Gas tax reduced 1 cent as program designed to fix underground storage tanks ends

DES MOINES - A little more than a year ago, Iowa raised its state gas tax by 10 cents.

On Monday, the state lopped off a penny.

Gov. Terry Branstad signed a bill into law that repeals 1 cent of the state's gas tax by eliminating a program designed to fund the repair of leaky underground fuel storage tanks.

State officials said the program, which has been around since 1989, served its purpose and the funds no longer were needed.

'This is a historic day. We're getting rid of a tax,” Branstad said Monday at a bill-signing ceremony at the Iowa Capitol. 'There are a lot of cynical people that say when the Legislature approves a tax it never goes away, even after the use for it is gone. Well, we've just proved them wrong.”

Branstad noted it's not often a governor serves through both ends of a tax program. He signed the underground storage tank fund into law during his first stint as governor in the late 1980s, and signed its repeal on Monday.

The program will continue through the end of the year to fund any necessary tank repair projects that remain.

On Jan. 1, 2017, the state gas tax will be a penny less.

'This is overdue, a good step, and the right kind of public policy,” Branstad said.

The fund still contains about $36 million, roughly $26 million of which has been earmarked for tank repair projects, according to state Department of Natural Resources director Chuck Gipp. The leftover money, plus what is collected through the end of the year, will fund any needs that arise.

The program addressed only tanks built before 1990, and Gipp said the number of those tanks that still need attention has dwindled, eliminating the need for the tax program.

Roughly 10,000 sites have been addressed by the program, Gipp said.

Iowa's state fuel tax is 31 cents per gallon. It was raised 10 cents in March 2015 in order to generate more funding for road and bridge repair projects.