AG says governor can't suspend gas sales tax
By The Associated Press
Thursday, June 14, 2007 10:52 PM EDT
INDIANAPOLIS - An Indiana governor does not have the power under a 1981 state law to suspend the sales tax on gasoline, according to a letter issued by the attorney general's office Thursday.
Republican Gov. Mitch Daniels, who has rejected several requests in the past two years to suspend the 6 percent sales tax on gas because of high prices, sought the legal advice last month.
Mark Massa, Daniels' general counsel, said then that his legal interpretation of the 1981 law that former Gov. Frank O'Bannon used to temporarily suspend the tax in 2000 would not allow Daniels to do the same.
But the Daniels administration was researching whether a threshold for declaring an ‘‘energy emergency'' under that 1981 law was being met, and it asked the attorney general's office for clarification on whether a governor could suspend the gas sales tax under that law.
The 1981 law allows a governor to declare an energy emergency. That's defined as an ‘‘existing or projected shortfall of at least 8 percent of motor fuel or other energy sources that threatens to seriously disrupt energy supplies or diminish energy supplies to the extent that life, health or property may be jeopardized.''
The law says if that threshold is met and an emergency declared, the governor can implement programs, controls, quotas or curtailments to affect the conservation or consumption of energy. O'Bannon relied on language that said a governor also could ‘‘suspend the provisions of any state statute regulating transportation.''
The interpretation from Republican Attorney General Steve Carter's office is not binding, unlike rulings from courts.
Massa had said in his legal judgment, the law's provision did not give a governor authority to waive a tax law.
Thursday's letter, signed by Chief Deputy Attorney General Gregory Zoeller, says that ‘‘it is clear that a suspension of a sales tax is not among those powers enumerated by this statute nor does it fall with the same category of those within the 1981 act that involve taking actions that should ultimately promote the restriction and conservation of energy.''
It further states that ‘‘without further legislative action granting the governor the authority to suspend the gas tax, we agree that this authority is not within the intent of the 1981 statute.''
Daniels said last month that he would ‘‘never say never'' to the possibility of suspending the tax, which would save motorists about 16 cents per gallon if the price was $3.
But he said it would not be an effective or responsible thing to do, in part because he was still trying to restore the fiscal strength of state government.
His comments, similar to ones he made in the past, followed suspension requests by Democratic House Speaker Patrick Bauer of South Bend and former U.S. Rep. Jill Long Thompson, who plans to announce a run for the Democratic nomination for governor next month.
The average price for a gallon of regular unleaded in Indiana hit a record high of nearly $3.49 on May 26, according to AAA's Daily Fuel Gauge Report. It was down to $3.07 on Thursday.
O'Bannon, a Democrat, suspended the tax in July 2000 when gasoline prices hit about $1.80 per gallon, which was considered expensive then. Republicans claimed it was an election-year ploy, but O'Bannon said it was needed to help working families and keep Indiana businesses competitive.
O'Bannon extended the initial 60-day suspension into September, then lifted it.
Bauer was swift to react to Thursday's letter.
‘‘One governor just does it, the other governor first says no and then he feels uncomfortable about his no because he knows that's not serving the people,'' Bauer said. ‘‘So he runs to his attorney general and it's not a surprise to anybody that he rubber stamps the governor's no.''
Bauer said that since the interpretation was not binding, Daniels should go ahead and suspend the tax.
But Daniels' spokeswoman Jane Jankowski noted that Daniels had cited other reasons for not suspending the tax, and now had legal interpretations from his own counsel and the attorney general's office saying that doing so would be unlawful.
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