The Idaho House Transportation and Defense Committee gave first approval Monday to a massive tax hike that will generate millions for road and bridge maintenance.
Very few Idahoans, the bill’s backer said, will escape footing the bill if the measure gets to Gov. Butch Otter’s desk.
The bill’s sponsor, committee chair Joe Palmer, a Republican from Meridian, said the measure generates nearly $200 million in new funding to maintain Idaho’s critical infrastructure.
The measure would hike Idaho’s gas tax, unchanged since 1995, by 8 cents, up to 33 cents per gallon. The diesel tax would go up 12 cents. These two hikes would add $68 million in revenue for roads.
The increases aren’t static, though. The bill allows those amounts to increase 1 penny per year for each fuel type. Palmer said that helps the state keep up with inflation.
There is, though, a tool to stop that. “The Legislature can stop it,” Palmer said. “Or the governor can do it through executive order.”
But that’s not the only place lawmakers will tax fuels. Palmer also proposed a 3-cent hike to Idaho’s 1-cent transfer tax, levied on distributors before fuel gets to station tanks. That would generate $28 million.
Palmer is also asking for a 25 percent hike in commercial vehicle registration fees and a 50 percent hike for passenger car and truck registration. That could bring in $16 million.
The measure also address hybrid and electric cars, which pay little or nothing in gas taxes, but use Idaho’s roads. Palmer wants a $140 fee on electric cars, added on top of registration fees. Hybrid car owners would pay an extra $75 at registration.
The bill also exempts materials used for road construction, including asphalt and gravel, from the sales tax. That idea, which could cut construction costs by $20 million, is already floating around the Legislature in a separate bill written by Sen. Jim Rice, R-Caldwell.
Palmer also allotted an unspecified amount for the Idaho State Police to audit dyed-fuel users, typically farmers who need diesel for tractors and other non-road equipment. The state doesn’t tax dyed diesel because those machines don’t impact the roads, but users request tax rebates using the honor system. Palmer wants to ensure buyers are following the law.
Finally, Palmer wants $18 million from the state’s general fund for road projects, an unusual maneuver. The chairman admitted there might be some unease pitting road funding against dollars for schools, but said it’s time for that discussion.
“It’s not an easy thing to deal with,” he said. “We all know what that entails.”
The measure faces an uphill battle, starting from the top down. Otter has opposed allotting general fund dollars for road projects, but Palmer told IdahoReporter.com in the past that’s a necessary piece of any funding package.
Palmer’s committee, too, didn’t seemed thrilled by the whole package.
Rep. Patrick McDonald, R-Boise, said he’s uncomfortable pairing the obvious gas tax hike with the 3-cent transfer fee, which would result in a total 11-cent gas tax increase for Idaho consumers.
“I think it’s prudent to know that transfer fee is going to be passed onto the consumer,” McDonald said.
Rep. Phylis King, D-Boise, professed adoration for most of the bill, but wanted more out of Palmer’s measure.
“I think this is great,” she said. “I like some of it. I love some of it.”
King wants Palmer to include local option taxing authority to give cities the power to raise taxes on residents to pay for public transit projects.
“We need a way to get out of our cars and walk and ride our bikes a little bit,” King siad.
Palmer and other committee members emphasized several times throughout the hearing that this omnibus bill will likely not pass as written, but will likely see several alterations if it moves forward.
“We’re all at the table,” Palmer said. “I think everyone needs to be at the table. I don’t think anyone’s being left out here.”
The panel gave the measure unanimous approval.