Gas price drop may require adjustments to Iowa energy proposals

DES MOINES - Gov. Terry Branstad and top legislators say lower pump prices for gasoline likely will force some modification in proposals to generate more state revenue for critical infrastructure needs, but they remained optimistic talks are progressing that could lead to some compromise resolution this session.

'We're looking at all options and I guess I don't think anything is off the table so to speak,” Branstad said in an interview. 'I haven't given up on anything.”

The six-term GOP governor's comments Thursday came a day after members of the Senate Transportation Committee expressed concern that declining oil prices had dampened hopes for a 'hybrid” option that would lower the state's per-gallon tax to 16 cents for gasoline and 18 cents for diesel but add a new 5 percent sales tax on the retail price of fuel. Another leading option would boost the state's gas tax by 10 cents a gallon over a phased period.

Officials with the Iowa Department of Transportation had estimated that the 'hybrid” approach would generate up to $230 million annually, but the gradual decline of gas prices in Iowa below the $1.80 per gallon mark had lowered the expected revenue from the combination of taxes to about $103 million a year - well below the $215 million needed annually to address a projected shortfall needed to upgrade Iowa roads and bridges.

DOT Director Paul Trombino also told legislators Wednesday that a 10-cent gas tax increase was downgraded to generate an average of $173 million over 10 years due to a continued decreases in gas and diesel usage and vehicle miles traveled, along with the drop in prices at Iowa gas pumps. The previous expectation was raising the current gas tax by 10 cents would generate up to $215 million annually.

Branstad said the gas price decline has been good for consumers, but it may mean that elements of the hybrid option have to be adjusted either with a higher gas tax level or a higher excise tax percentage to make it work.

'It could be either or a combination thereof. There are a lot of ways you could adjust that,” he said.

House and Senate leaders from both parties emerged from a closed-door meeting with Branstad Thursday saying all options under consideration still remained in the mix following another round of 'candid and constructive” talks.

'We're still talking and we're going to talk again,” said House Speaker Kraig Paulsen, R-Hiawatha.

'I'd just say that I feel encouraged that we're making progress,” added Senate Majority Leader Mike Gronstal, D-Council Bluffs. 'People are coming up with a majority of all four caucuses. We're listening to each other about what's important to each of the caucuses.”

Gronstal agreed with Branstad's observation that adjustments in some of the numbers may be required due to the volatile nature of the petroleum market.

'That's just a matter of moving the number and creating a mechanism that adjusts it over time. I wouldn't say that's ruled in or ruled out. Does it generate the same amount as it did last year? No. So we got to take a look at that and fool around with the numbers to come up with something that works,” he said.

'So that's still possible. It's still on the table,” he added.

'Nothing's been made definitely in and nothing's been made definitely out,” Gronstal noted.

James Lynch contributed to this story

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