South Dakota transportation panel urges fuel tax, fee increases

| 10/20/2009

Even with the 2010 elections looming, a South Dakota legislative panel has recommended boosting taxes and fees to raise $100 million to build and maintain state and local roads and bridges.

The Joint Transportation Committee voted 11-6 to pursue legislation that would raise fuel taxes over two years, as well as increase vehicle registration fees and the excise tax on vehicles.

The committee’s recommendation will be presented to the full Legislature during the session that opens in January. A two-thirds majority of lawmakers would need to endorse the effort to approve it. Backing such hikes during an election year could be an intimidating task for lawmakers.

With the state in need of more than $240 million per year for road funding, the Joint Transportation Committee looked at multiple options to help bridge the gap.

The interim panel chose to pursue an increase in the state’s 22-cent-per-gallon fuel tax by 10 cents per gallon. Half of the increase would be imposed in 2010 and the other half in 2012.

Boosting the current rate to 32 cents per gallon would generate $57 million for the state’s transportation system.

Other options that will get consideration are increasing the annual vehicle registration fee to raise $31 million for counties, cities and townships and increasing the excise tax on vehicles sales by 1 percent by 2012 to raise $18 million.

Critics of the fuel-tax increase say the price at the pump already is too high. They would prefer lawmakers look elsewhere for money. Others are concerned that charging more to license vehicles is too big a blow to consumers.

Advocates for the tax increases say the state is in a no-win situation that lawmakers are trying to figure out how to get out of. Like it or not, something must be done now or roads are going to go from bad to worse. They say that waiting will only make the funding problem worse.

The 2010 session convenes January 12.

To view other legislative activities of interest for South Dakota in 2009, click here.

– By Keith Goble, state legislative editor

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