State officials across country push for changes to fuel tax collection

By Keith Goble, Land Line state legislative editor | Wednesday, November 12, 2014

In the days following the fall elections governors fresh off victories and other leading lawmakers around the country are talking about possible revenue enhancers for transportation work.

Michigan Gov. Rick Snyder has addressed road funding concerns throughout his first term. The morning after securing a second term in office he renewed his push to get something done.

Specifically, he called on state lawmakers to spend the next few weeks working out a deal to pay for $1 billion in road improvements.

In the spring, the Michigan House approved a $450 million funding package that would repeal the state’s per-gallon tax rate on gas and diesel. In exchange, the excise taxes would be replaced with a 6 percent wholesale tax, which would allow tax collections to increase with inflation.

However, the bill didn’t get support in the Senate for a floor vote.

In neighboring Wisconsin, Gov. Scott Walker is likely to use his Election Day victory to bolster his pursuit of replacing the state’s fuel tax with a sales tax on gas, diesel and alternative vehicle fuel sources.

Walker has said the change would help provide the state with a stable revenue source. The tax would be collected based on the price of fuel, not just the number of gallons.

Across the border in Minnesota, Gov. Mark Dayton has said he will also call on state lawmakers to attach a sales tax to fuel purchases to raise revenue for road and bridge projects.

Speaking at a candidate forum prior to Election Day, Dayton said that he will make a specific proposal that would include a sales tax on fuel. He said it would raise about $6.5 billion over the next decade.

Similar methods of tax collection for transportation work have been approved in Virginia and Maryland.

In Iowa, Gov. Terry Branstad said that providing more money for roads is a top priority. He said options that deserve consideration include a fuel tax increase.

Branstad is calling on state lawmakers to start the conversation before the upcoming regular session begins.

New Jersey lawmakers are pushing ahead with plans to increase fuel tax rates.

Assembly Transportation Chairman John Wisniewski, D-Middlesex, has introduced a bill to help address a $620 million shortfall in the state’s Transportation Trust Fund for fiscal year 2016.

His bill would effectively increase the state’s 14.5-cent-per-gallon gas tax rate and 17.5-cent diesel tax by about 25 cents.

“Unless we act now, we risk not having the necessary funds to cover the most basic repairs to our roads and railways, which not only threatens public safety but our struggling economy,” Wisniewski said in a news release.

Gov. Chris Christie has said he’s open to all options. However, he generally has opposed boosting the tax rates.

In Texas, voters this month approved a state constitutional amendment to divert $1.7 billion annually in severance tax money for roads. The money now goes to the state’s Rainy Day Fund.

Despite the infusion into transportation, leading state lawmakers say a permanent solution for road and bridge funding will again be a major topic of discussion during the upcoming session. Among the funding methods expected to come up for consideration is a fuel tax increase.

A bipartisan group of South Carolina state lawmakers say they are ready to move forward with a plan to raise the state’s fuel tax rate to pay for road and bridge work. However, Gov. Nikki Haley has repeatedly brushed aside any talk of a tax increase. Instead, she said she will offer a plan to lawmakers in January to help the state address an annual transportation funding shortfall of $1.4 billion.

The Owner-Operator Independent Drivers Association supports investments into transportation infrastructure.

OOIDA Director of State Legislative Affairs Mike Matousek said he has communicated with elected officials in various states this year about the concerns of professional drivers for transportation funding.

Matousek said the message he has conveyed to lawmakers and governors is “if more revenue is needed, increasing the fuel tax is the most equitable and efficient option, so long as the generated revenue is used for its intended purpose.”

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