The Massachusetts House on Wednesday rejected a proposal to suspend the state’s gas tax amid record-high costs at the pump, batting down a GOP-led effort Democratic leaders called a “political stunt.”
House Republicans targeted the state’s 24-cent per-gallon tax during debate over a sprawling $1.6 billion mid-year spending bill, arguing the state should ease some of the burden on drivers at a time when the average price for a gallon in Massachusetts reached $4.306 on Wednesday, an all-time high, according to AAA.
An amendment filed by Representative Peter J. Durant, a Spencer Republican, would have shelved the tax until the average price of a gallon of unleaded gas falls below $3.70.
“This is one small step that we as a commonwealth can say to the people of this state that, ‘We feel your pain. We’re willing to step to the plate. We’re willing to do what’s right,’ ” said Durant, whose wife, Kate Campanale, is running for lieutenant governor and has also called for a suspension. “This is something that we need to give our residents to show them that we have skin in the game, too.”
But Democratic leaders derided the proposal, arguing it was a shortsighted move that could have wider financial ramifications for the state’s ability to borrow money for road projects. House Speaker Ronald Mariano called it a “political stunt.”
“I don’t think it’s a real serious attempt to provide relief,” the Quincy Democrat said.
The amendment was rejected without a roll call vote.
“The price of gas is outrageous. There’s a lot of price gouging . . . and that needs to be looked at,” said Representative Mark J. Cusack, a Braintree Democrat and House chairman of the revenue committee. But suspending the tax is “a gimmick that doesn’t even make sense when you read it.”
Cusack said House leaders are weighing a tax relief package that could include changes to Massachusetts estate tax or allow for higher rental deductions — changes he said that could provide “real relief for families throughout the commonwealth, not just drivers.”
Mariano said House leaders, for one, have been discussing for months potential changes to the state’s estate tax. Massachusetts is one of just two states that sets the tax threshold at $1 million, the lowest in the country.
“We understood that it’s an archaic system that had been put in place. Now, with the price of homes being what they are, a million dollars isn’t anything now,” Mariano said. “The easier we can make that transfer for folks to pass on the wealth to the next generation, the better I think that the state is.”
Governor Charlie Baker also targeted that tax, and others, in his own $700 million tax break proposal. When a wider proposal could emerge from the House is unclear.
The state’s gas tax, which does not change with prices, creates a sizable, albeit declining, revenue stream for the state, which collected $775.5 million from it in fiscal year 2019, $707.9 million in 2020, and $662.9 million last year.
Suspending it, Democrats argued, could have a litany of negative effects. The state uses the money as proof it has the revenue to pay back bonds for transportation projects, and scuttling it, even temporarily, could hamper the state’s ability to borrow money, which it does several times a year, said Representative William M. Straus, a Mattapoisett Democrat and House chairman of the transportation committee.
“The people who review and rate bonds are very boring, serious people. They don’t like surprises, and they especially don’t like it when their borrowers go back on their word,” Straus said. “And that’s what would happen here.”
The House passed the wider spending package on Wednesday, 156-0. The bill, which now heads to the Senate, would funnel hundreds of millions of dollars toward COVID-19 tests, treatments, and vaccine efforts, while also extending pandemic-era rules allowing restaurants to sell to-go cocktails or offer expanded outdoor dining.
The bill is built on hundreds of millions in expected federal reimbursements, and is moving at a time of better-than-expected tax revenues, which are trending more than $1 billion above what state officials projected to collect at this point in the year.
Still, House leaders said lawmakers need to be careful with spending, particularly as the ongoing pandemic, the war in Ukraine, and inflation threaten an already fragile economy.
“Recent history has shown us that record surpluses can become record deficits in a blink of an eye‚” said Representative Aaron Michlewitz, the chamber’s budget chairman. “We must continue to be cautious.”
There’s also pressure to ease the pain of consumers. The cost of a gallon of gas in Massachusetts jumped by 65 cents since last week, further squeezing people’s budgets at a time when inflation had already reached a 40-year high. Retail prices at the pump had climbed even higher in Boston and on Nantucket and Martha’s Vineyard, and prompted calls for investigations into whether gas and oil companies are price gouging.
It quickly made the gas tax a popular target. GOP gubernatorial candidates Chris Doughty and Geoff Diehl each backed suspending the tax, with Doughty arguing that “people are having to choose between paying their bills or filling their tanks.”
Diehl pointed to the state’s surging tax revenues, arguing that money should be returned to the taxpayers who were “overcharged in the first place, and this is one way to do it.”
Baker, too, had suggested last week that targeting the tax is something he may consider “if we were to do something short term.” But he did not offer public support for the House Republican amendment, instead using his Twitter account to tout the need for his proposed tax breaks.
Attorney General Maura Healey, a Democrat who is running for governor, indicated she does not support suspending the gas tax, saying the state in the short term “should look to real solutions to reduce costs and put money back in people’s pockets” without identifying what she believes those should be.
“Long-term, the solution must be a move to energy independence and a clean energy economy so that we are no longer subject to price spikes driven by the fossil fuel industry,” the South End Democrat said.
State Senator Sonia Chang-Díaz, another gubernatorial candidate, also emphasized the long-term need to wean the state from fossil fuels. But suspending the gas tax, she said, is a “political stunt” that will provide little relief.
Oil companies “don’t need to be raising prices to absurd levels now and we must not strip-mine the state budget so they can line their pockets,” the Jamaica Plain Democrat said.
President Biden on Tuesday banned imports of Russian oil, gas, and coal in response to the country’s invasion of Ukraine, where the war and the stampede of economic sanctions against Russia that followed have provided fiscal aftershocks. But the soaring prices at the pump are due largely to ongoing supply and demand shocks of the pandemic.