With about one week remaining in Utah’s regular session, one issue that is getting a lot of attention at the statehouse would tweak how the state collects fuel tax.
The 24.5-cent-per-gallon tax rate hasn’t changed since 1997. Supporters say that something needs to be done to help the state compensate for more fuel efficient vehicles and inflation that has hurt the state’s ability to stretch revenue.
“This is a first step,” Rep. Dan McCay, R-Riverton, told fellow members of the House Transportation Committee this week before the panel approved the bill by unanimous consent.
The legislative push follows a year’s worth of study by state lawmakers about how to make up for a projected $11.3 billion shortfall during the next 25 years for road, bridge and transit work.
A final House floor vote is expected Thursday on the bill that would restructure how the state collects tax on fuel purchases. If approved, SB60 would move to Gov. Gary Herbert’s office. Senate lawmakers already approved the bill on a 26-1 vote.
Sen. John Valentine, R-Orem, told the House panel that the bill would trim the tax rate to about 14 cents per gallon. A sales tax portion would then be implemented, which could increase over time.
“It’s a way to make our tax much more sensitive to price changes in fuel,” Valentine said.
He also said the change is important because higher costs for road construction in the past two decades have caused the state to fall further and further behind with how much revenue they collect from the fuel tax. In addition, he cited the popularity of alternative fuel vehicles, which don’t pay the same excise tax rate.
“I’m attempting to get a closer match between the tax we’re receiving and the increased costs on fuel,” Valentine testified.
The 24.5-cent tax would remain unchanged the first year. After that, the sales tax portion would be set at 3.69 percent.
A provision is included in the bill to prevent the tax from dipping below the current rate in the future.
The House voted on Thursday to authorize the Utah Department of Transportation to make sponsorship signs available at rest stops to help defray costs related to highway services.
“This is an opportunity for us to stretch finite dollars we have in transportation for maintenance,” said Rep. John Knotwell, R-Herriman. “We’re not raising any taxes (to do it).”
HB152 would also authorize the state DOT to sell banner ads for its online traffic application.
The bill now moves to the Senate for further consideration.
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