Illinois Retailers Fight Gas Tax Increase

After calls to increase funds to help roads, marketers push back

Published in CSP Daily News

SPRINGFIELD, Ill. -- A proposal to increase fuel taxes in Illinois to help fund infrastructure improvements saw pushback this week from retailers in the state, who argue is will hurt business and consumers.

The call to increase taxes comes from the Transportation for Illinois Coalition (TFIC), which warns that the state's transportation infrastructure will be left without any funding for maintenance and construction this summer if it does not act now. That's because a five-year, $31 billion capital program that pays for infrastructure improvements is set to expire July 1, 2014.

The transportation advocacy group, a coalition of state and regional business, labor, industry, governmental and not-for-profit organizations, argued that the current means of funding infrastructure improvements--the expiring capital program as well as the state's road fund--are insufficient and fundamentally flawed. A 2013 audit found that less than half of the money in the road fund went toward direct road construction and improvement costs in eight of the last 10 years.

Instead, TFIC proposes a user-fee-based solution that targets raising $1.8 billion in new annual revenues by a variety of measures, including: increasing the state motor fuel tax on gasoline by four cents per gallon (cpg) and on diesel by seven cpg; increasing fees on motor vehicle registrations; charging a sales tax on automobile-related services such as repairs, car washes and oil changes; ending the ethanol tax credit; and reprioritizing spending.

The group, whose members include engineering and contractor associations, local chambers of commerce, the Illinois Trucking Association and AAA Chicago, argued that this approach distributes costs among those who use and benefit from infrastructure and provides a long-term, sustainable revenue stream.

The state motor fuel taxes for gasoline is currently 19 cpg for gasoline and 21.5 cpg for diesel--not including 1.1 cpg levied for environmental impact and underground storage--and has not been raised since 1990. TFIC estimates that $304 million could be raised through this step alone; however, Illinois fuel marketers argued that the state should instead become more disciplined about spending the funding it already receives.

During a news conference at the state capital this week organized by the Illinois Petroleum Marketers Association, fuel retailers warned of the impact on their businesses and customers, reported the Associated Press.

"This tax, as a retailer, would be pushed to the consumer," Amy Chronister Ridley, vice president of Chronister Oil and Qik-n-EZ Convenience Stores, Springfield, which has 12 stores in the state, told the news agency. "We as retailers live in penny profits and cannot afford to absorb this tax."

In a statement provided to AP by the association, Carl Adams of Illinois Ayers Oil Co., Quincy, which has 27 sites, said an increase would kill investment. "We are to the point where we will not expand any further in this state because the market conditions are so poor," he said. "It's not worth the investment for us. An additional tax on gas is only going to drive us further out of business."

Adams said the company has many sites near the Illinois-Missouri border, where it is already losing customers on fuel and in-store purchases, and noted that the state is losing that tax revenue as well.

"We need to put the brakes on any type of plan to raise the motor fuel tax," Bill Fleischli, vice president of the Illinois Petroleum Marketers Association, told AP. "Drivers deserve a break, and business owners have suffered enough in recent years." He argued that the state should stop using money intended for maintaining infrastructure on other items in the budget.

The state's road fund is supplied by fuel taxes and registration fees, but lawmakers have traditionally tapped into the money for other purposes, said the report.

TFIC also has denounced this practice, and instead calls for focusing most of the driver-related revenues from the state's general budget into the road fund, AP said. The group also argued that revenues from the gasoline sales tax should go toward transportation-related projects instead of into the general revenue fund.

At the same time, TFIC argued that an increase in the fuel tax is necessary.

"The coalition understands paying more at the pump isn't easy," said Doug Whitley and Mike Kleinik, coalition co-chairmen, in a prepared statement obtained by the news agency. "But a modest four-cents-per-gallon increase will hardly be noticed as prices fluctuate much more regularly."

Any proposal to increase fuel taxes is unclear, said the report. Although TFIC members have reportedly met with lawmakers, they have yet to find a sponsor to introduce legislation. Meanwhile, in his recent annual budget address, Illinois Governor Pat Quinn said he would form a committee to explore the issue.