On Tuesday (Nov. 28), lawmakers on the Legislative Regulation Review Committee (LRRC) will decide the fate of the sale of new gas cars in the state. However, a report unveiled Monday (Nov. 20), by the nonpartisan Office of Fiscal Analysis (OFA) reveals that the Department of Energy and Environmental Protection (DEEP) has significantly underestimated the revenue loss to the Special Transportation Fund (STF) by tens of millions of dollars.
Following DEEPS’s methodology, OFA anticipates a loss to the STF in FY27 ranging between $15-$20 million, while DEEP reports a $5.3 million loss. Moving into FY28, the projected loss stands between $30-$40 million according to OFA, whereas DEEP calculates a loss of $9.7 million.
The issue at hand lies in DEEPS’s fiscal note, which overlooks the revenue impact on the Petroleum Gross Earning Tax (PGET), resulting in a significant understatement of the revenue loss from fuel tax collections by nearly half. Presently, collections from PGET slightly surpass those from the gasoline excise tax.
OFA’s report highlights that DEEP also inaccurately calculated the revenue loss stemming from the gasoline excise tax. DEEP failed to consider that California directs only 58% of the gasoline excise tax revenue to the state. By adopting California’s calculation method, DEEP significantly underestimated the adverse impact — by nearly half — on the STF, as 100% of the revenue goes to the state.
DEEP additionally noted a rise in revenue from Connecticut vehicle registration fees. However, this assumption is based on California’s analysis as well, which includes a surcharge on electric vehicle (EV) registrations — a fee that does not exist in Connecticut. Contrarily, OFA asserts a small revenue loss is anticipated since the Clean Air Act and the emissions exemption fees are not applicable to EVs.
The agency also submitted a small business impact statement, asserting that the regulation will not impact small businesses in Connecticut. In this report, unlike the fiscal analysis, DEEP deviated from California’s calculation method given that the Golden State is anticipated to face a projected loss of 40,816 jobs primarily in retail, wholesale and government sectors. Notably, DEEP did not acknowledge the possibility of job losses in its assessment.
California also indicated in its report that the regulation could indirectly influence business creation or elimination. It noted that the declining demand for gasoline has the potential to result in business elimination within the industry and downstream sectors, such as gas stations and vehicle repair businesses. Negative impacts are also expected in car dealership service departments due to the reduced maintenance requirements for EVS compared to gas-powered vehicles.
However, DEEP not only miscalculated the financial ramifications of the potential gas-car ban regulation, but also public opinion. The agency submitted a letter to the LRRC stating that “comments submitted by the regulated community overwhelmingly favored adoption.” However, according to Yankee Institute analysis, 3,987 unique individuals commented and 75% (2,923) opposed the regulation, while 25% (975) supported adoption.
As Connecticut legislators gear up to discuss the proposed gas ban on Tuesday, the disclosure of DEEP’s miscalculations and oversights raises substantial questions. The disparities in revenue projections and the agency’s omission of crucial elements, including the impact on PGET and small businesses, should make lawmakers skeptical.
If errors occurred in these fundamental calculations, it begs the question of whether we can rely on the agency’s assurances regarding any potential positive environmental impact resulting from the ban.