D.C. Council Chairman Phil Mendelson will ask his colleagues Wednesday to repeal the city’s 23.5 cent-a-gallon gasoline tax and replace it with an 8.3 percent tax on wholesale gas and diesel purchases.
The proposed shift, inserted into Mayor Vincent C. Gray’s 2014 budget proposal, would shift the onus of paying fuel taxes from consumers to businesses. But fuel distributors would almost certainly pass those costs on to customers.
In an interview, Mendelson (D) said the District needs to revise its fuels tax to better insulate city highway funds from market volatility associated with more fuel-efficient vehicles and decreased demand when prices spike.
“When you go out and buy a Ford Focus, your gas mileage is better than it was with your old Range Rover, so you buy less gas,” Mendelson said. “This removes the volatility from our gas tax.”
In recent years, Mendelson noted, numerous states have shifted to a wholesale fuel tax. Mendelson said he crafted his proposal “to be revenue-neutral.”
“The motorist should see no change,” Mendelson said. “We are not raising the tax. We are changing the implementation of the tax.”
Council member Jack Evans (D-Ward 2) asked for more time to study the proposal.
“Its unclear what the ramifications of this are,” Evans said. “He should have a hearing on things like this.”
The new fuel tax would be part of a $12.1 billion 2014 budget that also includes tens of millions of dollars for affordable housing, pay raises for city employees, and a 25 percent hike in the D.C. Public Library operating budget.
After Gray (D) unveiled his spending plan in March, the 13-member council recommended dozens of changes, but is largely keeping the mayor’s priorities intact.
Gray has urged the council to avoid new taxes and fees after back-to-back city budget surpluses totaling more than $500 million. Instead, the council will vote on a budget that increases the fines for street-sweeping violations from $30 to $45.
The council is also considering raising Circulator bus fares from $1 to $1.5o for Smartcard users, and $2 for users without the card, to fund a major expansion of the system. Mendelson has also agreed with a request by Council member Mary M. Cheh (D-Ward 3) to hire 30 additional parking control officers to raise additional revenue from tickets.
Along with other savings, the budget shaped by Mendelson includes an additional $6 million to combat homelessness and an additional $3.5 million for the Office on Aging.
Mendelson rejected a proposal by Council member David A. Catania (I-At Large) to cut money from the budget for the deputy mayor for education. But he agreed with Catania to expand summer school and to limit budget cuts at schools with low enrollment.
Mendelson also overruled an effort by Council member Jim Graham (D-Ward 1) to exempt women with babies younger than 1 year old from the city’s new five-year limit on welfare benefits.
Instead, Mendelson wants to exempt from the five-year limit recipients who care for a disabled or elderly relative or are enrolled in a GED or job training program.
“The option I am putting forth is incentives for training and education,” Mendelson said.
Graham has argued it would be cruel to cut benefits for women with babies.
“The most compelling, the most vulnerable are babies under 12 months,” Graham said. “Let’s not focus on the mothers; let’s focus on the babies.”