Both tax cut proposals were firmly denounced in all major NYC dailies and the Albany Times Union as the worst kind of political grandstanding in which motorists stood nothing to gain.

Of the total spent by federal, state, and local agencies on highways, bridges and roads in New York State, motorists pay for approximately 65% through gas taxes, (city, state, and federal) registration fees, parking fees, tolls, etc. The other 35% is derived from revenue sources such as income taxes borne by all citizens regardless of how much they use roads. The estimated $375 to $500 million a year - 5%-7% of all highway spending - generated by the 4% state tax would likely be recouped from these latter funds.

Based on Mayor Giuliani's remarks this week, some fear that if the state cuts its gas tax, New York City will follow suit (as it did when the state dropped the sales tax on clothing) and do away with its own 4% gas tax and the .25% surcharge which provides 5-10 million/year to the MTA, jacking taxpayers' subsidy to drivers up to more than $600 million annually.

Nor is a tax cut likely to benefit people at the pump. As lower gas prices simply give suppliers a greater margin for raising prices, in a tight gas market only retailers and producers stand to gain. As shows the Daily News' incontrovertible math, if the average increase of 6-cents a week continues, a 4% Monday tax cut off today's gas prices would be invisible to drivers by Friday evening.

Meanwhile Congressional Republicans initially supportive of a similar 4.3-cent reduction in the federal gas taxes, have withdrawn their proposal because of its impact on transportation spending. The federal government charges an 18.4-cents per gallon tax that provides an anticipated $210 billion in dedicated transportation funds over the 1998-2003 period. Of this, 94% pays for maintaining and constructing roads and 6% for transit projects.

The two budget bills still face the conference committee process and can ultimately be vetoed by Governor Pataki. The Governor told reporters this week that any gas tax roll-back measure must be accompanied by equivalent spending cuts in the proposed budget programs. That House and Senate leadership might force such trade-off seems especially contradictory at time when both budget proposals contain large line items for transportation (see previous article).