Pfingsten: It’s hard to count on state for gas price relief

Illinois drivers aren’t only being hit by high gas prices brought on by increased demand and instability in Eastern Europe, we’re being double, triple and even quadruple taxed on every gallon of gasoline we pump.

In the suburbs, prices have been as high as $4.79 for regular unleaded over the past couple of weeks, and while the price of a barrel is starting to fall a little, it may take some time for people to get some relief.

Lawmakers on both sides of the aisle seem desperate to provide relief to consumers, but it is a complicated question.

I had a long discussion last week with Jim Watson, a former state representative from Jacksonville who is now the executive director of the American Petroleum Institute-Illinois.

He said, as you know, the market has caused the spike, driven by the Russian war in Ukraine and an increase in demand after consumers spent the better part of two years staying at home. Illinois does have one significant factor working against it: taxes.

“What’s happening here, relatively speaking, is not all that different than what’s going on in Missouri,” Watson said. “Illinois has higher gas prices than Missouri because we have higher motor fuel taxes, and we charge a sales tax on top of that.”

Every gallon sold in Illinois is charged 18.4 cents in a federal motor fuel tax and 39.2 cents in state motor fuel tax. Some places, such as Chicago, Cook, DuPage, Kane, Lake, McHenry and Will counties, also have a county motor fuel tax.

Additionally, the state charges a 6.25% sales tax on each gallon. That’s on the retail price, so you’re paying more when the price is $4.50 instead of $2.

The Motor Fuel Tax revenue goes into roads and infrastructure. Only 1% of the 6.25% sales tax goes to roads and the rest goes to the state’s general revenue fund. So, cutting either, partially or completely, risks blowing a gaping hole in an already tenuous budget situation in FY23.

“Both of them have a challenge for elected officials,” Watson said. “If you decide to cut, reduce, end the sales tax that we put on gasoline, that’s going to cut resources for and funding for local governments. Or you can reduce the Motor Fuel Tax, but that funding goes to expenditures on capital projects like redoing our highways and building our bridges.”

Either way, a cut to motor fuel taxes will have an impact on the state budget. So, how do lawmakers approach it?

Gov. JB Pritzker has proposed eliminating the automatic increase in the MFT due to inflation, but that would be only about 2 cents per gallon. The libertarian-leaning Illinois Policy Institute supports ending automatic increases completely.

State Rep. Tom Demmer, R-Dixon, the top budget negotiator for House Republicans, wants more action.

“In this year’s budget, we should prioritize real relief for Illinois families by limiting gasoline sales taxes and providing a tax credit for families who need it the most,” Demmer said.

And it’s not like Democrats are oblivious. State Rep. Mike Zalewski, D-Riverside, the chair of the powerful House Revenue & Finance Committee, says it’s going to be a balancing act to provide relief without blowing a hole in the budget.

“Tax relief during this time of economic uncertainty remains a high priority as we enter the final weeks of session,” he told me.

Nobody seems to have a great answer yet. Meanwhile consumers are hurting, voters are angry and the clock is ticking to the scheduled April 8 adjournment.

• Patrick Pfingsten is a former award-winning journalist and longtime Republican strategist who writes The Illinoize statewide political newsletter. You can read more at www.theillinoize.com or contact him at patrick@theillinoize.com.