Utah is proposing a gas tax restructure, and Idahoans and petroleum industry aren’t having it

SALT LAKE CITY (Utah News Dispatch) — A bill aimed to reassess Utah’s gas tax structure hasn’t yet been filed, but it is already fueling tensions. And controversy is not only coming from industry players, but also from the Idaho Legislature, which is proposing a resolution urging Utah leaders to oppose the proposal.

Utah House Speaker Mike Schultz, R-Hooper, has been hinting at a legislative solution to high gas prices in the state since last summer, when he revealed in a social media post that Rep. Cal Roberts, R-Draper, and Sen. Brady Brammer, R-Highland, were drafting a bill to remove a longstanding tax exemption for exported fuel. 

Utah’s tax rate for fuel sold at gas stations is currently $0.379 a gallon. But, gas exported out of state is exempt from the tax. The idea behind the bill, Roberts told Utah News Dispatch last October, was to start charging the gas tax to refineries to generate enough revenue to drop the gas tax that Utah consumers pay.

“The Idaho Legislature respectfully but firmly opposes any proposal by a neighboring state to impose an export tax on transportation fuels that would disproportionately burden Idahoans,” says a joint memorial draft sponsored by Idaho House Speaker Mike Moyle.

House majority leaders from both states have been in talks about Utah’s proposal, Schultz told reporters on Monday. And, a first version of the bill is set to become public later this week.

In the middle of the dispute between the two states, Schultz said the petroleum industry has become an obstacle. 

“They are trying to do everything they can to stop this bill from moving forward. One of their tactics that they’re using is not giving accurate information to Idaho, and I think that’s what’s caused such havoc,” Schultz said.

The petroleum industry has been telling Idaho lawmakers that the Utah gas tax restructure would raise prices at Idaho pumps by 0.25 cents per gallon, Schultz said, a characterization he described as “just flat out ridiculous.”

House Majority Leader Rep. Casey Snider, R-Paradise, added that industry officials “have shared things said in confidence and have tried to blow this up and use the legislatures in their respective states to achieve their objectives.”

Rikki Hrenko-Browning, president of Utah Petroleum Association, said in an email to Utah News Dispatch that with many news reports about the potential bill, Utah lawmakers’ intentions to change the gas tax structure isn’t necessarily a secret.

“It’s not surprising Idaho and other states would estimate the impacts to fuel prices on their own constituents and respond however they see fit,” she said.

The association has met with lawmakers working on the bill and expressed concerns based on a version legislators had shared with them, Hrenko-Browning said, including “the likely disruption of regional fuel markets, destabilization of the transportation fund and likely litigation against the state of Utah due to double taxation.”

“Because of these anticipated outcomes, we do not support this bill and remain dedicated to sharing our knowledge and expertise with all relevant stakeholders who will be impacted by this significant policy change,” the association said in a statement shared on its website in January. 

“We want to be clear, however, Utah Petroleum Association and its member companies are not actively fighting this bill or its supporters. In the end, refining companies don’t pay the gas tax, consumers do,” the statement says. 

The association also listed potential losses for Utah, including perhaps failing to retain out-of-state customers, who would find other lower cost sellers, and making other fuels like diesel and jet fuel more expensive.

But, Schultz said, lobbyists from the biggest, most profitable corporations in the world are only aiming to “create controversy,” and pitting two states against each other.

“It’s just wrong. It is sad to be honest,” he said.

The Idaho joint memorial is getting ready for debate in the Idaho Legislature, but from Utah, Schultz isn’t that concerned about it, he told reporters. In fact, he’s “quite honored” by it.

Schultz, however, remained critical of his Idaho counterpart’s past comments to FOX 13 and Idaho News 6, suggesting southeastern Idaho could stop sending water to the ailing Great Salt Lake to put pressure on Utah. 

“I think it’s ridiculous to say that ‘we’re going to stop water from going to the Great Salt Lake,’” Schultz said. “I just think that’s childish.”

However, in the end, he hopes both states can solve their problems once the bill is published and Idahoans realize it will have little impact on them.

“We want to work through those issues with Idaho. Idaho’s a great state. We have a lot of respect for Idaho. We’ve been great partners over the years. We want to continue that,” Schultz said.

RELATED | Idaho gas prices jump 7 cents

Utah News Dispatch is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Utah News Dispatch maintains editorial independence. Contact Editor McKenzie Romero for questions: info@utahnewsdispatch.com.