Connecticut lawmakers on the Finance, Revenue, and Bonding Committee passed Senate Bill 1447, which would tax peer-to-peer car sharing services and repeal a law passed in 2017 on a bipartisan basis that restricts the Department of Transportation from using state money to study a vehicle mileage tax without legislative approval.
According to revenue estimates, the tax on ridesharing services would add $900,000 to the state’s Special Transportation Fund (STF), far less than the originally estimated $3.2 million, after the Office of Fiscal Analysis (OFA) received more information from the ridesharing industry.
However, the bill would also repeal a 2017 law pushed by Republicans when they occupied half the Senate seats and nearly half of the seats in the House. The law restricting the use of state funds to study a vehicle mileage tax (VMT) without legislative approval came just as debate over tolling Connecticut’s highways was heating up. Studying a VMT was considered a first step toward implementation, and the bill was passed on a bipartisan basis.
A VMT taxes people based on how much they drive and could conceivably replace the gasoline tax. Gasoline taxes nationwide and in Connecticut have decreased over the last decade due to better fuel efficiency and the rise of electric vehicles, leaving less revenue for state infrastructure projects. The DOT Commissioner in 2017, James Reddeker, wanted Connecticut to join a coalition of states to receive a federal grant to study the feasibility of a vehicle mileage tax.
Instead, Connecticut added a portion of the state’s sales tax to the Special Transportation Fund to boost funding in 2019, which has now become the single largest source of transportation funding. The STF is currently experiencing revenue surpluses, but those are projected to decrease in the coming years as debt payments increase until becoming a deficit in 2028, according to the OFA. At that time, however, the STF is projected to have nearly $650 million in cumulative balance.
Current DOT Commissioner Garrett Eucalitto is a board member of the Eastern Transportation Coalition (ETC), which has been pushing for establishing a vehicle mileage tax – or Mileage Based User Fee (MBUF), as they call it – since 2017. Eucalitto previously encouraged Connecticut drivers to voluntarily sign up for MBUF study in 2023.
Eucalitto offered testimony in support of the SB 1447, writing that Connecticut, like other states, faces aging infrastructure, increased driving, and decreasing gasoline tax revenue, and that a MBUF would create a “link between how much drivers pay and how much they drive.”
“The ability to explore and collaborate on potential alternatives to fuel taxes and innovative solutions for state fiscal and transportation leaders is essential to making informed, data-driven decisions – and a task performed by every state DOT in the country,” Eucalitto wrote. “However, CTDOT is the only state DOT in the country with restrictions on participating in federal MBUF research projects.”
“Any new funding alternative would require the approval of Connecticut General Assembly,” Eucalitto continued. “CTDOT’s role is to research, assess, and provide comprehensive, data- driven information to the legislature on any such funding alternative for their review and use.”
Ranking member on the Finance Committee Sen. Ryan Fazio, R-Greenwich, said he opposed both the sales tax on ridesharing services and repealing the MBUF language, calling it the “camel’s nose under the tent” of implementing a mileage tax.
“I’m also very concerned about the mileage-based user fee study being the camel’s nose under the tent about implementing a new mileage fee,” Fazio said.
Rep. Devin Carney, R-East Lyme, said if the mileage fee language was not in the legislation, he would have supported the bill, saying the idea of a MBUF is “deeply unpopular.”
“This is something that is deeply unpopular with folks around the state, regardless of party,” Carney said. “I think repealing it sends a very bad message to the people of this state that will open the door again to something that is extremely, extremely unpopular.”
The bill was passed previously by the Transportation Committee on a party-line vote, with Democrats supporting the bill and Republicans opposing. Transportation Committee co-chair Sen. Christine Cohen, D-Guilford, said that both Republican and Democrat led states are looking into VMT taxes, and twenty states have completed feasibility studies, and it wouldn’t be appropriate for Connecticut to use data from other states.
“While this doesn’t compel the DOT to study VMT or a highway use tax or road usage fees or mileage-based tax, it simply lifts the prohibition and un-handcuff our state,” Cohen said. “Times have changed significantly since this bill was put into place.”
A tax on retail delivery services like Amazon and GrubHub that was included in the original bill was removed before the bill was transferred to the Finance Committee.
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Just another money-grab. Just one more slap in the face for folks who drive to and from WORK every damn day. Here’s a thought…start obliterating the IMMENSE cost of social programs. Give me a red pencil, I’ll be happy to do it!!!