PHOENIX — Gov. Doug Ducey is not interested in suspending the state’s 18-cent-a-gallon gasoline tax to help Arizonans weather higher prices even though it would save each the average Arizonan more than $100 a year.
The governor’s refusal to consider some partial relief comes as the average price for unleaded gasoline in Arizona continues to set new records. It now hovers above $4.60 a gallon.
“It’s like nothing we’ve seen in our lifetime,” Ducey said. And that, he said, is affecting the economy.
“We have rising wages,” the governor said. “But their wages are not outstripping inflation.”
Ducey, however, dismissed the immediate relief that could come from suspending the Arizona tax.
“We should be expanding energy production and not pursuing gimmicks,” he said. And the governor noted those dollars pay for road construction and repair projects in Arizona “that need resources.”
In explaining what he thinks is the cause, the governor acknowledged “there is a scare internationally, of course, with what’s happening in the war.” But the Republican governor said that’s not the real issue.
“The inflation component of this and the rising gas prices began with the change in policies in the Biden administration,” he said.
And that, he said, started with the decision of the president on his first day in office to cancel the permit for construction of the Keystone XL pipeline which would have transported crude oil from Canada to Nebraska. There it would have connected with other projects to reach Gulf Coast refineries.
He said Congress should override the president’s decision.
But Ducey brushed aside questions about whether he had any short-term solutions, given that it would have taken years to build Keystone. He said there are “all kinds of opportunity” to create additional supply.
“It wasn’t all that long ago that America was (energy) independent,” the governor said.
“We were selling energy to our friends,” he continued. “Now we’re buying it from our enemies.”
And that “failed energy policy by the Biden administration,” Ducey said, is what has led to inflation.
There is some relief that could occur immediately.
Governors of six states recently sent a letter to congressional leaders urging suspension of the federal 18 cent-a-gallon gasoline tax, calling a federal gas tax holiday “a tool in the toolbox to reduce costs for Americans.” And there have been calls from both Republican and Democratic legislators in some states to suspend their own local levies.
Ducey was not interested in either option.
At the federal level, he touted having Congress approve the Keystone pipeline.
“They ought to bring supply to the demand that’s out there,” the governor said. “That’s the way to bring prices down.”
Nor does he believe suspending Arizona’s levy makes sense “especially when we have infrastructure projects in the state that need resources.”
The state Department of Revenue figures the average motorist is spending $8.60 a month on state gasoline taxes.
On the other side of the equation, ADOT estimates suspending the state levy would mean a loss of about $540 million a year that now goes into the Highway User Revenue Fund.
Those dollars go not only into the agency’s own operating and capital expenditure program but also are shared with various county and local governments.
But ADOT spokesman Doug Nick said there would be more than the immediate loss of dollars for programs.
The agency borrows money now to begin construction on projects that otherwise would have to wait for years to be funded. And it pledges future gas tax revenues as repayment.
Nick said suspending that revenue stream could result in the agency’s bond ratings being lowered. And that, in turn, would increase borrowing costs as lenders would demand higher interest rates on their loans.
The state has been unable to benefit from the sharp spike in the price of gasoline. That’s because the levy is set at a flat 18 cents a gallon, a rate not altered since 1991.
There have been various efforts to alter the rate.
In 2020, the House Transportation Committee agreed to a series of 6-cent increases to get the levy up to 36 cents a gallon by 2023 proposed by then state Rep. Noel Campbell, R-Prescott. And after that it would have matched future tax rates to inflation.
But legislative leaders refused to bring the proposal to the full House. Ducey pronounced himself cool to the idea.
“You know my feelings about taxes,” the governor said.
Ducey expressed no concerns about the fact that gasoline prices go up with every shortage scare but do not seem to drop even when the price of crude oil drops. Nor does he believe there needs to be an investigation into whether there has been some price fixing.
“Let’s watch the market for awhile,” he said. “The market typically works.”
By 
