Missouri fuel tax increase cleared to take effect this fall
August 4, 2021
A campaign to let Missouri voters make the final decision on a fuel tax increase approved by state legislators has been derailed.
Americans for Prosperity in Missouri this spring filed a petition for referendum with the Secretary of State’s Office before Gov. Mike Parson had the chance to sign into law a bill to raise the state’s fuel tax for the first time in one quarter century.
Jeremy Cady, Missouri director of the Americans for Prosperity, has confirmed to local media that his group could not muster the backing needed to collect the required 107,000 signatures within 90 days of the referendum language being approved by the secretary of state.
The group sought to meet the signature requirement to get the fuel tax challenge on the November 2022 ballot. In the meantime, Missouri would have been forced to delay implementation of the tax increase until the public vote.
Tax increase straight ahead
In early July, Parson put his signature on a bill, SB262, to raise the 17-cent fuel tax rate by 12.5 cents over five years. The increase marks the first time since 1994 that the fuel tax rate has changed.
Starting Oct. 1, 2021, the tax is slated to increase 2.5 cents each fiscal year until July 1, 2025. At that time, the tax rate will be increased by 73% to 29.5 cents.
The failed referendum effort focused on the legality of the legislative action. At issue was the Hancock Amendment to the Missouri Constitution.
The amendment mandates that any proposed tax rate increase above a certain amount must go before voters.
The fiscally conservative advocacy group has said that, by phasing in the tax increase, SB262 is intended to circumvent the requirement for a public vote.
Bill advocates countered that SB262 ensures the Hancock Amendment requirement is met.
Billions needed for transportation
State officials report the state has from $8 billion to $10 billion in unfunded needs for the transportation system.
The additional fuel tax revenue from SB262 is estimated to raise $455 million annually.
Americans for Prosperity says now is not the right time to make taxpayers pay more money. The group cites the economic difficulties resulting from the pandemic.
Included in the new law is an option for most Missouri residents to apply for an exemption and refund. The option will be available to residents fueling vehicles with a gross vehicle weight not exceeding 26,000 pounds.
Alternative fuel vehicles
Owners of alternative fuel vehicles also will contribute more. The fees for decals will be increased by 20% annually for five years.
Fees for electric and hybrid vehicles weighing in excess of 36,000 pounds will see a 10% annual increase over the same time period. LL