Ohio lawmakers reach budget deal with fuel tax increases
April 3, 2019
A two-year transportation budget deal reached Tuesday at the Ohio statehouse will raise another $865 million annually via state fuel tax collection.
House lawmakers voted 70-27 to approve the budget that includes increases to the state’s 28-cent fuel tax rate. The Senate followed suit on a 22-10 vote. Passage of HB62 in the chambers followed work over the past week from a select group of legislators from the House and Senate to hammer out differences in the proposed budget.
The version of the transportation budget sent to Gov. Mike DeWine’s desk will increase the gas tax by 10.5 cents to 38.5 cents. The diesel rate will increase by 19 cents to 47 cents per gallon.
“This is something that had to be done,” DeWine said during a news conference following the budget deal.
“We have some money for safety and some money for new projects. I’m very pleased.”
The governor is expected to sign the bill into law as early as Wednesday. He has line-item veto authority, which allows him to take out any language in the transportation budget that he does not like.
Start of the fiscal year
State officials said prior to the budget deal that an agreement was needed before Monday to avoid potential transportation spending delays when the new fiscal year begins July 1.
The fuel tax rate increases agreed to by legislators is less than the governor previously had pursued. DeWine wanted an 18-cent increase for gas and diesel purchases. His administration said that anything short of his proposal would not do enough for needed repairs and construction.
The Republican governor cited a $4 billion transportation debt owed by the state.
In recent months House lawmakers approved a version of HB62 to increase the gas tax by 10.7 cents and to raise the diesel rate by 20 cents. Senators then revised the budget to authorize a 6-cent increase for gas and diesel.
Leaders in both statehouse chambers were unwilling to relent on the issue. The stalemate led to the convening of the conference committee to wrangle the budget deal reached Tuesday.
The Ohio Department of Transportation says each penny increase in the fuel tax will result in additional $67 million annually.
The state DOT will receive 55 percent of the new revenue and local governments will claim the rest.
The Ohio Constitution requires fuel tax revenue to be used solely for road and bridge work.
Also included in the budget deal is a provision to collect fees on certain alternative-fuel vehicles. Specifically, a $200 yearly fee will be collected on electric vehicles, and a $100 fee will be collected on plug-in hybrid vehicles.
Also included in the transportation budget is language intended to discourage local governments’ use of ticket cameras by reducing their state funding by the same amount.
Additionally, the requirement for license plates to be placed onto the front of vehicles is eliminated. Hamilton County also is permitted to levy a sales tax to collect money for roads.
The Owner-Operator Independent Drivers Association believes increasing the fuel tax is the most equitable way to generate additional revenue.
In comments not specific to Ohio, OOIDA Manager of Government Affairs Mike Matousek said his group does not generally oppose reasonable fuel tax increases.
“It’s the most equitable way to collect revenue to support our nation’s roads and bridges,” Matousek said.
He added that a fuel tax increase is a much better alternative to tolling and vehicle-miles-traveled taxes.
“However, revenue generated from fuel taxes must be spent on the construction and maintenance of roads and bridges, and not diverted to non-transportation projects.”