States Scramble to Ease Pain at the Pump


(Updated 3:46 p.m. EDT, May 20, 2008)

As fuel prices across the country pass $4 a gallon, many states are offering motorists at the start of the summer driving season suggestions and some solutions for relief.

Plans pursued by states range from widely discussed proposals to suspend gas taxes to exploring flex-time hours for state employees and allowing campers to store their recreational vehicles longer at state parks. Some motorists, as well, are cutting back their driving or taking advantage of vacation destinations closer to home.

One of the most generous proposals is from Alaska, where the high price of oil sold there is funneling money into its budget, at the same time it became the first state to see the average price of regular gas hit $4 a gallon. The national average is $3.80 a gallon as of May 20, according to AAA .

Gov. Sarah Palin (R) unveiled on May 16 a proposal ( PDF ) to give residents $100-a-month debit cards for gas, heating fuel, electricity or other energy purchases.

Palin says she wants the Legislature to approve the $1.2 billion proposal in a special session this summer so the program can start in September. By conservative estimates, the state, which collects nearly 90 percent of its general fund revenue from taxes and royalties on oil, expects to have $2.7 billion more in surplus funds than originally projected for next year, according to the governor's office.

"The state treasury is swelling, while family checkbooks are evaporating," Palin said in a statement. "The right thing to do is to return surplus monies to the resource owners through energy relief. Instead of going to Washington, D.C., for relief, Alaskans should be independent enough to take care of this energy problem ourselves."

The issue of whether to reduce or suspend gas taxes hit the presidential race, as U.S. Sens. Hillary Clinton (D) and John McCain (R) each called for a tax holiday for the 18.4-cent-a-gallon federal gas tax. Clinton's Democratic primary opponent, U.S. Sen. Barack Obama, has dismissed the plan as a "shell game" and said it would do little for consumers.

But state governments would feel the impact if the tax were cut.

"The problem is states lose the money (without the tax), and then that money isn't available for transportation projects," said Jim Reed, transportation program director for the National Conference of State Legislatures (NCSL).

Nearly every state is facing shortfalls in transportation funding, while the federal gas tax - a primary source for state transportation project money - has remained stagnant since 1993, Reed said. "If your salary had been frozen at 1993 levels, how would you be faring today?" he asked.

When Illinois and Indiana decided in 2000 to cut their own state sales taxes on gasoline briefly, the average motorist saved $2 and $2.50 a month in each state, respectively, according to the American Road and Transportation Builders Association. But in the end, the tax cut cost both states tens of millions of dollars.

Republicans in the Illinois House on May 20 again tried to revive a summer gas tax holiday that had been sitting in committee since March. The plan called for lifting the state's 5 percent sales tax on gas, but Democratic lawmakers rebuffed their attempt amid concerns about whether it would actually save consumers money.

Some states are trying to address these budget shortfalls by looking at increasing driver-related taxes. Democratic Virginia Gov. Timothy Kaine presented a transportation plan May 12 that seeks an increase in motor vehicle sales tax and vehicle registration fees.

Those measures were opposed by state Senate Majority Leader Richard L. Saslaw (D) and many other Senate Democrats who favor raising the state's 17.5-cent-a-gallon tax to collect money for much-needed road improvements, particularly in traffic-snarled northern Virginia.

NCSL's Reed said only two states had recently raised their gas taxes: Nebraska and Minnesota, the latter to raise money for bridge repairs after the I-35 bridge collapse last summer.

Tax break or not, some motorists are choosing to take cost-saving measures themselves. South Dakotans bought about 1 percent less gas from 2006 to 2007 - nearly 4 percent less than in 2005, according to the state Revenue Department. Gas consumption in Indiana is down 3 percent so far for this fiscal year, which runs from July 2007 to June 2008, according to a spokeswoman for the state's budget agency.

The number of Americans traveling 50 or more miles from home this Memorial Day weekend is expected to decrease by 0.9 percent, the first decrease in the holiday's traffic since 2002, according to a AAA survey released May 15.

But despite the economic hit caused by the rising fuel prices, drivers by a slight margin don't favor cutting the federal gas tax, according to a CBS/ New York Times poll of 671 people released May 4. The survey showed that 45 percent said eliminating the tax is a good idea. But 49 percent said it is not.

Florida Gov. Charlie Crist (R) isn't buying it. He's trying to reduce his state's 15.6-cent-a-gallon gas tax by 10 cents for the first two weeks of July to help with in-state tourism. The plan was struck down by the Legislature, but he has vowed to pursue it.

Florida's tourism increased 3.4 percent for the first quarter of this year compared to 2007, according to the state's tourism marketing corporation, Visit Florida . Officials are attributing at least some of that to Floridians taking more in-state vacations, which increased 9.2 percent for the same period over last year, the figures show.

The marketing agency is spending about $500,000 on advertising for tourism initiatives in-state this summer, and another $2 million for out-of-staters. One of those initiatives, "Tours on a Tankful," offers activities people can do on one tank of gas in Florida. The state has about 1.25 million visitors on an average day, according to Dia Kuykendall, a spokeswoman for Visit Florida.

"We know people are going to take shorter trips, so these are some places they can go," Kuykendall said. "Vacation is the great American tradition. People aren't going to give it up, they'll just pare down."

Arkansas legislators are looking to keep more cars off the road in another way. At the urging of state Sen. Tracy Steele (D), the state's legislative council on May 16 agreed to consider allowing some state employees to work fewer days each week, targeting specifically those who drive long distances, as long as state offices remain adequately staffed.

Meanwhile, in Michigan, state parks and recreation officials are allowing campers to store their recreational vehicles in designated areas for free between camping trips to help motorists save fuel that they would have used driving their RVs between parks and home. People can store their vehicles for as many as 15 days.

"The Michigan economy is already down," said Harold Herta, the Michigan State Parks resource management chief. "People are saying, 'Either we're going to vacation in our yard or go up North [to the parks].' So we are especially concerned that people, with the gas prices, are going to be dragging this thing (RV) around."

Editor's Note: This story was updated to include action on May 20 by the Illinois Legislature.


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