Topeka A proposal to create a tax buffer zone along Kansas' borders with other states drew praise from the owner of a gasoline station and strong objections from some state officials concerned about losing tax revenue.
The Legislature's Joint Tax Committee heard testimony Thursday on creating the buffer zone and tying the Kansas gas tax to gas taxes in Oklahoma, Missouri, Nebraska and Colorado. The Kansas gas tax rate is higher than all those states except Nebraska.
Under a bill in the last legislative session, which was eventually deferred to the interim committee, the buffer would extend 3,000 feet inside the Kansas border or within the city limits of a border city. The Kansas tax rate would be 1 cent per gallon higher than the neighboring state's rate.
The current Kansas tax on gasoline is 25 cents per gallon. Rates in neighboring states are: Nebraska, 28 cents; Colorado, 22 cents; Missouri, 17.6 cents; and Oklahoma, 17 cents. The U.S. average state tax on gasoline is 28.4 cents. The federal government adds an 18.4 cent tax.
Mark Hurlbutt told the committee that his retail gasoline business in the southeast Kansas border city of Coffeyville is hurt because motorists drive one-half mile into Oklahoma to avoid paying an extra 8 cents per gallon in Kansas gas tax.
"It is so frustrating to go by these Oklahoma stores in South Coffeyville and see the cars lined up on both sides of the pumps clear back out into the street," he said.
But the committee also heard from some state officials that the proposal is bad public policy and would cost the state millions of dollars in tax revenue.
Pat Hurley, who represents the influential highway construction lobbying organization Economic Lifelines, said any measure that cuts Kansas' motor fuel tax revenue and decreases funding available to the Kansas Department of Transportation for road projects "while well intentioned, would have a detrimental impact."
And in testimony prepared for the joint committee, Richard Cram, the Kansas Department of Transportation's director of policy and research, said financial and constitutional issues make the proposal unreasonable.
Cram said the buffer zone created by the proposal would contain about 17 percent of the state's population, much of that on the northeast Kansas-Missouri border. If adopted, a 17 percent reduction in fuel tax receipts would cost the state $13.4 million on gasoline sales and $5.4 million on diesel sales. Of that total, he said, $12.5 million would have go to the state's highway construction fund.
"While stations within the designated border area may see some increased fuel sales, Kansas stations outside the area will undoubtedly see declining sales and will be hurt by this proposal," Cram said.
Tom Palace, executive director of the Petroleum Markets and Convenience Store Association in Kansas, said the industry group was officially neutral on the tax buffer zone idea.
"We are taking a neutral position because there are members who want the reduction of the excise tax on the border, and there are members that feel we are creating a problem for other marketers who would find themselves competing with another Kansas retailer," he said.
One solution to the problem would be to simply cut gasoline taxes in Kansas, he said.
The committee is expected to forward recommendations to the 2007 Legislature, which convenes in January.