UPDATE: Higher fuel taxes up for consideration in 11 states

By Keith Goble, Land Line state legislative editor | 4/28/2017

State officials around the country continue to make progress with efforts to implement higher fuel tax rates to boost funding for transportation work.

During the past four years, 19 states have acted to increase or revise their fuel tax collections. Elected officials in 11 more states stretching from Montana to Maine are pursuing plans to collect more tax for road and bridge construction and maintenance.

The Owner-Operator Independent Drivers Association believes when there is a valid need to generate additional revenue increasing fuel tax rates is the most equitable way to accomplish that goal. Mike Matousek, OOIDA director of state legislative affairs, points out that any increase should be applied equally to both gasoline and diesel. He adds that safeguards are also necessary to keep the additional revenue for roads and bridges.

Below is recent activity at statehouses followed by Land Line.

After having the plug pulled in the House on an effort to raise the state’s excise tax on gas and diesel by 9 cents, another option has emerged. The full Senate could soon vote on a bill to permit counties to ask voters to approve a local fuel tax up to 5 cents per gallon for five years. Revenue would be allotted for a predetermined list of road work.

Diesel fuel sold for interstate operations would be exempted.

The Legislature approved a bill to raise $5.5 billion annually for state and local roads, trade corridors, and public transit. The main component of the package will raise nearly $3.8 billion mostly via increases in the gas and diesel tax rates. The state’s current tax rates are about 38 cents per gallon, according to the American Petroleum Institute. The excise components making up the tax rates are 27.8 cents for gas and 16 cents for diesel.

SB1 increases the excise rate on gas by 12 cents over three years. Not to be outdone, the excise rate on diesel will be increased by 20 cents over the same time period. Revenue from the diesel tax will be designated for freight, trade corridors and goods movement. The 1.75 percent sales tax applied to diesel purchases will also be increased by 4 percent to 5.75 percent.

In an effort to appease truckers, another provision in the bill would restrict future regulations on emissions related to commercial vehicles. Sen. Jim Beall, D-San Jose, said the provision would “do no harm.” He said it is merely intended to help an industry that would be heavily taxed.
Additional information on the bill is available.

Gov. Eric Holcomb signed into law this week a bill touted to help the state address the $2 billion annually needed for roads over the next 20 years.
Among the options included to raise revenues is increasing the state’s 18-cent-per-gallon gas tax and the 16-cent diesel tax by 10 cents. In addition, the state’s 11-cent surcharge tax on diesel will nearly double to 21 cents.

The tax increases take effect on July 1. Tax rates will also be indexed on an annual basis through 2024. Annual adjustments will be capped at one penny. The diesel surtax will be collected at the pump instead of through quarterly tax filing reports. Once fully implemented, the tax increases are expected to raise $1.2 billion per year.

“This plan provides the tools necessary to maintain what we have, finish what we started, and invest in the future,” Holcomb said in prepared remarks.

OOIDA said multiple provisions in the bill, HB1002, are cause for concern for trucking businesses operating in the state. The provisions include opening the door to additional toll roads in the state, and a weigh-in motion pilot program to privatize certain aspects of truck enforcement.

Additional information on the bill is available.

At least five bills introduced at the statehouse would raise the state’s fuel tax by at least 7 cents.
Rep. Steve Carter, R-Baton Rouge, is behind one bill to increase the 20-cent tax rate by 17 cents. The increase is expected to raise $510 million annually for roads and bridges. HB632 would also index to inflation fuel rates to allow for increases in future years.

Gov. John Bel Edwards says he supports legislative efforts to help the state address a $13 billion backlog for transportation needs. A task force appointed by the governor has recommended an increase of 23 cents.

A bill in the Joint Committee on Transportation would raise the state’s 29.5-cent fuel rate by 7 cents to 36.5 cents. Other revenue enhancers in LD1149 include raising trailer or semitrailer registrations from $18 to $28. Exam fees for CDLs would also be raised $5.

The Legislature this week sent a bill to the governor’s desk to eventually raise $49 million annually for state and local roadways. Gov. Steve Bullock has called for more revenue to help get road work done.

HB473 would raise the state’s 27-cent gas tax and 27.75-cent diesel tax for the first time since 1993. Specifically, the gas rate would increase by 4.5 cents on July 1 and another 1.5 cents by 2023. The diesel rate would go up 1.5 cents July 1 and another one-half cent over six years.

Republican leaders at the statehouse are working on a plan to raise $200 million via an increase in fuel tax rates. Discussions are underway to increase the rates by about 6 cents per gallon. The state now collects 17 cents on gas and 14 cents on diesel.

GOP Gov. Mary Fallin has called for boosting fuel tax rates to get infrastructure work done.
During her State of the State address, Fallin proposed methods to help the state minimize the impact of a roughly $870 million budget hole. One option touted by the governor would be to raise tax rates to the regional state average.

House Democrats are instead calling for an increase to the oil and gas production tax.

South Carolina         
A bill nearing completion at the statehouse would increase the state’s fuel tax rate by 12 cents to help raise $800 million a year. House and Senate lawmakers have initially approved raising the state’s 16.75-cent tax by at least 10 cents.

Officials have said something needs to be done to help the state address the estimated $1 billion annually the state Department of Transportation says is necessary to cover infrastructure needs.
Gov. Henry McMaster has made it clear he is opposed to raising taxes. Instead, he has called for borrowing up to $1 billion for road repairs.

Both chambers have enough support for the bill to withstand a gubernatorial veto.

H3516 includes tax cuts and rebates and changes the structure of the state’s Department of Transportation commission.

Gov. Bill Haslam this week signed into law a bill to increase the state’s fuel rates and several fees to raise $350 million. The new law takes effect on July 1.

The state’s 21.4-cent gas rate and 18.4-cent diesel rate will be increased by 6 cents and 10 cents over three years, respectively. The taxes now provide only enough money to cover the cost of road maintenance, but not construction.

SB1221 also raises multiple vehicle fees including a $20 increase in the registration taxes for large trucks.

Two House bills would boost revenue for roads via collection of fuel tax on professional drivers. HB2513 would raise the state rate on diesel by 2 cents to 22 cents per gallon. HB3961 would apply the two-cent increase to gas and diesel.

Gov. Gary Herbert has signed into law a road funding bill to raise $14.6 million in additional revenue by 2020. Previously SB276, the new law imposes automatic increases in the state’s 29.4-cent-per-gallon fuel tax. A built-in ceiling caps fuel tax rates at about 40 cents.

Taxes are estimated to increase about 0.6 cents per gallon in 2019 and 1.2 cents in 2020 by reworking the complex formula for fuel taxes approved by state lawmakers in 2015. At that time, legislators imposed a 12 percent tax on fuel once the wholesale price reaches $2.45 per gallon. Rep. Mike Schultz, R-Hooper, said during House floor discussion that fuel prices have since dropped and the state remains in need of additional revenues.

SB276 triggers a 16 percent tax on fuel once the wholesale price reaches $1.78 per gallon.

Copyright © OOIDA