Branstad agrees to take gas tax increase 'off the table' for a year

DES MOINES – Gov. Terry Branstad said Tuesday he is willing to delay consideration of a state gas tax for at least a year in favor of finding efficiencies and savings within the state transportation system that could generate more money to upgrade roads, fix bridges and fund other critical needs.

“I think with the financial circumstances that many people are in today rather than being the first thing you do is raise the fuel tax, I think we've got to look at additional efficiencies,” Branstad said during a radio call-in show just a few hours after receiving a citizen advisory panel's recommendations that included raising the gas tax by 8 to 10 cents a gallon and increasing the state's new vehicle registration fee from 5 percent to 6 percent.

The governor said he has challenged Paul Trombino III, the director of the state Department of Transportation (DOT), to eliminate duplications, find efficiencies and identify administrative savings that would be the equivalent of 2 cents of fuel tax, or about $50 million. He also wants to end the diversion of a penny worth of gas tax revenue from the state road use tax fund to deal with leaky underground storage tanks – saying much of the tank problem has been addressed and he is concerned the money is becoming “a slush fund” that legislators are using for purposes not road related.

“I think we need to look at that first before turning to these other alternatives,” Branstad said before and during his WHO-AM radio call-in show. “These are some of the things that we can do up front before we ever look at raising the fuel tax.”

The Republican governor told Ryan Rhodes, an Iowa Tea Party leader who sent letters to all 150 state legislators urging them to pledge to oppose a gas tax increase proposal next session, that he would take the gas tax increase “off the table for one year” to explore administrative savings and efficiencies.

Earlier Tuesday, members of the Governor's Transportation 2020 Citizen Advisory Commission asked the DOT Commission and department officials to recommend new funding mechanisms for high-efficiency and hybrid vehicles and study whether all vehicles using public roadways pay their fair share. The panel also recommended an increase of between 8 and 10 cents per gallon to the state's motor fuel tax -- currently at 21 cents per gallon for regular gas and 19 cents per gallon for ethanol.

Branstad was on hand at the commission's meeting in Ames to praise the commission for its work and discuss the importance of adequate transportation funding to economic development. The DOT commission and department staff were asked to prepare legislative recommendations based on the citizen commission's findings.

“The ball's now in your court and you are going to have a tough job,” Branstad said.

The citizen commission held seven meetings around the state, which were attended by about 500 people. Of the 138 attendees who made comments, 11 percent said the state should create new funding mechanisms for hybrid, high-efficiency and alternative fuel vehicles, according to Allan Thoms of Cedar Rapids, co-chair of the commission.

“We spent a lot of time discussing that,” Thoms said. “We think there's equity in that. It's not a penalty.”

Thoms said the alternative fuel vehicles are comparable in weight to other vehicles and do the same amount of road damage. He pointed to growing interest among commercial vehicle fleet operators in natural gas powered vehicles as one example.

Ninety percent of those who commented supported more funding, and just one who addressed the issue of funding did not think more funding was needed, according to co-chair Nancy Richardson, formerly director of the Iowa Department of Transportation.

The report was issued amid likely reductions in federal highway dollars for state and local governments, stagnant increases in motor fuel consumption as high prices drive motorists to buy more efficient vehicles and drive less. The commission described that convergence of factors, along with an aging and large transportation system, as a “perfect storm.” Without raising revenue, it forecast that revenues will fall short of meeting needs by $1.6 billion per year, including an annual shortfall of $215 million in needs it describes as critical.

The commission also recommended that the DOT increase the frequency of its Road Use Tax Fund studies from every five years to every two years, and that the DOT meet annually with cities and counties to talk about ways to increase efficiency in transportation projects.

By June 30, 2012, the commission said the DOT should study whether all vehicles and equipment using public roadways pay equitable fees.

The DOT is expected to complete its study and submit it to the Iowa General Assembly by Dec. 31.

DOT officials project that each penny increase in the state fuel tax would bring in about $22 million in revenue, and the 1 percentage point increase in vehicle registration fees was expected to generate $50 million in additional revenue.

Iowa currently gets $1.2 billion in yearly transportation money through the state's road-use tax fund, which annually takes in $470 million from various vehicle-related fees and $430 million from fuel taxes currently set at 21 cents a gallon on sales of unleaded gasoline, 19 cents per gallon for ethanol-blended fuels and 22.5 cents a gallon for diesel, according to DOT data. Iowa's gas tax was last raised in 1989 and currently ranks in the bottom third among states nationally, DOT officials noted.

During the radio call-in show, Branstad ruled out placing tolls on Iowa roadways as an option, saying: “I think that's the most unpopular thing I've ever heard of. Iowans hate to have to pay a toll to have to drive on the roads in this state. I don't think we want toll roads in Iowa. I certainly would not want to advocate for that.”