Iowa lawmakers again consider raising fuel tax
DES MOINES – While education spending and property tax cuts have been the focus so far in Iowa’s legislative session, some think lawmakers might also take action this year on the perennial proposal of raising the fuel tax.
Iowa’s fuel tax – now 22 cents per gallon for gasoline including all fees – hasn’t been raised since 1989. A commission appointed by Gov. Terry Branstad in 2011 recommended an increase of 8 to 10 cents to boost funding for the state’s substantial network of bridges and roads, many of which are considered deteriorating or deficient.
Proposals to raise the tax have come up repeatedly, and an effort to increase it by 10 cents failed in the Legislature last year. But Rep. Joshua Byrnes, R-Osage, who chairs the House transportation committee, said he thinks similar legislation would have a stronger chance this time around.
“(Chances are) better, because I think any time you are in an election year, something like this becomes extremely difficult,” said Byrnes, who plans to introduce legislation in the coming weeks that would gradually raise the tax by 10 cents over three years. “If we’re going to do it, it has to be this year.”
When you add in the federal fuel tax, the total drivers pay at Iowa pumps is about 40 cents a gallon for regular gas and slightly more for diesel. Branstad has said he will consider a fuel tax increase if state lawmakers approve property tax reductions and the overall tax burden for residents drops.
Scott Newhard, executive vice president for the Associated General Contractors of Iowa, which supports the increase, expressed some optimism over the potential for a gas tax increase this year.
“If you see some form of tax reductions, you very likely might see a gas tax bill,” Newhard said.
Iowa’s taxes and fees for gas are lower than in neighboring states Illinois, Minnesota, Nebraska, South Dakota and Wisconsin. Only Missouri has a lower rate.
A 10 cent increase would yield $215 million annually for road projects, which Department of Transportation Director Paul Trombino said would help state infrastructure needs.
“There are some very difficult issues in the county areas. Some of the small cities have significant challenges with roads and bridges,” Trombino said.
Revenue from the fuel tax – expected to be about $440 million in the current fiscal year – is divided between the state, counties and cities for upkeep on the state’s 114,000 miles of road and 25,000 bridges. Revenue from car registration fees also goes to road repairs.
According the commission report in 2011, the state ranks fifth nationally for the number of bridges and 13th for miles of roadways. The system, largely built in the 1940s through 1960s, is deteriorating due to age and heavy use.
Iowa ranks 43rd nationally for the condition of urban interstates and 38th for rural interstates, according to a 2010 report from the Reason Foundation, a libertarian public policy group.
Reactions are mixed to raising the tax. A recent poll by The Des Moines Register showed 63 percent of residents opposed to raising the gas tax, 35 percent in favor and 2 percent undecided. Groups lined up in support of the tax include the Iowa Farm Bureau Association and the Iowa Good Roads Association. Opposition includes Iowans for Tax Relief
“Iowans are already overtaxed. We already have a nearly $1 billion surplus, proving we’re overtaxed,” said Lindsay McQuarry, policy director for Iowans for Tax Relief. “The gas prices are already extremely high right now. Iowans are already paying a good portion of their budgets to the road use tax funds.”
But Barb Seil, who lives on a farm near Gowrie in central Iowa, said she would pay the increase if it would help fix the cracks and potholes in the regional and state highways she and her husband travel.
“I think my personal opinion is that I do believe that’s a good thing. The people who use the roads should help pay for them,” Seil said. “If somebody comes in from out of state, they’re going to help pay.”