Iowa's gas tax increase working as planned, officials say

Millions poured into road repair, construction projects statewide

Stephen Mally/The Gazette

Jose Rodriguez of Cedar Rapids pumps gasoline at Kum & Go on 16th Ave. SW in Cedar Rapids on Feb. 9.
Stephen Mally/The Gazette Jose Rodriguez of Cedar Rapids pumps gasoline at Kum & Go on 16th Ave. SW in Cedar Rapids on Feb. 9.

DES MOINES — A year after Iowa’s gas tax increased 10 cents per gallon, the extra money paid at the pumps has put hundreds of millions of new dollars into state and local road construction budgets, enabling expedited repair and construction projects statewide.

And the gas tax boost apparently has not significantly altered Iowans’ driving habits. They are driving just as much as they were before, according to the state Department of Transportation, a fact no doubt aided in large part by otherwise plummeting fuel prices.

The state gas tax increase that went into effect March 1, 2015, generated $150 million in additional revenue through December, and it’s expected to generate $213 million in the first full fiscal year, a DOT official said last week.

That falls in line with projections made during last year’s contentious gas tax debate as state lawmakers and officials grappled with how to address a $215 million annual shortfall in the state’s road and bridge repair and construction budget.

That money has enabled the state and local governments to add new road repair and construction projects, and move others up in line. Of that roughly $213 million in new gas tax revenue, $101 million will go to state projects, $70 million to county projects and $42 million to city projects.

“It’s really being used as intended, to address those critical needs that exist at all levels of public road ownership,” said Stuart Anderson, the Iowa DOT’s director of planning and programming.

Lucas Beenken, a public policy specialist for the Iowa State Association of Counties, said some local governments are using the new gas tax revenue to advance their road construction schedule, while smaller municipalities are using it to save for upcoming projects.


“We’ve heard from (county) engineers and supervisors that receipts are up and they’ve been able to move projects either from the five-year plan to the three-year plan, or maybe they weren’t even in the five-year plan,” Beenken said. “In a few more years, looking at maybe five years, you’ll be able to see a tremendous difference. Once you take a step back and look over a number of years, I think you’ll really be able to see it.”

The debate over whether to raise Iowa’s gas tax already was a couple of years old when the 2015 legislative session arrived. Fresh off his fifth re-election, Gov. Terry Branstad decided the time was right to push legislation that would generate the millions of dollars officials said they needed to catch up on road and bridge repairs.

The gas tax dominated the early part of the 2015 legislative session and became that rare contentious issue that did not divide lawmakers along party lines — there were Republicans and Democrats on both sides of the debate.

With gas prices in Iowa at a seven-year low, Branstad and supporters of the gas tax increase sensed their moment and pushed the proposal through the Legislature at an unusually rapid rate. Both the House and Senate debated and passed the bill on Feb. 24, 2015, the governor signed it into law the next day, and implementation began March 1.

The gas tax increase did not correlate with an immediate reduction in Iowa drivers’ activity. Vehicle miles traveled in Iowa were up 2.6 percent in 2015 compared to 2014, according to the DOT.

That may be because although the state gas tax boost increased the cost of gas by 10 cents per gallon, gas prices overall have continued to fall steadily since the summer of 2011.

Iowa’s average gas price was $2.44 per gallon in March 2015, when the gas tax increase was implemented, according to AAA. In February 2015, the statewide average was $1.69.

“The stars definitely aligned on this deal,” said Rep. Josh Byrnes, R-Osage, who chairs the House Transportation Committee and was a proponent of the gas tax increase. “That fact we did get this done, and then (the price of crude oil) did what it did, people haven’t really noticed. Oil has been cheap .

“Because of that, we’re generating some really good revenue.”


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The gas tax increase was a tougher sell for Sen. Rick Bertand, R-Sioux City, but he ultimately supported the proposal with the expectation it would help the state complete the expansion of U.S. Route 20 to four lanes through northwest Iowa.

New work on that long-sought project started in 2015 and is scheduled for completion in 2018.

“Two things happened,” Bertrand said. “With falling gas prices, I think it kind of took (the gas tax increase) off the front of people’s minds. And the second thing is you’re actually seeing dirt moving in northwest Iowa.

“The time was right, and I think Iowans understand that it was time to invest in northwest Iowa .

“Any good legislator knows when it comes down to it you have to vote your district, and that’s what I did. I put a road over a resume.”

A Branstad spokesman said the governor thinks the increase has been good for major road construction projects in Iowa and will help the state’s economy.

“Gov. Branstad believes that the increase in motor fuel revenue has been essential to address critical road and bridge needs across Iowa at the city, county and state highway level,” Ben Hammes, the governor’s spokesman, said in an email. “As intended by the legislation, this additional revenue is being used directly on those roads and bridges most vital to support Iowa’s economy and is spurring economic development to advance the governor and lieutenant governor’s goals of creating high-quality jobs in our state.”

A handful of groups opposed the gas tax legislation, the most vocal being the conservative tax watchdog Iowans for Tax Relief.

A year later, Iowans for Tax Relief Political Director Ernie Adkison asserted Iowans were misled when they were told the state had pressing needs to repair crumbling county bridges and roads. Adkison cited a recent Radio Iowa interview in which DOT bridge maintenance and inspection engineer Scott Neubauer defends a report saying Iowa has more structurally deficient bridges than any other state by saying most of those bridges are lightly traveled.


“Instead the state is using all the new tax proceeds to continue highway expansion projects, focusing its time and money on expanding Highway 61 to four lanes in southeast Iowa or Highway 20 to four lanes in northwest Iowa,” Adkison said in an email.

“While having a state blanketed in four-lane highways is a nice luxury to have, should we have obtained it by passing a disingenuous tax increase on Iowans, or just changed the formula to allow the money to go where it is most needed?”

Although the gas tax increase is in the rearview mirror, some lingering effects remain. The House is considering legislation that would require county engineers to document to the state what road and bridge construction projects they are funding with gas tax revenue.

To that end, Beenken said his association is urging members to publicly promote projects so taxpayers know the gas tax is being put to good use.

“People see what’s going on,” Beenken said. “When it’s a bridge a mile down the road or whatever the case might be, they can see their local government in action.”

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