Branstad on Gas Tax Hike: Timing Is Right

Iowa Governor Terry Branstad was on Iowa Press this weekend.  Radio Iowa’s Kay Henderson asked, “Governor, this past week the state’s truck stops went to the Statehouse and said, the gas tax is a jobs issue for us and they pleaded with legislators that if they do raise the gas tax that it be phased in over two years. Do you think that’s a good option?”

“Well, we have been working with the bipartisan leadership in both the House and the Senate since the beginning of the session on this. I think they now have bill drafts that are before both committees. And obviously our goal is to get bipartisan support in both houses to get this accomplished,” Branstad responded. “It’s a compromise and it’s not what everybody would like and I’m sure that there are many groups would like to see it differently. But there is a clear need for additional money for infrastructure, for our roads and bridges, in the counties, cities, as well as the state. And I think the timing is right to get it done this year.”

Henderson asked a follow-up question, “What is your role going to be in getting votes in the House and Senate among your fellow Republicans?”

“I’ve had personal discussions with members of both houses on this and we have time set aside to visit with legislators. We have primarily been working with the leadership and the leadership has been working with the committee chairs. And the nice thing about it, it’s not a partisan issue and people have been going down this road together and I have said that I’m open to considering different options and we had the Department of Transportation put together a lot of different ideas. Some of those ideas are included in this bill. Some of them are not,” Branstad replied.

HSB 129 was written by State Representative Josh Byrnes (R-Osage) who chairs the House Transportation Committee.  His proposal would raise the excise tax on motor fuel by 10 cents and the excise tax on aviation fuel by two cents.  The bill is supported by groups like the Iowa Farm Bureau, Iowa League of Cities, Iowa Association of Business and Industry, and Iowa Association of Counties.

HJR 5 is an alternative introduced by State Representative Walt Rogers (R-Cedar Rapids) that would address revenue for transportation without raising the excise tax. If passed the bill would amend Iowa’s Constitution to state that a sales tax rate of 1/2 of 1% imposed by the state will be deposited into a fund for transportation infrastructure costs.

This proposed constitutional amendment is co-sponsored by State Representatives Steven Holt (R-Denison), John Landon (R-Ankeny), Dean Fisher (R-Garwin), Ralph Watts (R-Adel), Guy Vander Linden (R-Oskaloosa), Joel Fry (R-Osceola), Dawn Pettengill (R-Mount Auburn), John Wills (R-Spirit Lake), Greg Heartsill (R-Melcher-Dallas), Sandy Salmon (R-Denver), Jared Klein (R-Keota), Rob Bacon (R-Slater), Jake Highfill (R-Johnston), Mary Ann Hanusa (R-Council Bluffs), Ken Rizer (R-Cedar Rapids), Zach Nunn (R-Altoona), Chris Hagenow (R-Windsor Heights), Linda Miller (R-Bettendorf), Larry Sheets (R-Moulton), and Chip Baltimore (R-Boone).

Watts also introduced HF 224 which would remove the exemption on fuel used in unlicensed vehicles, stationary engines, engines used in agricultural production, and machinery and equipment used for non-highway purposes.

State Representative Ron Jorgensen (R-Sioux City) introduced HF 144 that would increase the excise fuel tax by 3 cents in 2016 and an additional 3 cents in 2017.  It would extend the distribution percentage formula for ethanol that was set to expire in 2015 two more years after which ethanol would be taxed at the same rate as other types of fuel at 26 cents per gallon of fuel.

His bill also specifies that the first $50 million in wagering tax receipts be deposited in the road use tax fund, as well as, 50% of revenue generated by traffic enforcement cameras.  The bill also specifies that the Iowa Department of Transportation places a priority on in-progress projects over the commencement of new projects.

Sheets introduced HF 83 which would replace the current excise tax of 20 cents per gallon to a percentage of the wholesale price of fuel that would be the equivalent of 20 cents per gallon rounded to the nearest 1/2 of 1%.  The rate for diesel fuel would be the equivalent of 22.5 cents per gallon rounded to the nearest 1/2 of 1%.

Three bills have been filed in the Iowa Senate.

SSB 1168 introduced by State Senator Tod Bowman (D-Makoqueta) who chairs the Senate Transportation Committee would increased the excise fuel tax for motor fuel by 10 cents per gallon in 2016 and raise the excise fuel tax for aviation fuel by 2 cents in 2016.  It also establishes a distribution percentage formula for biodiesel that would expire in 2025.  The bill also places limits on road use tax fund, secondary road fund and farm-to-market road fund monies used by cities and counties for the purpose of debt service.

SF 212 introduced by State Senator Brad Zaun (R-Urbandale) and co-sponsored by State Senators Randy Feenstra (R-Hull), Amy Sinclair (R-Allerton) and Jason Schultz (R-Schleswig) provides for an annual transfer of 4% of the general fund to the road use tax fund.

State Senator Bill Anderson (R-Pierson) introduced SF 42 that establishes a critical needs road fund in the state.  Monies appropriated to the Iowa Department of Transportation for that fund is to be used exclusively for state and local road repair the bill states.  It also directs the Iowa DOT to designate guidelines for determining which roads and bridges in critical need of repair and for prioritizing state and local road projects.

A recent Iowans for Tax Relief poll shows 77% of Iowans oppose a gas tax increase while a Loras College poll said 53.8% of Iowans support the increase.  A Des Moines Register Poll conducted in 2013 showed 63% of Iowans oppose a gas tax increase.