Raises the state’s wholesale gasoline tax rate calculation from a floor of 97 cents per gallon (where it has been since 1983) to $2.34 a gallon.  This keeps the wholesale gas tax at 11.7 cents.  The gas tax would have reduced 1.7 cents starting January 1, 2010, costing the W.Va. Division of Highways around $23 million next calendar year.  The gas tax was frozen in 2006 due to the effects of Hurricane Katrina and again in 2009 due to the spike in gas prices in 2008.  In 2010, the wholesale tax would have dropped, so establishing the floor at $2.34 stabilizes the highway fund. 

Caps any future increase or decrease in the wholesale gas tax to 10 percent of the wholesale gas price.  This provision will provide West Virginia consumers with a degree of protection against significant increases in future state fuel taxes during periods of rapidly rising fuel prices. The cap will also prevent a significant loss of revenue to the WVDOH if gas prices fall considerably in a year’s time. Assuming significant higher fuel prices, a cap would limit the maximum increase to 1.17 cents per gallon in 2011.  Motor fuel taxes would be allowed to grow at levels more closely tied to long-term general inflation rates. 

Transfers from the state General Fund to the Road Fund the remainder of the $40 million allotted to the WVDOH by the WV Legislature when highway revenues fall under estimates.  Gas tax revenues have been meeting estimates and the transfer probably would not have occurred.  There is $27.3 million remaining and the legislation will allow the transfer and dedicate it to secondary road paving or maintenance.

The final provision of the bill eliminates the expiration date of the “temporary” 5-cent a gallon gasoline tax component, which has been in place continuously since May 1, 1993.  The retail gasoline tax will now be a permanent 20.5 cents per gallon.