Iowa Senate panel advances 10-cent fuel tax increase

By Keith Goble, Land Line state legislative editor | Monday, February 13, 2012

A possible fuel tax increase in Iowa is one step closer to reality.

The Senate Transportation subcommittee got the ball rolling on consideration of a 10-cent-per-gallon increase on the state’s fuel tax rates starting next year. Senate Study Bill 3141 was forwarded to the full committee for further consideration.

Sponsored by Senate Transportation Chairman Tom Rielly, D-Oskaloosa, the bill calls for a 5-cent increase in 2013 and another nickel hike in 2014. The rate increases would apply to gas and diesel.

Spurred by the recommendation of a citizen task force, it is estimated that each penny added to the state’s 21-cent-per-gallon gas tax and 22.5-cent-per-gallon diesel tax would generate about $22 million in revenue.

The governor’s Citizen Advisory Commission voted in fall 2011 to endorse a proposal to increase the state’s fuel tax rates by 8 to 10 cents per gallon. The rates have not changed since 1989.

The 16-member panel was responsible for coming up with transportation funding options to help the state cope with an annual budget shortfall estimated at about $220 million.

Gov. Terry Branstad has since indicated he will not support a fuel tax increase this year. Instead, the governor said he believes cost savings elsewhere are the first priority.

Branstad recently unveiled plans to save $50 million to benefit road and bridge work in the state. He said cost savings and efficiencies at the Iowa Department of Transportation are needed before state lawmakers authorize any fuel tax increases.

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

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