Utah lawmakers push forward changes to state's fuel tax collection

By Keith Goble, Land Line state legislative editor | 2/24/2014

In the month since the Utah Legislature kicked off the 2014 regular session, one issue getting a lot of attention at the statehouse would increase or change how the state collects fuel tax.

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.

The legislative push follows a year’s worth of study by state lawmakers about how to make up for a projected $11.3 billion shortfall during the next 25 years for road, bridge and transit work.

Senate President Wayne Niederhauser, R-Sandy, said state lawmakers need to act.

“We need to address how we are going to fund (transportation) in the future,” Niederhauser said during a discussion with other senators and local media. “This (bill) wouldn’t solve that problem but this would be a little step toward solving that problem.”

The Senate Revenue and Taxation Committee voted unanimously to advance one bill that would restructure how the state collects tax on fuel purchases.

Sponsored by Sen. John Valentine, R-Orem, SB60 would trim the tax rate to about 14 cents per gallon. A sales tax portion would then be implemented that could increase over time.

“It’s a way to make our tax much more sensitive to price changes in fuel,” Valentine said.

He also said the change is important because higher costs for road construction in the past two decades have caused the state to fall farther and farther behind with how much revenue they collect from the fuel tax.

“I’m attempting to get a closer match between the tax we’re receiving and the increased costs on fuel,” Valentine said during a media discussion with other senators.

The 24.5-cent tax would remain unchanged the first year. After that, the sales tax portion would be set at 3.69 percent.

Valentine included a provision to prevent the tax from dipping below the current rate in the future.

The bill’s next stop is the Senate floor.

Another approach to raising money for roads would include raising taxes on more fuel-efficient vehicles.

The Senate Transportation and Public Utilities and Technology Committee narrowly approved a bill that would increase the registration fee on some clean air vehicles.

SB139 would raise the fee for registration or renewal of hybrid vehicles to $138 – up from $43. Fees for electric vehicles would increase to $163 while fees for natural gas vehicles would be set at $133.

Supporters question whether affected vehicles are paying their fair share to use the state’s roads.

“As we go to more natural gas vehicles, more electric vehicles, how are we going to pay for the roads when there’s no gasoline tax coming in on those vehicles?” Niederhauser asked. “We need to have those discussions on how these vehicles that damage roads are going to help pay for the roads.”

Critics say the bill would discourage people from buying electric and hybrid vehicles.

It awaits further consideration on the Senate floor.

The bill is part of a two-bill package that would make available a tax credit for the purchase or lease of an electric vehicle. Specifically, HB74 would offer as much as a $2,500 tax credit.

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