What lies ahead?

2013-06-16T21:00:00Z What lies ahead?Mike Wiser, Capital Bureau 515-244-2145 michael.wiser@lee.net Muscatine Journal

DES MOINES, Iowa — Road and bridge repair took a hit during the lean times of the recession in Iowa as state coffers ran low and dollars were diverted to more immediate needs.

Now surpluses are back — but not to the level the state needs fill what the Iowa Department of Transportation estimates is a $250 million annual backlog in critical infrastructure projects.

Iowa’s not alone. The National Conference of State Legislatures cited a National Surface Transportation Infrastructure Financing Commission estimate in a 2012 report that says states have shortchanged road construction and maintenance by as much as $185 billion a year.

Compounding the problem is a fuel tax that lawmakers — at least in Iowa — have been loath to raise and that  nationwide offers diminishing returns as vehicles become more fuel efficient and more alternative fuel vehicles take the road.

Gov. Terry Branstad now says a fuel tax increase is politically near impossible. He’s floated the idea that road repairs could be paid for through the sales tax or some other means.

The idea hasn’t won the governor any friends in the contracting industry or among the legislators who already went on record in support of a fuel tax increase. They like the fuel tax because it — unlike sales tax — is constitutionally required to go to the state’s road fund.

But critics say fuel taxes are a short-term fix for a long-term problem.

“It’s primarily because of the diminishing returns of the fuel tax,” said Ben Husch, committee director for the Energy, Transportation and Agriculture Committee at the National Conference of State Legislatures. “All of these states are trying to figure out what they’ll do as (fuel tax revenue) decreases.”

State options

That figuring has led to a rash of proposals, according to a National Council of State Legislatures report released last month.

Twenty-three states had significant legislation introduced that would raise various taxes and fees during their 2013 sessions. Four states — Maryland, Vermont, Virginia and Wyoming — passed legislation that would increase their total taxes on gasoline.

“In contrast,” the report points out, “no state legislatively raised its gas taxes in 2010, 2011 or 2012.”

Iowa Department of Transportation Director Paul Trombino III said his staff is following what Virginia did. There, a variety of methods will raise an estimated $5.9 billion for state transportation over the next five years.

The Virginia legislation, signed into law on April 3, replaced the state’s 17.5 cents-per-gallon fuel tax with a percentage-of-wholesale-price tax on gas and diesel. The bill also imposed a $64 annual registration fee on hybrid and alternative fuel vehicles; raised state sales tax and use tax by 0.3 percent and designates the increase for transportation; and increased the amount of current sales tax to go for roads.

Trombino said he’s not sold on any one idea. A hope, he said, is one day technology will allow states a better method of tracking miles on roads than tolls or taxes on what’s bought at the pump.

That’s precisely what they’re experimenting with in Oregon. The state just wrapped up a second pilot program in which vehicle miles are logged by devices and the state bills based on those miles.

“You can choose how it’s tracked, either with a device on your vehicle, using a GPS or through your phone,” said Patrick Cooney, spokesman for the Oregon Department of Transportation.

The state worked on the per-mile tax system for more than a decade, Cooney said. Now, the department is pushing a bill in the Oregon General Assembly that, if approved, would force drivers of vehicles that get more than 55 miles to the gallon to adopt a per-mile system or pay an extra flat road use fee. Cooney said the bill is still alive and may get through before adjournment, scheduled for June 30.

“What it comes down to is at some point — and I don’t know if it’s five years, 20 years or 40 years — but some time, we’re not going to be using fossil fuels to propel our vehicles, so we have to have a different way,” Cooney said.

In Iowa

That’s fine, said Republican Rep. Josh Byrnes of Osage. He’s the chairman of the House Transportation Committee who saw his fuel tax increase legislation fall apart at the end of the 2013 session. His bill would have increased the fuel tax by a dime over the next three years.

Byrnes said a fuel tax increase is a good immediate fix and, once it’s passed, lawmakers can figure out longer-term solutions.

“My big beef with it is why come up with a new plan when we have a solid mechanism right now?” he said. “The fuel tax is constitutionally protected. You switch it to sales a tax, and suddenly, you have these debates when leadership changes. There’s no consistency.”

Scott Newhard, chief lobbyist for the Associated General Contractors of Iowa, is likewise skeptical of a move away from the fuel tax.

He likes the reliability of the fuel tax. The constitutional protection means lawmakers don’t get into the sticky “kids versus concrete” arguments that would pop up if road money became part of the general fund pie.

But it is evident the state isn’t taking as much in as it once did in fuel taxes. According to figures from the Iowa Department of Revenue, the fuel tax took in $362.9 million from the start of the 2013 fiscal year through the end of April. Over the same period in fiscal year 2012, the take was $363.1 million, and in fiscal year 2011, the take was $370.7 million.

“If it’s a result of propane vehicles or electric cars, I’m sure the state can figure out appropriate mechanisms to tax alternative propulsion systems,” he said.

He said it’s likely the contractors will push ahead with another education campaign in hopes that lawmakers take a shine to a fuel tax increase in the next session, even though they haven’t raised it since 1989.

But, he said, there are no proposals on the table, yet.

“We’re always open to discussions,” Newhard said.

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