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Task force members think gas tax increase is the way to go for road funding

Task force members think gas tax increase is the way to go for road funding

Idaho Freedom Foundation staff
July 27, 2010

The governor's task force on highway funding met all day Tuesday in the Statehouse to find ways for the state to increase revenue for upgrading roads in Idaho.  Task force members had a myriad of options, including a tax on miles traveled by vehicles, a gas tax hike, increasing registration fees, and a boost in taxes on rental cars.  In the end, panel members decided that an increase in the gas tax might be the best way for the state to pay for upcoming road projects.  The panel was also presented information that big trucks, which are much heavier than cars and do more damage to state roads, might not be paying their fair share for highway maintenance.

If the Legislature chooses to raise gas taxes, it would have several options. It could decide to set a finite amount, say a one penny increase, which could raise as much as $8.2 million annually.  If lawmakers decided they would like to index the gas tax for inflation and the cost of living, it could mean a 9-cent increase for Idaho residents and could bring in approximately $73 million each year for state highway maintenance.   Lawmakers could also decide to boost the sales tax on wholesale fuel - the second choice of the task force - which could raise $22 million in revenue.

The committee's fourth choice to raise funds was a new tax on rental car fees, which would likely generate $1 million in new funds for roads.  The panel also considered increases in car and heavy truck registration fees, along with a permitting system for electric vehicles, which use little or no gas and therefore do not pay fuel taxes, and a proposal to tax commercial trucks according to their weight and distance traveled.

Task force members were also treated to a surprising piece of information about who is really paying to maintain Idaho's highways.  According to a study presented to the panel, car owners may be overpaying for road work by about 8 percent, while large trucks may be underpaying by 14 percent.  Patrick Balducci of Battelle Group told task force members that the disparity may be higher than the study suggests.  Under one scenario, if state and federal funding dollars, along with GARVEE bonds, are brought into the equation, it is estimated that heavy trucks are only paying about two-thirds of their cost to the state to maintain roads, while passenger car and pickup drivers are likely overpaying 47 and 18 percent, respectively.  Balducci told panel members that when a heavy truck is fully-loaded, one axle is equal to the weight of 10,000 cars passing on the same roadway the truck is traveling.  Heavier trucks do more damage to state roadways, which leads to shorter life spans for roads and increased maintenance costs.

The committee's recommendations may or may not be accepted by lawmakers in the Legislatures next session, which begins in January.  Two years ago, a proposal to hike the gas tax rate by one penny, a plan that had the backing of Gov. Butch Otter, failed to clear the Legislature.  Rep. Marv Hagedorn, R-Meridian, told IdahoReporter.com following a previous task force meeting that other proposals, such as the Vehicle Mileage Tax (VMT), meant to get highway funding dollars from drivers of high-efficiency cars who pay less in fuel taxes than do other drivers, might not receive a warm reception from members of the House or Senate.

If lawmakers choose to do nothing to increase taxes and thereby generate revenue, the state could see a $250 million shortfall between road needs and available dollars within 10 years, according to David Hartgen, a professor of transportation studies at the University of North Carolina-Charlotte who volunteered to study Idaho's transportation trends.   Hartgen, whose brother, Stephen, is a state representative from Twin Falls, said that the state could expect a yearly increase of 3 percent for transportation funding sources, but that number could fall well below his projection if the economy continues to be unstable.

The panel will meet again in August to narrow its option to make a recommendation to the full Legislature.  That recommendation could come as one idea - the gas tax hike - or it could be a multi-faceted approach that uses several of the task force's proposals to increase road revenue.

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