Utah lawmakers pursue changes to state's fuel tax rate

By Keith Goble, Land Line state legislative editor | Wednesday, January 29, 2014

The Utah Legislature kicked off the 2014 regular session this week. One issue that is expected to be debated at the statehouse would boost the state’s fuel tax rate.

The 24.5-cent-per-gallon tax rate hasn’t changed since 1997. Advocates 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.

Rep. Jim Nielson, R-Bountiful, offered a couple of plans to address the issue. One bill would authorize a phased-in increase over the next four years.

HB240 would increase the fuel tax by 1.5 cents per gallon each year through July 2018. At that time, the tax would increase 7.5 cents to 32 cents per gallon.

His plan is estimated to raise $22 million in the first year.

The tax rate change wouldn’t resolve the state’s funding shortfall but it would help the Utah Department of Transportation address an estimated $11 billion revenue shortfall during the next 25 years.

Nielson, who announced in December that he would not run for re-election in 2014, offered another option, too. HB266 would implement annual increases in the fuel tax by tying the tax rate to inflation.

Both bills await assignment to committee in the House.

Some critics say the fuel tax rate is high enough, and they would prefer to see the state pursue new revenue to boost transit use.

On the Senate side, Sen. John Valentine, R-Orem, is expected to pursue another option to raise revenue for roads and bridges. His plan would restructure how the state collects tax on fuel purchases.

The tax rate could be trimmed to about 13 cents per gallon. A sales tax portion would then be implemented that could increase over time.

Lawmakers have said the outlook is not good for a fuel tax increase in an election year. Instead, they expect to continue discussion on the issue into next year. 

Copyright © OOIDA

Comments