The proposed 10-cent increase in Iowa’s motor fuel tax may be on a fast track to passage, in spite of overwhelming public opposition.
Identical study bills – House Study Bill 129 and Senate Study Bill 1168 – were offered Tuesday in their respective chambers’ transportation committees by chairmen Rep. Josh Byrnes (R-Osage) and Sen. Tod Bowman (D-Maquoketa). The bills themselves are wide-ranging and include a number of provisions related to the funding of road and bridge construction projects.
Here’s a breakdown.
The bills would prohibit counties from using Road Use Tax Fund, Secondary Road Fund, Farm-to-Market Road Fund, County Bridge Construction Fund, and RISE Fund to pay off public indebtedness for projects where the term of indebtedness exceeds the life expectancy of the asset subject to the project. That includes refunding, reissuance, or other refinancing of such indebtedness, and the bill includes a retroactivity clause.
The bills would provide for a two-step phased increase in certain fees that often apply to heavy-load equipment; the first increase would occur Jan. 1, 2016, and the other on Jan. 1, 2017. The increases would be applied to single-trip permits, all-systems permits, and certain permits relating to length, height, and gross weight of vehicles of excessive size and weight.
Motor Fuel Taxes
The bills increase the excise tax on motor fuel and aircraft special fuel. The motor fuel tax would increase by 10 cents. The aircraft special fuel tax would increase by 2 cents.
The bills also include intention statements that 100 percent of the revenue produced as a result of the motor fuel tax increase and credited to the Secondary Road Fund or the Farm-to-Market Road Fund from the Road Use Tax Fund shall be used exclusively for critical road and bridge construction projects that “significantly extend the life of such assets.”
They also state the Iowa Department of Transportation and Iowa Transportation Commission shall use 100 percent of the revenue produced as a result of the motor fuel tax increase on critical road and bridge construction projects. Those projects must be identified on IDOT’s annual five-year transportation improvement program report.
The bills exempts current motor fuel sellers from a portion of current law that requires an additional tax on gas in storage on the day before a gas tax increase goes into effect.
The bills would establish a higher distribution percentage formula for B-11 or higher biodiesel blended fuel. Currently, if the distribution percentage is not greater than 50 percent, the tax rate for biodiesel blended fuel classified as B-11 or higher is 29.5 cents, 3 cents less than special fuel for diesel engines of motor vehicles other than biodiesel blended fuel classified as B-11 or higher.
As the distribution percentage increases, the difference in the tax rates on the two types of fuel decreases until the distribution percentage is greater than 95 percent, at which point the tax rate for both types of fuel is 32.5 cents. The bills would have both fuel distribution percentage formulas expire on June 30, 2025.
They also provide for legislative review of the percentage formulas at least every six years, based on recommendations from an interim committee. The departments of Revenue and Transportation are required to assist the interim committee with its findings.
Currently, Access Iowa highways receive priority funding out of TIME-21 and RISE funds, but are set to be repealed July 1 of this year. The bills would extend the sunset date by 10 years.
If approved and they become law, the provisions of the bills would take effect the first day of the month following the month they become law, except for the provisions relating to modified permit fees, which take effect Jan. 1, 2016. The provisions relating to county indebtedness and Access Iowa highways would immediately go into effect upon enactment.
As one might gather regarding a bill with such wide-reaching impact, a multitude of lobbyist groups have made declarations on the bills. They have been broken down below as those in support, those against, and those who are “undecided.”
The Professional Developers of Iowa, the Iowa Limestone Producers Association, the Iowa State Association of Counties, the Urban County Coalition, Manatts Inc., the Iowa Public Airports Association, the Iowa Bicycle Coalition, Plumbers and Steam Fitters Local 33, the Iowa Soybean Association, the Quad Cities Chamber of Commerce, the Cedar Rapids Metro Economic Alliance, the Iowa Chamber Alliance, the Monsanto Co., the City of Coralville, the City of West Des Moines, the Iowa League of Cities, the Iowa-Nebraska Farm Equipment Dealers Association, the Iowa Institute for Cooperatives, the Iowa State Building and Construction Trades Council, the Highway 61 Coalition, the Iowa Federation of Labor (AFL/CIO), the Iowa Good Roads Association, the Iowa Motor Truck Association, the Iowa Bankers Association, the Heavy Highway Contractors Association, the International Union of Operating Engineers, the Iowa Alliance of Surety Companies, Lafarge North American Inc., the Metropolitan Coalition, the Iowa Corn Growers Association, Associated General Contractors of Iowa, the Community Bankers of Iowa, and Iowa Farm Bureau Federation.
Iowans For Tax Relief, Truckstops of Iowa, and the Petroleum Marketers and Covenience Stores of Iowa.
The Iowa Association of County Conservation Boards, the Iowa Natural Heritage Foundation, the Travel Federation of Iowa, the Iowa State Education Association, Kum & Go Inc., AFSCME Iowa Council 61, the Iowa Biodiesel Board, the Iowa Cattlemen’s Association, the Greater Des Moines Partnership, the Iowa Automobile Dealers Association, the Iowa Grocery Industry Association, the Iowa Society of Certified Public Accountants, Casey’s General Stores Inc., the Agribusiness Association of Iowa, UPS Inc., the Iowa Renewable Fuels Association, the Iowa State Snowmobile Association, the Iowa Wholesale Beer Distributors Association, the Petroleum Marketers Management Insurance Co., the Iowa State Association of County Supervisors, the City of Cedar Rapids, the Linn County Board of Supervisors, the 3M Co., Annett Holdings Inc., CRST International Inc., 3M Government Affairs, Deere & Co., the Iowa Department of Transportation, the Polk County Board of Supervisors, and Ag Processing Inc.