No bond worry after Massachusetts gas tax relief: Credit agency

Suspending the gas tax should not negatively impact a state’s bond rating despite what legislatures may fear, according to the nation’s largest credit ratings agency.

“None of the states anticipates a drop in debt service coverage compared with originally budgeted projections,” S&P Global Ratings said in a release of those states that have suspended their tax.

The agency did caution that the situation is fluid and could change.

“We continue to monitor the situation and to the extent future state gas tax suspensions result in material declines in debt service coverage, we could potentially take a rating action,” the agency said.

Massachusetts House Speaker Ron Mariano has been a critic of the idea of suspending the gas tax, a move neighboring New York and Connecticut have taken as a spike in gas prices has driven record inflation.

On March 9, a proposal to amend the supplemental budget to suspend the 24-cent gas tax anytime the price at the pump goes above $4.00 died without a vote.

“I don’t think it’s a real serious attempt to provide relief,” Mariano said then, calling the plan by Rep. Peter Durant, R-Spencer, a political stunt.

The Massachusetts Fiscal Alliance welcomed the S&P’s determination Wednesday, saying that opponents of suspending the tax are raising objections that are not supported by facts.

“Speaker Ron Mariano and Senate President Karen Spilka seemed so concerned with the bond rating when considering a tax suspension, but they don’t have the same concern when raising taxes or borrowing more money for current spending,” a spokesperson for the group said in a release.

“It’s a good thing that their fears are not based on reality, so State House leaders can now freely consider suspending the state gas tax when debating the annual budget,” the spokesperson said.

Suspension of the gas tax has been a topic of discussion lately due to historic high prices at the pump.

Mark Finley, an energy expert and fellow with the Baker Institute for Public Policy, a non-partisan think tank based out of Rice University in Texas, told the Herald the issue with gas prices is being felt globally.

“Oil is global. If the price goes, it goes up everywhere in the world,” Finley said. Still, Finley said that politicians should take heed of the price they see at stations.

“Why does it matter? Well the politics of it are massively impactful. Last year’s increase alone cost a typical American family about a $1,000, that’s real money and so gas prices seem to have an outsized impact on consumer confidence,” Finley said.

On March 10, the national average cost-per-gallon of regular unleaded gasoline reached a record $4.33, not adjusted for inflation. According to AAA highest price adjusted for inflation was on July 17, 2008, when prices hit $4.11, which would be about $5.25 today.

from Boston Herald https://ift.tt/FbGSPEN