Sales tax rapidly becoming state’s road tax

Just a few years ago, in 2015, gasoline taxes overwhelmingly dominated the list of state revenues that go toward Connecticut’s transportation spending.

The combined levies on gasoline — a 25-cent per gallon pump tax and a smaller wholesale tax — made up more than half the state’s transportation budget, a total of $855 million five years ago.

Sales taxes amounted to just $84 million of the $1.4 billion transportation fund back then. But we had a crisis brewing, as the transportation fund was headed for insolvency.

This year, sales taxes will total just over $500 million toward the $1.7 billion transportation fund. That’s still well under the motor fuels taxes, but it’s rising fast and the gas taxes are falling gradually.

By 2023, state projections show, the sales tax — from three different places — will pass motor fuel taxes as the largest source of transportation revenues, projections show. This would have happened with or without tolls, but with last week’s defeat of tolls, for the time being at least, it’s all the more acute.

What happened? How did Connecticut become one of the states with the largest dependence on sales taxes to pay its bills for road and bridge maintenance, repairs, upgrades and the daily running of the departments of transportation and motor vehicles — not to even mention mass transit?

Much of the sales tax money could, would and should go toward the running of regular state government, not roads and rails. In fact, if not for two policy changes — a massive diversion of sales tax money to the transportation fund and a boost in revenue sharing to cities and towns — Connecticut would be looking at clean budgets with no projected shortfalls by 2022.

Instead, we’re still wrestling with those shortfalls.

The reasons for this funding oddity are several. Some of the sale tax money may rightly belong in transportation. That’s the levy on new and used cars that we buy. The used car sales tax amounts to about $88 million a year, rising slightly, and that has long been part of the transportation revenue picture.

The new car sales tax is one of the main reasons for the climb in sales taxes for transportation. By 2023, 100 percent of that tax, more than $350 million a year, will go to the transportation fund.

But we’ve also diverted one-half of 1 percent of the regular sales tax on all the stuff we buy, to bail out the growing transportation fund. That amounts to about $325 million a year, and rising.

And that last piece, that one-half of 1 percent of the 6.25 percent general sales tax, is the part that should not be used for transportation. We should have roadusers pay with tolls, especially since we would collect free money from interstate trucks and out-ofstate drivers — about $125 million a year in a $300 million tolling plan.

Yes, as Republicans say, we should also find ways to do more with less spending on transportation. But even most tolls opponents agree we should be spending at least $1.7 billion a year, and that means the money has to come from someplace.

We didn’t notice any shortage of tolls opponents begging the transportation committee to spend billions on the Waterbury rail line this week, did we?

And to make enough of a dent to actually improve congestion and boost the state economy, we’d need even more than that $1.7 billion.

It’s lots of numbers that add up to one important point. Just because the tolls opponents won this latest round, due to political meltdown in a Capitol that had the votes to pass tolls, does not mean we’re not paying the piper.

We’re paying in sales taxes to make up for Connecticut’s lone status as the eastern seaboard state with no tolls.

We’re paying more to borrow more. And we’re able to do less in regular state government. I favor a hefty tax cut of $200 million in a $300 million tolls plan that would restore the sales tax to the general state budget — but that’s a matter of debate.

“I don’t know that there is an option that anybody is going to like,” said Rep. Jason Rojas, D-East Hartford, Hiuse chairman of the General Assembly’s finance committee. “It is alarming.”

Or, as Sen. Carlo Leone, D-Stamford, co-chairman of the transportation committee, put it, with the sales tax backing transportation, “you have to do less someplace else.”

On last point: If you’re one of the many misinformed people who thinks the transportation fund would be just fine if we didn’t divert money from it, look at the facts. Since 2003, we’ve diverted about $350 million from the fund.

And we’ve diverted about $3 billion to the transportation fund. The rise of the sales tax as a funding source is nothing more than making that diversion official.