Vote On Special Fuel Tax Possible Amendment Of Constitution Needed For Tank Insurance

Idaho residents might be asked to amend the state constitution to allow the use of a special tax on motor fuels to subsidize insurance policies on petroleum storage tanks.

The House Transportation Committee on Tuesday approved introduction of a resolution that could put the amendment before voters in November 1998. It would change a section of the constitution that says taxes on motor fuels can be used only for highway and bridge maintenance and construction.

Both chambers of the Legislature need to give two-thirds approval to the amendment before it would go before voters.

Idaho set up a special fund in 1990 to underwrite liability insurance for petroleum storage tanks in response to a federal requirement that all the tanks be tested for leaks and cleaned up if necessary.

Small operators complained that it was difficult to get liability insurance on their tanks, and even when it was available the coverage was prohibitively expensive.

So the state created a fee of 1 cent per gallon on petroleum products - usually collected from a wholesaler - to subsidize the insurance. Tank owners now pay $25 a year for liability policies that would cost several times as more on the open market.

But Idaho Falls petroleum dealer V-1 Oil Co. challenged the fee, and the Idaho Supreme Court ruled in July 1995 that the fee actually was a tax that could be used only for highway purposes.

Dave Mabe, who represents petroleum marketers, said there is about $32 million in the fund underwriting the liability policies. As of the date of the Supreme Court ruling, collection of the fee or tax was stopped.