Counties are collecting millions from taxes on gasoline
Erie, others benefit as price rises while volume declines
ALBANY — Motorists upset by high gasoline prices can add another target for their scorn: county governments across the state.
Because the counties’ tax generally is calculated on the price, not the volume, counties are collecting millions of additional dollars this year even though drivers are purchasing less fuel.
An analysis by The Buffalo News shows counties’ gasoline tax revenues have risen 12 percent in the first six months of the year compared with the same period last year.
For Erie County, which imposes the highest levy on gasoline in the state, these revenues increased 37 percent for the first six months, adding nearly $7 million to what motorists have paid so far.
Statewide, the increase for all counties totals $31 million for the first half of this year.
For the state, which has capped its tax on gasoline, these revenues have declined 11 percent over the same period.
Critics say the counties should not profit from higher gasoline prices.
“There’s no question, they’re getting a windfall,” said Edmund J. McMahon, director of the Empire Center for New York State Policy, a conservative think tank. “They shouldn’t be able to coast on a commodity rise.”
“I didn’t realize the windfall was that significant for the counties,” said Kendra Adams, president of the New York State Motor Truck Association, whose members have been complaining the loudest about high gasoline prices. “It’s a cause for concern. We can’t continue to place the burden on the backs of our consumers.”
Erie County officials, though, dismiss talk of a windfall.
“We’re a victim of it just like everybody else,” said Greg Gach, the county budget director, who noted that the county must pay more to fuel its vehicles. He also pointed out that oil-based products used in road repairs have risen sharply, increasing the cost of such work.
From January through June, Erie County collected $24.5 million in gasoline sales taxes, compared with $17.9 million in the same period last year.
If that trend continues — which is a conservative estimate based on the past decade of quarterly gasoline sales — the tax would bring the county $50 million — significantly more than the $39 million it raised last year.
The state Department of Taxation and Finance lists Erie County with the highest levy in the state: 4.75 percent. Most others charge 4 percent.
The result?
Start with gasoline priced at $4 a gallon, which AAA says is about the statewide average — but about a dime less than in the Buffalo area.
On a gallon of gasoline sold in Erie County, the state collects 8 cents in taxes, while the county gets 19 cents.
So the $80 for a 20-gallon fill-up of a minivan brings the state $1.60 and the county $3.80.
On a annual basis, filling up the minivan just once a week would involve paying almost $200 in county taxes — not to mention state and federal charges.
While Erie County’s gasoline tax revenues rose 37 percent in the first half of this year, the increase in the second quarter — April through June — was an even more astronomical 47 percent.
Gach, the county budget director, said he wasn’t sure of the numbers for the county’s gasoline tax revenues but noted that the county’s total sales tax revenues, which grew 7.5 percent last year, are up about 2.5 percent this year. The state-collected tax data, therefore, indicates that gasoline sales are buffering the decline in revenues from sales of other products.
Gach also pointed out that, by law, the county shares a portion of the tax revenues with its localities.
If the county followed the state’s approach, its gasoline tax revenues would drop, which, Gach said, could result in “drastic cuts” in services or getting more money by other means, such as raising property taxes.
Elsewhere in the state for the first six months, gasoline tax receipts were up 25 percent in Monroe County, 17 percent in Albany County, 26 percent in Saratoga County, 12 percent in Suffolk County, 6 percent in Nassau County and 8 percent in New York City.
The state, however, has collected $24 million less than in the same period last year.
When gasoline prices spiked in 2006, the state, which at that time also based its tax on price, came under criticism as its tax revenues went up.
In response, state lawmakers, facing re-election that year, capped the state sales tax at 8 cents per gallon. While lawmakers congratulated themselves, critics dismissed it as a political ploy that would not guarantee that the savings would be passed on to consumers at the pump.
More than a dozen counties followed the state’s lead that year but quickly discovered it reduced revenue. Today, therefore, only six counties scattered around the upstate area levy gasoline taxes by the state method.
In those counties, the results have been predictable: Chautauqua County’s gasoline tax revenue rose only 3 percent. An effort in June to remove the tax limit was narrowly defeated.
In Onondaga County, where the tax revenues dropped 4 percent in the first half of this year, officials threw up their hands and joined the parade of other counties that abandoned the cents-per-gallon approach that they, like the state, had instituted in 2006. Oswego County will follow suit Sept. 1.
Drivers, meanwhile, are stopping at the pump less frequently.
In May, the state imported 469 million gallons of gasoline, down from 493 million gallons in May 2007, according to the state Department of Taxation and Finance.
People also are not driving as much. Every month since March, the number of vehicles on the Thruway has dropped — by 5 percent in June and 3 percent in July from a year earlier, according to Thruway data.
County officials elsewhere bristle at any notion that the gasoline tax has been a boon for localities.
The additional revenues help offset higher expenses for many services and funding mandates from the state — and help keep property taxes from rising higher, said Mark La- Vigne, a spokesman for the New York State Association of Counties.
“I don’t see any of our counties operating as if they have a windfall out there,” he said, noting that budgets across the state are “fragile” as counties cope with a slumping economy and cost-shifts from the state.
“If it is the case,” he said of higher gasoline tax revenues, “it’s being used to offset increases in other costs.”
No firm explanations were available for the disparities in the tax revenue increase.
But some Western New York counties, tax officials said, might have benefited from Canadians crossing the border to buy gasoline.
