With deadlock on many major issues, a proposal to provide relief to motorists has picked up steam.
ALBANY, N.Y. — In the final feverish days of state budget negotiations, there are few things that New York State lawmakers seem to agree on. One of them is that gas prices are too high.
Proposals to give New Yorkers some sort of relief have gained momentum in recent days, even as other issues show little movement. The only question, it seems, is how to do it.
The Democratic-led Senate put forth a proposal to suspend certain state gas taxes at the pump from May through December. A similar proposal in the Assembly would cut all taxes for a full year.
Others have suggested issuing one-time rebate checks, which could be targeted at lower-and middle-income New Yorkers, or creating a tax credit.
And while everyone wants to share in the warmth of a feel-good tax cut, it would have fiscal consequences that could come at the expense of the state’s other priorities, including roads, bridges and mass transit.
“Most economists think it’s a bad idea,” said Jason Furman, a professor of economics at Harvard University, adding that the debate was less about whether a tax holiday was harmful, than how harmful it might be.
“Is it you know, a terrible thing you should never do?” he continued. “Or is it a minor bad thing, and why not just go ahead and do it because it’s good politics?”
New York is hardly the only state to consider offering relief from the soaring fuel prices following the Russian invasion of Ukraine. Connecticut, Maryland, Florida and Georgia have enacted temporary gas tax holidays, while officials in California, Ohio and West Virginia have considered relief measures.
Proponents hope that pausing some or all of the state’s gas tax would offer tangible assistance to struggling New York drivers, who pay an average of $4.33 per gallon, according to the AAA. They argue that high gas prices have the potential to cripple the state’s fragile economic recovery.
“We’re asking people to get things back online: start going back to businesses, going to restaurants, and this is really putting a damper on things,” said Assemblyman Angelo Santabarbara, the proposal’s sponsor, adding that he considered it a Covid relief measure.
Gov. Kathy Hochul, a Democrat from Buffalo, did not include a gas tax suspension in her executive budget plan, but she indicated last week that she would be amenable to including it as a part of the budget, which is due April 1.
“This is about people getting to their jobs and getting the kids dropped off at school and just trying to live their everyday lives,” she said last week, adding: “The timing of the budget is perfect to address this.”
A Siena poll released on Monday showed 70 percent of voters across party lines were in favor of some sort of tax relief. Democrats, particularly those from upstate and Long Island, where Republicans have made significant inroads, have taken note with an eye to this year's election.
State Senator James Gaughran, a moderate Democrat from Long Island, whose constituents mostly drive cars, said he was “open to whatever is the best path.”
“I think it’s important that people get relief now, as soon as possible,” he said. “If it can’t be done at the pump, then the rebate checks should come as quickly as possible to try to help people offset some of that increasing costs.”
New York State levies about 33.35 cents for each gallon of gas sold, much of which goes toward funding roads, bridges, trains, subways and buses. Suspending the gas tax seems less popular among lawmakers from New York City, where many rely on public transit.
And economists argue that a gas tax holiday might run counter to some of New York’s other goals.
Because people tend to use more gas the more money they earn, economists say wealthier New Yorkers would receive a greater benefit from the tax holiday than poorer ones. And lowering taxes on gas, even temporarily, could incentivize New Yorkers to drive more, frustrating the state’s environmental progress.
Proponents of rebate checks or a tax credit say their approach could be more narrowly targeted to those with the greatest need, and heads off gas companies raising prices to offset the gas tax savings. Opponents say a flat rebate could unfairly benefit those who drive little.
Lawmakers would also need to decide how to get by without the money raised by the tax — more than $2.2 billion in combined state and local revenues each year. A majority of that goes toward transit projects like roads, bridges and mass transit, with a sizable chunk going to the city’s transit agency.
The Metropolitan Transportation Authority — which runs the city’s subway and buses, the Long Island Rail Road and the Metro-North Railroad — expected to receive 3.3 percent of its funding from gas taxes this year.
The authority has said that every dollar is necessary to help it avoid service cuts or fare hikes as officials try to lure back riders following the pandemic. Janno Lieber, the authority’s chairman and chief executive, initially expressed dismay at the notion of losing gas tax revenues, but has since indicated that the state will make up any lost revenue.
Ultimately, experts said, the most difficult thing about implementing such a plan could be ending it — particularly if prices remain high.
“The real danger is that this is a permanent tax cut,” Mr. Furman, the economist, said. “Who wants to be the person to raise gas taxes?”
Michael Gold and Luis Ferré-Sadurní contributed reporting.
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