Wisconsin panel pursues fuel tax, truck fee increases

By Keith Goble, Land Line state legislative editor | Wednesday, November 28, 2012

A special roads panel in Wisconsin is working on possible funding methods to get needed transportation work done.

The state’s Transportation Finance and Policy Commission is working on a list of recommendations for Gov. Scott Walker to help address transportation funding for the next decade. The panel will submit its list to lawmakers by March 1, 2013.

It is estimated that the state has a $4 billion shortfall to address road and bridge needs over the next 10 years.

Notable state revenue plans discussed by 10 transportation officials and state lawmakers to help the state cover their needs include applying a sales tax on fuel, indexing the state’s fuel tax rate and increasing vehicle registration fees.

The state gets 85 percent of its transportation revenue from the fuel tax and vehicle registration fee.

Wisconsin now exempts fuel purchases from the state’s 5 percent sales tax. Lifting the exemption is estimated to raise about $530 million in the first year, according to panel figures.

Neighboring Illinois and Michigan also apply sales tax to fuel purchases at 6.25 percent and 6 percent, respectively.

Multiple funding methods call for raising the state’s 30.9-cent-per-gallon tax on gas and diesel.

One plan calls for a 1 cent increase while another plan would index the tax rate – allowing for annual adjustments. The Legislature eliminated annual indexing for fuel in 2006.

A third option would restore the annual adjustments to raise an estimated $21 million annually.

Another option would impose a “catch-up” component. It would allow the state to get their hands on lost revenue that would’ve been available had indexing been in place for the past six years.

The change would increase the tax rate by 5.7 cents per gallon to 36.6 cents and raise about $186 million annually.

One more option would combine the catch-up component and annual adjustment to raise about $210 million a year.

A separate funding method calls for increasing vehicle registration fees. A flat $10-per-vehicle fee is estimated to raise $45 million a year.

Another method would rely solely on large trucks to pay higher registration fees. A 1 percent increase in the gross weight rates schedule is expected to raise $913,000 annually.

The Owner-Operator Independent Drivers Association remains committed to the fuel tax as the primary way to fund highways.

Ryan Bowley, OOIDA’s director of legislative affairs, said the fuel tax remains the most efficient option to address funding needs.

“The fuel tax has been shown time and again to be the most efficient system to pay for highway maintenance and improvements based on its low cost of collection,” Bowley said.

Gov. Walker has downplayed the possibility of increasing fuel tax rates or charging toll taxes to pay for transportation work in the state.

The governor can move forward with the panel’s recommendations or offer his own funding solutions early next year when he unveils his transportation spending plan as part of the state budget.

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

Editor’s Note: Please share your thoughts with us about the story topic. Comments may be sent to state_legislative_editor@ooida.com.

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