New data bolster supporters of raising Iowa's gas tax

The average cost of owning a car is lower in Iowa than in any other state, the Cedar Rapids Gazette's B.A. Morelli reported on August 16, citing an analysis by Bankrate.com. Car insurance costs an average of $630 per year in Iowa, the lowest in the 50 states. Vehicle repairs cost Iowa drivers an average of $315 per year, also the lowest number for any state. The average cost of gasoline for Iowa drivers worked out to $998 a year, taking into account not only the price of gas but also vehicle miles traveled and fuel efficiency rates. That's "middle of the pack," Morelli noted.

Iowa's gasoline tax has not been increased since 1989, reaching a historic low in real terms. Meanwhile, Iowa road and bridge conditions continue to deteriorate. Three years ago, our state ranked third-worst in the country for structurally deficient bridges. The latest data indicate we are second-worst in that category, with more than 20 percent of the state's bridges in need of repairs or replacement.

Democratic gubernatorial candidate Jack Hatch supports raising the gas tax, while Governor Terry Branstad has said he favors other ways to finance road and bridge work. The candidates clashed over that issue during last week's debate. Branstad has left himself some wiggle room by not pledging to veto a gas tax increase.

The current leaders of the Iowa House and Senate Transportation Committees strongly support raising the gas tax to pay for road work. Bills to increase the tax by a total of 10 cents per gallon over several years passed committees in both chambers in recent years, but advocates were unable to recruit enough bipartisan support to pass them in the full Iowa House or Senate in either of the past two legislative sessions. Iowa House Transportation Committee Chair Josh Byrnes has promised to keep working on this issue, and State Representative Brian Moore, the vice chair of that committee, said this spring that a gas tax hike is "in the works" for 2015. He has emphasized that weight limits on structurally deficient bridges are bad for businesses like the livestock transportation company he owns.

Republicans Byrnes and Moore both represent Iowa House districts that may be targeted this fall, as does Iowa Senate Transportation Committee Chair Tod Bowman, a Democrat. Prospects for raising the gas tax will depend in part on whether key advocates are re-elected in November. Regardless of which parties control the Iowa House and Senate after the midterm elections, a gas tax increase would have to be a bipartisan effort.

Democratic and Republican critics of increasing the gasoline tax have pointed out that consumption taxes tend to be regressive, hitting lower-income people harder. A gas tax hike would also disproportionately affect rural residents, who may need to travel further to work or shop. The Washington-based Institute on Taxation and Economic Policy has recommended reforms to address those concerns. I've posted the short summary after the jump; you can read more in depth on their ideas for "building a better gas tax" here. I would add that any increase to Iowa's gas tax should be accompanied by "fix-it first" language, so that new road construction doesn't swallow the most of the revenue that should be earmarked for repairs. Fixing roads and bridges gives taxpayers more bang for their buck and creates more jobs than building new roads or putting new lanes on existing roads, which (while sometimes needed) increase future maintenance costs.

From a May 2014 Washington-based Institute on Taxation and Economic Policy policy brief, "State Gasoline Taxes: Built to Fail, But Fixable":

Despite the dismal condition of so many state gas taxes, there are a few straightforward reforms that states can use to fix these broken, but vital, revenue sources:

• Rising fuel efficiency and construction costs have significantly reduced the purchasing power of state gas taxes. The first and most obvious step that states should take to off set these declines is to increase their gas tax rates.

• An increase in state gas taxes, however necessary, will be of little help in the long-term unless steps are taken to ensure that the tax can withstand future increases in fuel efficiency and construction costs. Restructuring state gas tax rates so that they grow over time can help alleviate this problem. Restructuring can come in a variety of forms, including linking state gas tax rates to construction cost inflation, the general inflation rate, or gas prices.

• Like most taxes on consumption, state gas taxes are inevitably regressive-impacting low-income families far more heavily than any other group. The impact of gas taxes on families struggling to make ends meet is often cited in opposition to state gas taxes, but lawmakers can provide meaningful relief to these families via targeted low-income tax credits, without having to starve states' transportation revenue streams. transportation revenue streams.

  • Strongly agree with "fix it first" language.

    We don't need more 4-lane highways in western Iowa. The legislators representing me both favor a gas tax increase, Rep. Muhlbauer (D) and Sen. Segebart (R). They both previously were Crawford Co. supervisors. As such, they are aware of the need to maintain rural roads.  

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