Fleming calls on governor to suspend gas tax; Holcomb says power lies with legislatures

May 10—SOUTHERN INDIANA — On Tuesday, State Rep. Rita Fleming called on Gov. Eric Holcomb to suspend the state's gasoline tax until July, but the two disagree on the path for making such a move.

In a news release, Fleming, D-Jeffersonville, said Indiana's gas tax has hit the highest mark in state history at 74.5 cents per gallon. It comes as gas prices have skyrocketed across the nation. On Tuesday, the state average for a gallon of regular gasoline was $4.32, according to AAA. It was $2.98 in May 2021.

"Thanks to excess funds, we're in the unique financial position to provide economic relief at the pump for each Hoosier resident while maintaining funding for roads and construction projects," Fleming said. "The gas tax is the highest it has been in state history. Senior citizens on fixed incomes, hard-working families, truck drivers and folks looking to supplement or earn their income delivery-driving stand to benefit the most from swift action on this worsening issue."

Fleming said there would be precedent for such a move with former Gov. Frank O'Bannon having suspended the state sales tax on gas for two months in 2000.

She also referenced Georgia and Maryland, which have temporarily suspended state gas taxes.

But for an Indiana governor to suspend the gas tax through a declaration of an energy emergency, the state must have an existing or projected energy shortfall that would jeopardize life, health and property, Holcomb said in a statement to the News and Tribune.

"We have not met that threshold. INDOT and the Office of Energy Development have both confirmed that we do not have a shortage or a projected shortage. The states that have suspended the gas tax thus far have done so through the legislature," Holcomb said.

Maryland Gov. Larry Hogan signed off on a 30-day gas tax holiday that was approved by the state's legislature in March. The holiday wasn't extended after the 30-day period.

Georgia's gas tax suspension also originated in the state legislature. It started March 18 and is set to expire May 31.

According to AAA, the elevated prices are primarily due to the high cost of crude oil. A barrel of crude oil cost close to $110 this week.

"With the cost of oil accounting for more than half of the pump price, more expensive oil means more expensive gasoline," said AAA spokesperson Andrew Gross. "These prices are creeping closer to those record high levels of early March."

With the latest surge at the pump, there has yet to be a significant decline in consumer spending, said Uric Dufrene, Sanders Chair in Business at Indiana University Southeast.

"Consumers remain resilient, and have been shifting spending to more services, away from goods spending," Dufrene said.

Gas prices have reached similar levels to those of the Great Recession, but there are differences in the current economy and that of 2008, Dufrene said.

"Unlike 2008, we now have higher overall prices, not just at the pump. However, unlike 2008, households are also in much better shape financially," he said.

The Great Recession was marked by mortgage delinquencies and defaults that damaged the overall economy, he continued. By contrast, households are currently experiencing increased home equity.

But is the nation headed into another recession?

"Not just yet," Dufrene said. "Unemployment claims are too low, and we continue to add jobs at historical levels. We also have record job openings."

But he cautioned that while he doesn't foresee a recession in 2022, one could be in the cards next year.

"If we continue to see higher prices, both at the pump and overall, then this will have an impact on overall consumer behavior, and consumers will pull back," Dufrene said. "The consumer is almost 70% of the U.S. economy, and this could tip us in a recession. Stock market volatility does not help with consumer sentiment."