Iowa House committee moves to protect Road Use Tax Fund as gas tax decreases

DES MOINES - Iowa's motor fuel tax will drop by a penny a gallon July 1, and the House Transportation Committee took action Thursday to prevent that from becoming a $17 million hit on the state Road Use Tax Fund.

One cent of the 32-cent-a-gallon fuel tax is earmarked for cleaning up underground petroleum storage tank sites. That penny expires at the end of the current fiscal year, but petroleum marketers would like to see funds continue to flow into that cleanup fund.

However, House Study Bill 638 would cap the cleanup fund at its current $36 million. Without that action, $17 million a year would be transferred from the road fund to the Underground Storage Tank Fund, reducing funds available for transportation projects.

Department of Natural Resource Director Chuck Gipp said $26 million will be used to clean up known sites.

'We have enough to take care of all sites that have been identified,” Gipp told the committee.

The remaining $10 million will be used to create an Iowa Tanks Fund in the Iowa Finance Authority to fund future underground storage tank site cleanup operations.

However, Casey's General Stores and the Petroleum Marketers and Convenience Stores of Iowa opposed the bill out of concern that the $10 million may not be enough to address as many as 600 underground storage tank sites around the state.

'This is not the way to wind down the program,” said Kellie Paschke, a representative of the Petroleum Marketers and Convenience Stores of Iowa.

In addition to halting the flow of revenue into the fund, HSB 638 transfers authority for cleanups to a private company, she said. An insurance company's role is to mitigate risk, but not necessarily clean up underground tank sites, Paschke said.

The committee voted unanimously to send the bill to the full House.