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Lawmakers Pumped Up For Extending Gas Tax ‘Holiday’

ALBANY — With a state gasoline and diesel fuel tax “holiday” slated to expire Jan. 1, several lawmakers are proposing it be extended to help New Yorkers cope with elevated prices at the pump and higher costs for necessities such as energy, food and clothing.

The state suspension on gasoline taxes, in the seven months that the program will run before it sunsets, is estimated to cost the state some $600 million in revenue.

But the loss to the state has been good news for motorists operating gas-burning vehicles.

According to state officials, the suspension of the fuel taxes gave consumers a break of at least 16 cents per gallon. Counties were allowed to provide a holiday on the county share of the sales tax. Some did, but others did not.

Assembly Republican Leader Will Barclay, R-Pulaski, told CNHI he favors an extension of the tax holiday, arguing New Yorkers are being pinched financially by inflationary pressures across the economy.

“The latest inflation numbers confirm what everyone already knew: prices are still rising and the financial pain isn’t going away,” Barclay said.

When the inflation rate stood at 5.4% a year ago, Barclay recalled, Assembly GOP members called for a two-year sales tax cut on the purchases of items he called everyday necessities, including gasoline.

But he said Democrats did nothing with that proposal.

With inflation now at 8.2%, Barclay added, “the situation has only gotten worse, and it’s clear this will be a major priority heading into 2023.”

Several upstate Democrats did join the vanguard in advocating for a reduction in the state tax on gasoline, among them Assemblyman Billy Jones, D-Plattsburgh, and Angelo Santabarbara, R-Schenectady.

“I certainly think we need to continue it,” Jones said. “Anything we can do to help lower gas prices or fight the effects of inflation, we should be doing.”

Gov. Kathy Hochul, a Democrat, was initially hesitant to advocate for a curb on gasoline taxes but eventually backed the legislation for the temporary suspension, calling the relief “a critical lifeline for those who need it most.”

A Hochul spokesman said Friday that her fiscal plans will emerge in January when she presents her proposed state budget.

Assemblyman Chris Tague, R-Schoharie said consumers are struggling and need the relief to go beyond January. He said it was clear last spring the suspension should run longer than the one that was enacted, but Democrats in control of both houses of the Legislature favored the shorter time span.

“The Democrats just refuse to deal with the things that are really hurting New Yorkers,” he said, adding he hopes voters pay close attention to the legislative priorities put forward at the state Capitol,

Nationally, prices at the pump climbed to a record high over the summer. They have eased to an extent, and have fluctuated in recent weeks.

The latest American Automobile Association data shows the average price for a gallon of regular gasoline in New York is $3.66, a price that reflects the tax suspension. Nationally, the average price for the same gallon was put at $3.90.

Some of the money generated by gasoline taxes goes to fund road repairs.

Assemblyman Angelo Morinello, R-Niagara Falls, said he favors extending the tax holiday beyond the current sunset date.

“The argument that it will hurt the roads can be overcome by prudent budgeting and the elimination of wasteful spending,” Morinello said. “The budget is always filled with areas that need accountability and need to be trimmed.”

The opposition to gas tax relief has mainly come from advocates for public transportation and environmental causes, as well as those who favor more funding for the infrastructure projects the tax revenue could fund.

State Sen. Dan Stec, R-Queensbury, said with energy costs expected to significantly increase this winter, it will inflict economic pain on many New Yorkers if the tax expires as scheduled.

“They should have done it for the whole fiscal year,” Stec said. The state’s fiscal year runs from April 1 through March 31, when the next state budget is slated to be passed.

“People need to stand by for a nasty increase in all energy costs,” the senator said. “We all love the planet and want to do the right thing for the environment, but we also have some very real financial and infrastructure realities we can’t ignore.”

How county governments will respond to the expiration of the temporary suspension remains to be seen.

“Each county will evaluate this locally, weighing price, consumer behavior and industry trends,” said Stephen J. Acquario, executive director of the New York State Association of Counties. “This balancing of interests must remain one of local discretion.”

The state’s financial condition will likely play into the debate over gasoline taxes.

On Friday, state Comptroller Thomas DiNapoli, said tax collections have been running ahead of projections through September, with receipts exceeding projections by $2.4 billion.

“However, there are economic uncertainties and risks that may impact revenue in the months ahead,” he said, adding the state budget should seek to boost reserve funds to address future costs.

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