Iowa Senate committee advances gas tax increase proposal

Three Republicans joined eight Democrats on the Senate Transportation Committee Wednesday in approving a state gas tax increase.

Senate Study Bill 3151 would raise the state's excise tax on motor vehicle fuels by five cents a gallon on Jan. 1, 2013, and another five cents a gallon on Jan. 1, 2014, and deposit the proceeds in a TIME-21 fund that would distribute the proceeds with 60 percent going to state transportation needs, and 20 percent each to cities and counties for bridge, highway and other transportation repairs or upgrades. It also would extend tax breaks for biodiesel and ethanol and study changing transportation trends to equitably pay future highway costs.

“I think it's high time we do this,” said Sen. Tom Rielly, D-Oskaloosa, the committee chairman who managed the bill.

Rielly was joined by seven other Democrats and Republican Sens. Joni Ernst of Red Oak, Hubert Houser of Carson and Tim Kapucian of Keystone in passing the bill 11-2 to the Senate debate calendar. Opposing the bill were Sens. Jim Hahn, R-Muscatine, and Brad Zaun, R-Urbandale.

“It's a hard time to try to make people pay more for gas when I think there are other alternatives,” Hahn said after the vote. “I don't like spending money that we have other places to go for it, and look what the gas price has done just in the last week.”

Zaun said he asked attendees at a legislative forum for a show of hands of people who supported a gas tax increase. “I didn't have anyone that said they wanted me to support it other than cities and counties.”

Sen. Daryl Beall, D-Fort Dodge, said he supported increasing the user fee because it is a constitutionally protected funding source that will help improve safety by financing needed road and bridge repairs – improvement that also will create jobs and assist economic development. It also will ensure that out-of-state users contribute to upgrading Iowa's road network, he added.

Backers say Iowa faces a deficit of nearly $2 billion in transportation needs, with a projected yearly shortfall of $220 million to address the most critical deficiencies.

Currently, the state motor fuel excise tax is 21 cents for each gallon of unleaded gasoline sold in Iowa, 19 cents per gallon for ethanol-blended fuels and 22.5 cents a gallon for diesel. Iowa's gas tax was last raised in 1989 and currently ranks in the bottom third among states nationally, according to DOT data. Each penny of state gas tax generates about $22 million.

Last fall, members of the Governor's Transportation 2020 Citizen Advisory Commission recommended 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.

Gov. Terry Branstad, who signed the last gas tax increase into law in 1989, instructed DOT Director Paul Trombino III to eliminate duplications, find efficiencies and identify administrative savings that would be the equivalent of 2 cents of fuel tax, or about $50 million. Trombino recently issued a report that identified $33 million in ongoing yearly savings and $17 million in one-time savings that could be phased in over several years.

The governor has said he expects Iowa will have enough extra transportation money to meet critical needs in the coming construction season without having to consider a boost in the state gas tax, but he conceded that “down the road” he expects a phased increase in the “highway user fee” likely will have to be considered to address the state's projected $220 million yearly shortfall.