South Dakota bill calls for fuel tax, fee increases

| 1/6/2010

Even with the 2010 elections looming, a group of South Dakota lawmakers are going forward with an effort to boost taxes and fees to raise $140 million to build and maintain state and local roads and bridges.

The first Senate bill to be prefiled in anticipation of the start of the regular session, which begins next week, is targeting more transportation funds by raising fuel taxes over two years, increasing vehicle registration fees and the excise tax on vehicles.

The initiative is led by nearly a dozen lawmakers from both parties, who were members of a special interim panel that studied highway money during the summer. The group decided to pursue this legislation – SB1 – during the 2010 session.

With the state in need of more than $240 million a year for road funding, the lawmakers spent the summer looking at multiple options to help bridge the gap.

Among the provisions endorsed by the interim panel, thus making it to the bill, is an increase in the state’s 22-cent-per-gallon fuel tax by 10 cents per gallon. Half of the increase would be imposed May 1, 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 provisions call for increasing license fees to raise $62 million for cities and counties, and increasing the excise tax on vehicles sales by 1 percent to raise $19 million.

While there is some bipartisan support for the tax and fee increases, passage is likely to be a difficult task. 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.

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 bill can be considered during the session that convenes Tuesday, Jan. 12.

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

– By Keith Goble, state legislative editor

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