USA Today reported last week that more than 20 states are considering gas tax cuts, while many are also pursuing other options, such as acting against price gouging. New York is the latest state to approve legislation, with Governor George Pataki signing a gas tax cap just this week.
That level of activity contrasts starkly with the lack of interest in the states just a few months ago. When I was writing a preview of legislative issues to watch for Governing's January issue, I wanted to include state responses to gas prices.
There was just one problem: Nothing much was happening.
Right after Hurricane Katrina, Hawaii implemented a gas price cap (which the legislature had approved earlier), while Georgia and West Virginia temporarily cut gas taxes, but that was about it. Lawmakers in a few other states called for similar cuts, but most efforts went nowhere.
Obviously, part of the explanation is that gas prices dropped late last year -- and with them motorist outrage and legislative urgency. It was especially telling when, last November, voters in Washington state rejected a ballot measure that would have repealed a gas tax increase legislators had passed earlier in the year.
The broader picture is that lawmakers in many states want to upgrade transportation infrastructure and worry that reducing fuel taxes will delay that goal. Plus, some research suggests that gas tax cuts don't result in corresponding reductions prices at the pump because they boost demand.
Given that those two latter considerations are still relevant, but that motorist outrage is back in full force, it will interesting to see how legislators negotiate the issue in the coming weeks, especially in an election year.
