Will 2013 be the year Iowa raises its gas tax?
Any bill would have a tough time gaining traction without support from Gov. Branstad
Tuesday, January 15, 2013 3:04 PM
AT A GLANCE: Iowa Gas tax
A citizen’s advisory council formed by Gov. Terry Branstad recommended an 8- to 10-cent per gallon gasoline tax increase in late 2011. A bipartisan proposal that did not advance in the Iowa Legislature last year called for an 8-cent increase to be phased in over two years.
Though sentiment on the issue is not split along party lines, Democrats in general seem to favor an increase. Senate Majority Leader Mike Gronstal said Democratic senators are interested in financing infrastructure but said he doubted the issue would get much traction without more emphatic support from Branstad.
House Republicans have set a goal of making sure taxes go down for all Iowans; the gas tax would have to fit into that.
Branstad in May said that 2013 was the year to raise the tax, but more recently said he would only favor it as part of overall tax reform. He has indicated that he won’t push for a levy increase, but wouldn’t necessarily veto one.
Who favors the legislation:
From a business standpoint, the Greater Des Moines Partnership and the Iowa Chamber Alliance.
Who opposes the legislation:
Iowans for Tax Relief opposed the gas tax hike during last year’s legislative session, saying the state should not raise the cost of gasoline in 2012 because of predicted price spikes. In fact, the price of gasoline spiked to nearly $4 a gallon twice last year before settling back down to around $3.
Odds of an increase?
Unless raising the gas tax is part of an overall tax reduction in the state, the odds area against passage this year. Branstad hasn’t thrown his support behind a tax hike, and there seems to be general fear to push for it in the Legislature unless lawmakers are sure it won’t be used against them in future re-election campaigns.
Raising the state’s gasoline tax rate would add operating costs for Ruan Transportation Management Systems Inc.
However, that’s a sacrifice Ruan President and CEO Steve Chapman is willing to make if the result is more funding to help the state keep up with road and bridge repairs.
Fuel is “a tremendous expense to this company, so obviously we look at that very closely,” Chapman said. “But I can tell you, we are equally concerned about the quality of the highway system in this country. ... So if I knew the funds were going to be used to fund infrastructure projects, I would be supportive.”
He is not alone. A number of business and industry groups have expressed support for raising the gas tax, including the Greater Des Moines Partnership and the Iowa Farm Bureau Federation.
Here’s why: For every cent per gallon added to the gas tax, the state will gain $23 million in revenue per year. The Iowa Department of Transportation (DOT) last year identified a critical funding shortfall of $215 million per year over the next 20 years. A report released in 2011 by a citizen advisory council put together by Gov. Terry Branstad recommended an 8- to 10-cent increase in the gas tax, which would bring in $184 million to $230 million a year in extra revenue. That would either narrow or close the DOT’s shortfall, assuming all funds raised go to infrastructure.
Gas tax advocates point out that the state hasn’t raised the gas tax since 1989, and say the longer Iowa goes without finding extra revenue, the worse things will get in the future.
But the politics get tricky.
A spokesperson for Branstad said the governor would “only look at increased revenue for our roads and bridges if it is contained within a broad, overall tax reform package that reduces taxes on all Iowans.” Branstad told the Iowa Taxpayers Association in December that he wouldn’t push for a gas tax increase, but that he wouldn’t necessarily veto such legislation.
Not good enough, says state Sen. Matt McCoy, a Des Moines Democrat who serves as the co-chair of the Legislature’s joint Transportation, Infrastructure and Capitals Appropriations Subcommittee. McCoy is a believer that the issue should stand on its own, and that Branstad needs to be a leader in educating the public on the benefits of raising the tax.
But politicians on both sides of the aisle acknowledge that pushing for a gas tax increase is dangerous politically, which is part of the reason a bill to raise the levy didn’t get brought up last year even though it was a bipartisan proposal.
Without Branstad’s advocacy and widespread bipartisan support, the issue will likely have a tough time getting off the ground on its own due to public sentiment against raising taxes. If the matter does come up as part of a comprehensive tax reform, though, it could stand more of a chance.
“I think that there’s general support for an increase in funding for horizontal infrastructure. I think the Legislature believes there needs to be a greater investment. The question is, how?” said Kraig Paulsen, speaker of the Iowa House of Representatives.
“I know this: It’s very important to House Republicans that when we are done at the end of session, that we are collecting less money from Iowans than when we showed up,” he added.
Whether or not boosting the gas tax is a stand-alone issue, the Greater Des Moines Partnership’s position is that this is the year for the Legislature to take up the issue.
“We’re not so much concerned with the process,” said Matt Hinch, senior vice president of government relations at the Partnership. “We just are supportive of increasing funding for our roads and bridges in Central Iowa.”?
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