Missouri fuel tax increase faces referendum challenge

Missouri Gov. Mike Parson could soon approve the state’s first fuel tax increase in one quarter century. A taxpayers group, however, is looking to throw a wrench into implementation of the increase.

The General Assembly recently voted to send a bill to the governor’s desk to raise the 17-cent fuel tax rate by 12.5 cents over five years.

Starting Oct. 1, 2021, the tax would be increased by 2.5 cents each fiscal year until July 1, 2025. At that time, the tax rate would be increased by 73% to 29.5 cents.

Gov. Parson is expected to sign the bill, SB262, into law.

Our office recently received a referendum petition on the “Gas Tax” (Senate Bill 262). It is now open for public comment. https://t.co/dJ9BtusWtu #moleg pic.twitter.com/8wzGNDp2wN

— Missouri SOS Office (@MissouriSOS) May 17, 2021

Not so fast

Americans for Prosperity in Missouri has filed a petition for referendum with the Secretary of State’s Office to give voters the final say on the tax increase.

Jeremy Cady, Missouri director for the AFP, wants the state to find another way to cover costs to improve transportation infrastructure.

To make that a reality, the group must collect 107,000 signatures by mid-August to qualify for the November 2022 ballot. Meeting the signature requirement would delay implementation of the fuel tax increase until the public vote.

If we want more road revenue maybe Missouri needs more than the status quo and leaders who supports reforms that grow our economy and our population.

Tax reform, regulation reform, education reform, labor reform.

More jobs = more Missourians = more money#moleg

— ???????????????????????? ???????????????? (@jeremycady) May 12, 2021

Hancock Amendment protection

The referendum focuses on the legality of the legislative action. At issue is 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 says that by phasing in the tax increase SB262 is intended to circumvent the requirement for a public vote.

Bill advocates counter that the legislation ensures that the state meets the Hancock Amendment requirement.

Show me the money

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.

AFP 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 bill is an option for most Missouri residents to apply for an exemption and refund. The option would 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 would contribute more. The fees for decals would be increased by 20% annually for five years.

Fees for electric and hybrid vehicles weighing in excess of 36,000 pounds would see a 10% annual increase over the same time period. LL

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