Iowa officials say fuel tax increase not off table
DES MOINES – With time running out in this legislative session, Gov. Terry Branstad still isn’t ruling out the possibility of increasing the state fuel tax, though lawmakers seem less optimistic.
“Nothing’s for sure until the Legislature goes home. I don’t think you should assume anything,” Branstad said this week when asked about the possibility of a fuel tax increase. “Once we get property tax relief concluded, that is something that could be considered.”
For years, legislators have debated raising Iowa’s fuel tax – currently 22 cents per gallon of gasoline, including fees – which has not gone up since 1989. A commission appointed by Branstad in 2011 recommended an increase of 8 to 10 cents a gallon to support the state network of bridges and roads, many of which are considered deteriorating or deficient.
When the federal fuel tax is included, Iowa drivers pay 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 drops.
Debate continues in the Legislature on proposals to cut commercial and industrial property taxes. It is not yet clear if the Republican-controlled House and the Democratic-majority Senate can find a resolution. May 3 marks the last day lawmaker will stop receiving daily expense payments, though the session could continue past then.
Rep. Joshua Byrnes, a Republican from Osage who chairs the House transportation committee, said the state needs the funding. He has drafted legislation that would gradually increase the tax by 10 cents, but it has not been introduced and whether there is support in the Legislature is unclear.
Byrnes said the focus has been on property tax reduction and he’s not “real optimistic.”
“I’ll be personally disappointed if we can’t bring something to the floor to be debated. I think just looking down the road, who’s going to want to talk about a fuel tax next year with legislators looking at re-election,” Byrnes said. “Then you’ve pushed the problem for two more years and the roads are not going to fix themselves.”
Organizations supporting the tax include the Iowa Farm Bureau Association, the Iowa Good Roads Association and the Associated General Contractors of Iowa,
“Clearly on all of our national benchmarks, the condition of Iowa’s roads continues to rank low,” said Scott Newhard, executive vice president of the Associated General Contractors of Iowa, a trade organization for the highway construction industry.
Groups opposing the increase include Iowans for Tax Relief.
“Iowans already pay enough toward taxes,” said Lindsay McQuarry, policy director for Iowans for Tax Relief. “They don’t need this tax as well. A lot of the issues on Iowan roads exist on rural roads that most Iowans won’t be driving. I just don’t think the average Iowan is encountering problems on the roadways.”
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 has said would help state infrastructure needs.
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.
Democratic Sen. Tod Bowman of Maquoketa, who chairs the Senate transportation committee, said he would like to see an increase, though he expresses skepticism on whether it would happen.
“Kicking the can down the road does not seem to be the best option,” Bowman said.