Iowa’s shortfall still $215 million a year for critical transportation needs

ANKENY – Past legislative action to raise vehicle registrations and other fees have reduced a shortfall for funding key transportation needs, but $215 million in increased revenue yearly is still required to finance critical improvements and repair highways and bridges, state officials said Thursday.

The new projections from the state Department of Transportation (DOT) were discussed at the kickoff meeting of the Governor's Transportation 2020 Citizen Advisory Commission – a 12-member panel with four ex-officio lawmakers that has been assigned to gather information about the state's future transportation needs and make recommendations on how best to fund them. The group plans to hold six public meetings around Iowa before reporting its findings later this year.

Gov. Terry Branstad called the panel a diverse group of “idea people” that he challenged to come up with “new and innovative” ways of financing infrastructure needs given the changing dynamic of vehicles powered by electricity or alternative fuel sources that are lighter and more efficient but traveling fewer travel miles on roadways heavily reliant on traditional fuel tax revenues.

“We need to make sure that all of those that use our transportation network pay a fair share towards it. It's not just looking at the traditional way of funding things with gas and diesel fuel tax. It's got to be different,” the governor said. “We need to try to fashion a fair and equitable way to fund our transportation system and I think most people think it should be funded by the users and it should be done on a pay-as-you-go basis.”

Commission co-chairwoman Nancy Richardson, who recently retired as DOT director, said the panel members will explore all options, but conceded “there's a good chance” that increasing the state's gas tax for the first time since 1989 “could be a piece of the puzzle” because each penny per gallon increase raises $23 million in revenue and costs Iowans about $4.75 in yearly fuel expenditures.

State lawmakers appeared headed toward considering a state gas tax increase of around 8 cents a gallon several years ago but former Gov. Chet Culver nixed the idea. Iowa's fuel tax on unleaded gasoline currently is 21 cents a gallon, 19 cents for ethanol-blended fuels and 22.5 cents for diesel.

Rep. David Tjepkes, R-Gowrie, an ex-officio member who is chairman of the House Transportation Committee, said he thinks the odds of legislative approval for a state gas tax increase in the 2012 session would depend on whether the governor and top lawmakers took a strong leadership position and if there were guarantees and assurances that any new transportation revenue would be spent wisely.

“I'm reasonably optimistic that if we come up with a checks and balance system, I think we can sell it,” he said.

Rep. Jim Lykam, D-Davenport, another ex-officio member, was less convinced, saying “it's going to be hard to get this done in a reapportionment election year.”

Other potential revenue sources that could be looked at included a per-mile tax, a sales tax, a severance tax on ethanol and various license and registration fees.

“I think it's premature to speculate on what they're going to come up with or how it's going to be done. I've encouraged them to think outside the box and look at other ways that we can do things,” Branstad told reporters. “People that benefit are the ones who should pay the cost. You need to determine - what is the best and most equitable way to have a reasonable user fee?”

A previous DOT study pegged the statewide transportation critical needs shortfall at $267 million per year but that number has since been lowered as new revenue from higher vehicle fees rose to about $97.5 million this year and is expected to peak at more than $150 million by 2015. Without that influx, the shortfall likely would have hit $400 million, DOT officials said.

Another concern looming on the horizon is the potential loss of more than $100 million in federal transportation money to Iowa next fiscal year, officials said.