This is an archived article that was published on sltrib.com in 2015, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

The tax Utahns pay for a gallon of gas will be headed up by a nickel and could climb higher in the future, after Gov. Gary Herbert signed into law Friday a nearly $76 million increase to the state fuel tax.

Herbert also signed a $76 million increase in property taxes, designed to help bring funding for rural schools up to par with those in more affluent, urban areas.

Some saw both tax hikes, coming in a year when the state experienced a huge surplus, as unnecessary. But Herbert said the tax increase will help ensure Utah's long-term transportation needs can be met.

"A strong transportation infrastructure has played a critical role in our economic growth and it will continue to do so thanks to this bill," Hebert said in a statement.

Effective July 1, the bill raises the existing 24.5-cent-per-gallon state gas tax by a nickel. The tax hadn't been raised in 18 years. Going forward, the tax rate will rise automatically with gas prices, thanks to a 12 percent sales tax that will take effect once the wholesale price of gas reaches $2.45. The wholesale price is about $1.73 currently.

The tax is capped at 40 cents per gallon. Counties also are authorized to seek voter approval of a quarter-cent increase to their local sales tax under the bill for local transportation and transit.

Lane Beattie, president of the Salt Lake Chamber, called the tax hike a "fiscally conservative approach" that will save Utah taxpayers money "through investments in maintenance and preservation needs, while also making investments for Utah's future growth."

And David Golden, chairman of the Utah Transportation Coalition, said HB362 "will ensure future economic prosperity for years to come."

But Billy Hesterman, vice president of the business-backed Utah Taxpayers Association, said the group was disappointed with the governor's decision to sign both tax bills.

"He could have protected Utahns from higher taxes but decided to increase the tax burden on the state's families and businesses," Hesterman said in a statement. "Taxpayers produced $700 million in surplus revenue this year for the state government. To think such tax increases right now are necessary begs the question if the governor and the Legislature really were as fiscally responsible in creating the state budget as they claimed to have been."

SB97 raises the property tax by about $46 on a $200,000 home and $184 on a business, with the $76 million collected going largely to rural schools, which lag behind the more affluent areas of the state because they lack the property tax base to fund education.

"Education is the key to our long-term economic strength," Herbert said. "For Utah to remain among the strongest economies in the nation we need all of our students to succeed, whether they live in a metro or rural area."

Herbert also signed SB169, which prohibits manufacturers of contact lenses from setting a minimum price for retailers to sell lenses. The bill was backed by 1-800 Contacts, which argued it was price-fixing that hurt consumers and hampered competition.

Twitter: @RobertGehrke

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