State Gas Taxes: No Deposit - No Return

Like any good investment, the state sales tax you pay on each gallon of fuel used by your boat can appreciate over time if your state places those taxes into a dedicated trust fund for boating or fishing. However, if you live in one of the 23 states that takes your money and gives nothing in return, it might be time to consider changing the state law that says that you aren't entitled to a return on your investment.

Why not? Even the federal government has established the Aquatic Resources (Wallop/Breaux) Trust Fund which collects 13 cents of the 18.6-cents-per-gallon federal tax on gasoline used by boaters. The trust fund returns some $200 million to the states and the U.S. Coast Guard each year to fund a wide variety of programs that benefit boaters and anglers. And while $200 million sounds great, boaters are still actually entitled to $100 million more that they're not getting at the federal level because of outdated estimates of how much gas boaters actually buy.

The "lost" $100 million ends up in the federal Highway Trust Fund and is used for the construction and repair of highways and bridges, as is the hundreds of millions of dollars collected by the aforementioned 23 states which tax gasoline used in motorboats but return nothing to boating.

Why should boating tax dollars pay for highway construction, road repairs and bridges? What would it take to ensure that the "user pays, user benefits" principle applies to all of the federal and state taxes paid on fuel used by motorboats? A tremendous amount of work and a lot of volunteer effort, most likely.

To help lay the groundwork for such a campaign, BoatUS recently conducted a state-by-state survey of all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands to see where the fuel taxes paid by boaters are going. More than half the states have taken the plunge and enacted laws that direct state marine gas taxes back to boating. Another handful of states allow boaters to apply individually for refunds of taxes they paid on marine fuel (see chart). The principle behind this is that if the fuel purchased is not being used on the highway, then there should be no tax as the only purpose of these excise taxes is to fund highway improvement programs.

However, 23 states still do not return gas taxes collected back into a boating fund, including some of the nation's biggest boating states: New York, Louisiana, Maine, Georgia, New Jersey, Virginia and Kentucky, to name a few (see chart of all the states). On the plus side, among the top 10 boating states, which account for half of all the nearly 13 million registered boats in the U.S., all except New York earmark state gas taxes for boating.

Boat owners in "trust fund" states are directly benefiting from this stable source of revenue as it pays for basic on-the-water law enforcement and search and rescue as well as marina construction, expansion and repairs, launching ramps, pump-out facilities, boating education classes, safety campaigns and Web sites.

State boating programs that have no dedicated trust fund usually suffer because they must compete for discretionary funding - often against higher priority agencies for their annual budgets in their state legislature. And the state's boating program is often looked at like something that benefits a "select" group, rather than the citizens at large - a difficult political position to be in.

A 10-year-old survey of boaters indicated that 1.08% of all of the motor fuel used in this country is attributable to boats with motors. However, a more recent survey conducted by Minnesota indicates that 1.5% of all fuel sold in that state is attributable to motorboats.

The state of Louisiana, which proclaims right on its license plates that it's a "Sportsman's Paradise," is a good example of a boating program that has no consistent source of funding and is something of an orphan in the state bureaucracy.

The state boating office is folded within the state Department of Wildlife and Fisheries, which, as its name implies, primarily serves hunters and anglers. Its budget is entirely dependent upon fees collected for hunting and fishing licenses, as well as boat registration fees, and a Conservation Fund derived from state oil and gas leases.

According to Louisiana boating law administrator, Lt. Col. Charles Clark, the oil and gas stocks are being depleted so those revenues are falling off significantly, reducing the Conservation Fund. "We ride a roller coaster," Clark said. "The whole fund is $60 million, so each year we compete for a share and it becomes an agenda-based issue."

It got so bad recently that his agency was directed by the legislature to double its fees on licenses for out-of-state hunters and anglers to make up the losses. Three days of fishing that cost $35 suddenly went to $110. Guess what? State officials did not like the impact on tourism, so the hunting and fishing fees were rolled back and the boating registration fees were doubled. Clark says this still barely holds their head above water.

"Our state has not grown up to the fact that boating is a huge part of Louisiana; out of a population of 4.1 million, 2.2 million people are boaters; it's very much tied to fishing and fishing is tremendous here," Clark said. He's also seen a steady increase in what he calls the "pure boater," not just the outdoorsmen and women who happen to boat because they fish. "These people want services now. They want buoys, channel markers and pump-outs; We're ten years behind the times," he said.

Currently all Louisiana state gasoline taxes go into a highway fund, protected by an amendment to the state Constitution. Boating gets none of it, not even the portion generated by sales of marine fuel. Passing a bill in the state house is one thing, but passage of a constitutional amendment would be next to impossible, says Clark. "It would be messy; It would look like we were robbing the pothole fund," he said.

However, Louisiana Gov. Mike Foster happens to be an avid boater and the plight of the state's boating office has gotten some favorable attention from the governor's office recently. At presstime, Clark was preparing for a meeting with the governor to outline his department's needs and make the case to get a share of the highway fund. Apparently, a "loophole" exists in which Louisiana waterways may be considered "highways." Clark's proposal is to capture a modest 1/8 of 1% of the state gas tax revenues for boating which would equal about $8 million a year.

Anticipating that Louisiana will soon pass a boater education bill that his office will have to administer, Clark said having the gas tax money available for boating education, could make or break their boating safety efforts. "Without new revenue you can't have new programs," he added. "I'm being asked to do more with less people; I had 273 officers in 1989; now I'm down to 234 and they must cover 300 square miles per officer."

A bit farther north, it's the boaters themselves who are making waves in an attempt to recoup their gas tax monies. BoatUS member Jerry Donofrio of Willingboro, NJ, has formed the Boater Voter Coalition in New Jersey and has collected 3,000 signatures requesting that the state refund to boaters the 10 1/2-cents-per-gallon marine fuel tax they pay. He hopes to get a sympathetic hearing in the state tax department, which already provides refunds to a list of off-highway users.

While a dedicated fund would be ideal, Donofrio said it would not work well right now in New Jersey, a "home rule" state, in which municipalities have great control over all programs and projects that affect them. The state's boating program is now fragmented among three different agencies and under the current system, it would be difficult to manage such a fund and for boaters to track how the money is spent, Donofrio said.

"My goal would be to eventually supplement the federal money to get free access and more docks along state waterways so that boaters could actually stop and visit," he said. "There is very little free access in New Jersey. We also need safe anchorages off the main rivers." The Boater Voter Coalition is also lobbying for the creation of a citizen's advisory commission for boating.

Donofrio, a 59-year-old powerboater on the Delaware River, donates his own time to travel around the state speaking to boating groups and at boat shows. A few years back the coalition was successful in defeating a proposed 50% increase in boat registration fees. He also led an effort with the Army Corps of Engineers to get storm debris cleared from the Delaware Estuary.

BoatUS is considering launching a state-by-state effort to win back state gasoline taxes for boating. Since a vocal boating public is key to getting any state issues addressed, members who are interested in getting involved can learn more by going to the "Government Affairs" site at www.BoatUS.com.

(c)©2006-2007, Boat Owners Association of The United States. All Rights Reserved .