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How New Hampshire's Gas Tax Went Up - And What It Means

Ryan Lessard

This week All Things Considered is taking a look at the 2014 legislative session - which key bills passed, which did not, and why.

One item that made it through the legislature this year was a roughly 4 cent increase to the state’s tax on gas and diesel. The law, which takes effect in July, is expected to fund highway improvements for about two years, and pay some of the bonds being used to finish the expansion of Interstate 93.

How it passed

This is the first increase to the tax since 1991 – and a big turnaround from last year, when the State Senate voted 18 to 6 against a proposed gas tax increase. (The Senate vote this year was 15 to 9 in favor of an increase.) Kevin Landrigan, longtime political reporter for the Nashua Telegraph, says the turnaround is a testament to Republican State Senator Jim Rausch of Derry. Landrigan says the Senate Transportation Chair “came up with this idea to couch the tax in a more politically correct manner than just a bald tax increase. He essentially marketed it as a one-time increase in the tax to represent the changes in cost of living during the past decade. That translated to about a 4.2 cent increase in the tax, and made it more palatable for a lot of senators’ support.”

Another key element of the final bill, Landrigan says, is that, once the bonds for the Interstate 93 expansion are paid off, the tax increase expires and the tax rate returns to 18 cents a gallon.

The original version of the bill was different in some key areas than the bill that ended up passing, tying future tax increases to the rate of inflation. That provision drew strong opposition from business groups – but many of those groups backed the bill once lawmakers stripped the automatic increases out of the bill, something Landrigan characterizes as “an unusual stepping-up on their part.”

Landrigan also says one of the key players in the final shape of the law was one of its biggest opponents: Senate President Chuck Morse of Salem. Morse, Landrigan says, “recognized after this bill passed the House that it was going to have enough support in the Senate to pass it as well. So he worked with Sen. Rausch and Nancy Stiles of Hampton, a Republican, to come up with a gas tax increase most to his liking. He ended up voting against it, but he really wanted the widening of I-93, so his crafting of the language that actually ended up becoming part of the final compromise was a key to this thing happening this year.”

The effects

One provision of the bill has proven very popular among residents of Merrimack: it eliminates the toll booths at Exit 12, which has been a big bone of contention in that part of the state. Landrigan says legislators from Merrimack, including former State Senate President Peter Bragdon, had pushed to do away with the ramp tolls for two decades, without success. “Merrimack is the only community in the state on the turnpike system where you can’t travel on the turnpike in that town without paying a toll,” Landrigan says. “This would get rid of the northernmost toll in the town.”

The commissioner of the Department of Transportation, Chris Clement, has been calling for more revenue for road and bridge projects. Landrigan says this new revenue doesn’t fill the entire gap Clement has been talking about. “The next governor and legislature are going to face some big decisions in the Department of Transportation,” he says. “There’s a kind of endemic, $50 million operating deficit in the highway fund that pays for the Department of Transportation. This is going to be a big priority for the next governor and next legislature when they write this budget in 2015, to figure out how to close this hole – whether to reorganize the Department of Transportation, or somehow find additional revenue.” Otherwise, Landrigan says, “that department’s not going to look anything like it looks right now.”  

The future?

Who writes that budget in 2015 will be determined in the fall elections. Landrigan sees the gas tax as a potential campaign issue, especially in a number of primary contests in the State Senate. “Four Republican senators [voted] for this tax increase. All four, it looks like, are going to have primary opponents.” In the general election, Landrigan says challengers might try to tie the issue to broader themes of “spending, in terms of bigger government - you could make a case against a sitting incumbent and make him pretty uncomfortable.” 

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