House and Senate lawmakers in the South Dakota Legislature are giving a lot of attention to efforts to raise $50 million annually for roads and bridges throughout the state.
Road construction and maintenance in the state is funded through multiple sources. License plate fees are primarily used for local and county roads. The state’s fuel tax is the primary source of funding for state highways.
Two bills winding their way through the statehouse would raise revenue for transportation work through multiple sources.
The Senate voted 26-8 to advance one bill that would include the first fuel tax increase since 1999. A 2-cent rate increase on gas and diesel purchases would be imposed. However, the rate increase would sunset in 2023.
Gov. Dennis Daugaard has called for a plan to generate $50 million more each year for road and bridge work. His plan included a fuel tax increase that would be ongoing.
On the House side, one bill still in committee also follows the governor’s road and bridge funding proposal. However, HB1131 was amended in committee to end the 2-cent-per-gallon fuel tax increase in 2030.
The governor’s office says an annual 2-cent rate increase would raise nearly $14 million per year.
Nathan Sanderson, the governor’s director of policy and operations, told a House committee a state tax increase is long overdue.
“We’ve been flat with our gas tax for 16 years. In that time, if our gas tax had followed construction inflation we should be at 45 cents today,” Sanderson testified. “This is the year to take the steps to meet the need. “
The updated bill also increases license plate fees in excess of an initial 10 percent increase. The new revenue would add nearly $10 million annually for local governments.
An additional registration fee would also be applied to electric and hybrid vehicles. Counties could also charge a wheel tax on vehicles with 12 wheels – up from four wheels.
The vehicle excise tax would also be raised from 3 to 4 percent. Additional revenue is expected to top $27 million per year.
State lawmakers are trying to address an estimated $280 million a year that is needed to maintain roads throughout the state.
Referring to roads as the backbone of the state, Senate Transportation Committee Chairman Mike Vehle, R-Mitchell, told the panel they need to act now to address current needs.
“We have a $14 billion asset. The roads are our largest single asset in the state. It’s our responsibility to keep it up.”
The Senate bill, SB1, and HB1131 await further consideration in the House State Affairs Committee.
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