paying for road construction and repair is bigger than suspending the levy. She pointed out that, despite inflation, the last time the tax rate was adjusted was in 1991.
"We're seeing less revenues into the HURF fund from gas tax,'' she said. And some of that, Hobbs said, is due to the increasing number of all-electric vehicles.
"We should look at a broader idea of how we actually fund our roads,'' the governor said.
There have been proposals, including by some Republicans, to impose some sort of equivalent tax on electric vehicles that also use the roads, based, for example, on the number of miles driven.
All have failed. And legislative foes of such a levy have voted to put a measure on the November ballot which would put a provision into the Arizona Constitution barring state and local governments from imposing any type of tax or fee "based on the vehicle miles traveled.''
Still, that leaves the fact that the 18-cent levy just isn't worth what it was back in 1991.
A calculator from the Bureau of Labor Statistics said that 18 cents, with inflation, now has the buying power of only about 7.5 cents.
And, potentially more telling, a gallon of gas was selling for only $1.20 a gallon in 1991.
This isn't the first time that Hobbs has acknowledged that the 18-cent-a-gallon levy just isn't raising the amount of money, relatively speaking, as it once did. As Senate minority leader in 2018, she co-sponsored legislation that would have raised the tax by 36 cents per gallon.
On Friday, however, the governor brushed aside a question of whether her previous support for doubling the gas tax might hurt her now in an election year.
"The fact that I co-sponsored a bill that never had a hearing, and is not in existence today, is that a liability? No,'' Hobbs responded.
Of note about the governor's willingness to suspend the gasoline tax is that it appears out of step with legislators from her own party. Not a single Democrat voted for the Willoughby measure when it was approved by the House Committee or Natural Resources, Energy and Water last month on a party-line vote.
Rep. Patty Conteras of Phoenix said that, given the conditions on many Arizona roads, she just can't see foregoing the funds necessary to keep them in good shape.
For Rep. Sarah Liguori, also from Phoenix, the issue came down to exactly how much what Willoughby was proposing would actually help a typical Arizonan. She said that saving 15 cents a gallon -- $3 to fill up a 20-gallon tank -- provides the "least return'' in comparison to other relief that's needed in things like the costs of housing and health care.
Willoughby, for her part, conceded the point.
"The back-of-the-napkin math doesn't seem like a whole lot,'' she said during the committee debate.
"But, at some point in time, when we're not moving the needle in other areas of affordability you look for any relief at any time,'' Willoughby said. "That's where this is at for me and my constituents.''
Whether there is a future for her legislation remains unclear.
After being approved by the full House — again, along party lines — her HB 2400 was assigned to the Senate Committee on Regulatory Affairs and Government Efficiency.
But Sen. Shawnna Bolick, who chairs that panel, did not give it a hearing. What makes that important is this past week was the last time her committee is scheduled to meet this session.
Bolick, however, said it doesn't necessarily mean the idea is dead. She pointed out that there is a meeting this coming week by the Senate Committee on Appropriations, Transportation and Technology, with the possibility of resurrecting the concept.
"Stay tuned,'' Bolick said.
One other thing could affect the calls — and demands — for a fuel tax holiday.
Willoughby said one reason she was pushing the measure is that more expensive gasoline in Maricopa and Pinal counties due to that federal requirement to use special "boutique'' fuels designed to produce less pollution. But this past week, the U.S. Environmental Protection Agency agreed to an emergency waiver from that requirement beginning on May 1 and running for 20 days, with the potential to be extended.
There are no firm estimates, though, of how much that EPA waiver might save affected Arizonans.
