You requested a summary of gasoline tax legislation passed in the last few years. You also requested a discussion of the rationale for and history of the Special Transportation Fund (STF).

SUMMARY

Legislation adopted in 1997 and 1998 reduced the gasoline tax from 39 to 32 cents per gallon. The STF was created in 1984 to provide a dedicated revenue stream for transportation infrastructure projects and programs. The lack of dedicated revenues in the period before the fund's creation led to a significant deterioration of the state's highways and bridges, epitomized by the 1983 collapse of part of the Mianus River Bridge, which resulted in three fatalities.

GASOLINE TAXES

PA 97-309 reduced the gasoline tax from 39 cents per gallon to 36 cents as of July 1, 1997 and 33 cents as of July 1, 1998. In its FY 1997-98 budget book, the Office of Fiscal Analysis (OFA) estimated the state revenue loss caused by the tax decrease as $38.1 million in FY 1997-98 and $78.1 in FY 1998-99, with somewhat larger losses in subsequent years. The act transferred the part of tax on petroleum products and certain other revenues from the General Fund to the STF. It also transferred costs associated with the highway patrol functions of the State Police from the STF to the General Fund.

PA 98-128 reduced the gasoline tax to 32 cents per gallon effective July 1, 1998. OFA estimated the revenue loss for FY 1998-99 at $13.2 million. The act required gasoline dealers to reduce their prices by four cents to reflect the tax decreases caused by this act and PA 97-309, with the lower prices remaining in effect for least 90 days. It subjected dealers who did not lower their prices to a fine of up to $500, up to six months imprisonment, or both, and allowed the Department of Consumer Protection to revoke the dealer's license. It required dealers to post a sign on their pumps informing the public of this provision and including the department's toll free number. The act also transferred part of the sales tax on casual sales of motor vehicles from the General Fund to the STF.

SPECIAL TRANSPORTATION FUND

This fund was created in 1984 to arrest the deterioration of the state's transportation infrastructure. Before 1975, STF's predecessor, the Transportation Fund, used dedicated revenues to provide financial support to highway and transportation development projects. The fund also paid for other costs, including those associated with the Department of Motor Vehicles (DMV), the State Police, and other agencies and programs. The fund was terminated in 1975, and thereafter an increased emphasis on other priorities led to a decline in bonding for highways.

In 1980, the resulting deterioration of the transportation infrastructure led to the passage of SA 80-79. This act directed the Department of Transportation (DOT) to evaluate each state bridge and highway, classify their condition, and submit a 10-year resurfacing and bridge repair plan to the legislature by July 1, 1981. DOT reported that 63% of the state highway network and 61% of state bridges were in “less than good” condition. DOT estimated that it would cost $1.6 billion to reverse these conditions. The report also noted that in the absence of significant increases in maintenance funding, the state could anticipate a dramatic increase in bridge load restrictions and a possibility of bridge closure and collapses.

On June 28, 1983 a 100-foot long section of Interstate 95 collapsed into the Mianus River in Greenwich, killing three people and seriously injuring three others. Within two days, the legislature (which was in special session) passed, and the governor signed, a bill creating a fund supported by one cent of the fuels tax. A subsequent special session in October 1983 provided additional bond authority to repair the Mianus River Bridge. The legislation expanded the road and bridge repair program so that DOT could meet its first year target under the 10-year program. In the 1984 regular session, Governor O'Neill presented his Transportation Infrastructure Renewal Program and by the end of the session the STF had been created.

The act creating the STF dedicated three types of revenues to back transportation bonds: the motor fuels tax; motor vehicle receipts; and license, permit, and other fee revenue. The motor fuels tax (primarily on gasoline) accounts for nearly two thirds of the STF's total revenues. The legislation provided for automatic increases in these revenues at periodic intervals.

Originally, the STF was designed to cover only the direct costs of the transportation infrastructure program. But, starting in 1987, the legislature transferred a series of agency costs from the General Fund to the STF, in part due to growing General Fund deficits. Among the costs transferred were those for fringe benefits for DOT and DMV staff and, for a time, the highway patrol functions of the State Police.

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