Background:
The Governor’s budget proposed a tax on oil companies in a range of 3.2 to 4.4 cents per gallon of fuel.  It was not related to profit.  It was tied to revenues.  Proceeds were designated to go to the state’s transportation fund.  Concerns included that language in the provision intended to prevent oil companies from passing the tax to consumers would become the subject of litigation and be declared unconstitutional.  A second concern was that, even if the state prevailed about the constitutionality of the ‘anti-pass-through’ provision, it would be impossible to enforce.  Responding to these concerns, the Assembly changed the plan to allow the tax to be passed to consumers at the pump.

Outcome: 
The oil tax was dropped entirely in the Senate and Conference Committee.  To replace about $250 million lost revenue to the state’s transportation fund, legislators increased the capital gains tax by approximately 75 percent.  It remains to be seen whether legislators will carry through and direct revenue to transportation or to other spending.