Gas tax hike pumps half a billion into Iowa road projects

But the 2015 increase of 10 cents a gallon won't end funding problems

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DES MOINES — When they pull into the gas station and fill up their tanks, drivers pay 10 cents more per gallon to the state than they did only a few years ago.

That tax hike, approved by a bipartisan Legislature and signed into law by a Republican governor in 2015, has produced an extra $515 million for state and local governments to put toward fixing Iowa’s roads and bridges.

Because of that influx of cash, hundreds of road and bridge construction or repair projects in each of the state’s 99 counties have been added or started sooner than planned, according to data recently compiled by the state’s nonpartisan fiscal and legal analysis agency.

“The additional funds have allowed us to accomplish more construction — absolutely they have,” said Johnson County Engineer Greg Parker.

A contentious debate preceded the decision to raise the gas and diesel tax. The 10-cents-a-gallon increase was a compromise by the GOP-controlled House, the Democratic-controlled Senate and Republican Gov. Terry Branstad.

At the time, the Iowa Department of Transportation said state revenue for road and bridge construction and repair needs was falling short by $215 million each year. Projects were being delayed and national ratings showed Iowa bridges were in poor shape.

The increase produced an additional $220 million in the state budget years that ended June 30 of 2016 and 2017, according to the state data.

With the addition of a smaller portion of new revenue from the first few months after the increase was approved, a total of $515 million in extra revenue has been produced by the increase since its implementation.

Of that, $245 million has gone to the state road system, $167 million to county roads and $103 million to city streets.

Each of Iowa’s counties is adding projects with the new revenue, the state data show.

Nearly $100 million was used on 237 critical projects, at least one in every county, during the state budget year that ended June 30, according to state data.

State projects helped because of the extra money include replacing two bridges in Johnson County — one over a stream on County Road F52 and another where the same road crosses Old Man’s Creek. The projects are estimated to cost about $773,000 and $2.9 million, respectively. Both are expected to be completed in 2020.

In Linn County, the added tax revenue will help fund a nearly $12 million grading and paving project on Highway 13 from about a mile north of County Home Road to about 2 miles south of Central City. The roughly 5-mile project is estimated to be completed in 2019.

Cathy Cutler, a planner with the Iowa Department of Transportation’s District 6 office in Cedar Rapids, said these funds have allowed the state to expedite projects that otherwise might still be in the hopper. The Highway 13 project, for example, was first identified about a decade ago.

In addition to those state projects, the tax put about $1.5 million of additional construction funds into the Linn County budget, Assistant County Engineer Brad Ketels said in an email. For 2017, that would be the cost of either 7 miles of asphalt overlay, 4 miles of concrete overlay or 4 concrete slab bridges, he added.

Parker said the gas tax increase has provided between $1 and $1.1 million in extra funds annually for Johnson County.

Local projects there have included work on Sutliff Road, Wapsi Avenue and 180th Street.

Some county officials said they have been banking some of the early returns on the gas tax increase in order to build up their reserve accounts in anticipation of big, expensive projects on the horizon.

“We felt it was better to let the money come in and build up for a little while so we had money on hand to spend instead of banking on money that might not come in consistently, as fuel tax (revenue) does fluctuate,” said Scott County Engineer Jon Burgstrum.

Iowa recently has ranked at or near the worst in reports showing states with bridge and road repair needs.

The American Road and Transportation Builders Association, for example, published a study this year that said Iowa has the nation’s most structurally deficient bridges, meaning one or more elements of the bridge is considered to be in poor condition.

The 22nd Annual Highway Report, released September 2016 by the nonpartisan research group Reason Foundation, rates all states based on the performance of their state-owned highway systems. It found that from 2012 to 2013, Iowa dropped from 18 to 40 on the list, the biggest decline for any state that year, according to the report.

But the new gas tax revenue may be help.

More than 31 percent of bridges are in line to be repaired or replaced, according to a report published this year by InsuranceQuotes.

“That’s a pretty high percentage ... which I thought was interesting,” Laura Adams, a senior insurance analyst with InsuranceQuotes, told The Gazette in October. “It means the leadership in Iowa is likely very aware of what’s going on with the state of these bridges and there are proposals to replace them or repair them.”

At the state level, the new gas tax revenue has meant completing work on multiple four-lane corridors, including U.S. Highway 20 in western Iowa, U.S. Highway 30 in Tama and Benton counties and U.S. Highway 61 in southeast Iowa.

“The (state transportation) commission wasn’t able to fund any of those projects prior to the fuel tax increase,” said Stuart Anderson with the Iowa DOT.

It is unlikely, however, that Iowa’s gas tax increase will end long-term funding issues for state roads and bridges.

As vehicles continue to become more fuel efficient and electric-powered vehicles become more prevalent, gasoline sales will continue to decline, as will revenue from the state gas tax.

Anderson credited Iowa lawmakers for having the vision to include other revenue streams, including vehicle registration fees, in its road funding formula.

Still, he acknowledged big decisions likely will have to be made as gas tax revenue declines.

“I think that will be, in the coming years, an item of increased discussion about how to deal with that,” he said.

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