Senate panel approves 10-cent gas tax increase

DES MOINES - A bipartisan panel of state senators Wednesday set in motion legislation that would increase the state gas tax for the first time since 1989 - a 10-cent boost for each gallon of gasoline and diesel fuel sold in Iowa that would generate $215 million annually to address critical road and bridge improvements.

'I don't think there's a person in here who wants to raise anybody's taxes, but I don't see any other way we can do this,” said Sen. Tim Kapucian, R-Keystone, who joined Democratic Sens. Tod Bowman of Maquoketa and Bob Dvorsky of Coralville in approving an infrastructure funding package to be considered by the Senate Transportation Committee next week.

If the bill, introduced Tuesday in the House and Senate, is approved by the split-control Legislature and signed by Gov. Terry Branstad, the 10-cent per gallon hike in state fuel taxes would take effect on the first day of the month following the month of enactment. Currently, state per-gallon gas taxes are 19 cents for ethanol-blended gasoline, 21 cents for regular gasoline and 22 cents for diesel fuel.

Many of the speakers who addressed the subcommittee for farm, construction, business and labor groups were supportive of Senate Study Bill 1168, which also boosted the excise tax on aircraft fuel two cents, increased single-trip permit fees and proposed other changes. Some called it a jobs bill, others called it a fulfillment of government's basic role to maintain infrastructure vital to the state's economic growth.

'There are things we like and there are things we don't like so it must be a good bill,” said David Scott, a lobbyist for the Iowa Good Roads Association and the Iowa Motor Truck Association.

However, representatives of Iowa's truck stops and convenience stores warned the spike in Iowa's taxes would make their businesses uncompetitive with neighboring states and should be phased in to mitigate the sting of a 10-cent jump upon enactment.

'That's a big increase to swallow,” said Delia Meier of the Interstate 80 truck stop near Walcott. 'The market needs time to adjust.”

Dawn Carlson of the Petroleum Marketers and Convenience Stores of Iowa said a previous $1-a-pack increase in Iowa's cigarette tax caused a big dip in sales and she feared Iowa businesses would take another $5 million hit in decreased gasoline sales and increased costs associated with credit card transactions.

Kellie Paschke, also of the Petroleum Marketers and Convenience Stores of Iowa, said there are other revenue sources that fund transportation upgrades that could be tapped to lower the a gas tax increase 'that doesn't solve the problem. We're just kicking the can down the road,” while Rob Solt, president of Iowans for Tax Relief, said a regressive gas tax increase is 'not the way to go.”

However, Paul Trombino, director of the state Department of Transportation, said the legislative package would generate enough revenue to address the $215 million annual shortfall in addressing critical infrastructure needs. He also refuted claims that the proposed gas tax increase would make Iowa uncompetitive given that every bordering state but Missouri also is looking at ways to raise transportation revenue that include higher gas taxes.

'Every state is feeling the pressure for infrastructure funding,” he said. 'We'll be in the mix and we won't be the highest state.”

Representatives from county associations were supportive of most of the bill but balked at a provision that would limit local jurisdictions' ability to bond for infrastructure improvements. Currently, 30 counties have used $208 million in bonding authority and other jurisdictions have invested $166 million to maintain secondary roads.

Subcommittee chairman Tod Bowman, D-Maquoketa, said the bipartisan legislation was an effort to avoid shifting transportation costs away from the constitutionally protected road use tax fund by building a consensus that could win bipartisan passage in both the Iowa Senate and the Iowa House. A House subcommittee was slated to consider its transportation funding proposal on Thursday.

'This is a collaboration of a lot of people with a lot of different ideas, but we believe we can move this politically through the process,” said Bowman, who expected the Senate Transportation Committee he chairs to take up SSB-1168 next Tuesday.

During a meeting with the Westside Conservative Club in Urbandale Wednesday morning, Gov. Terry Branstad said Iowa needed to find a pay-as-you-go solution to the state's transportation needs that is paid for by system users that include out-of-state motorists.

'This is an issue that needs to be addressed,” he said. 'The timing is right to do it this year.”