OOIDA weighs in on Missouri fuel tax increase effort
January 22, 2020
The most recent effort at the Missouri General Assembly to raise the state’s fuel tax has taken the first step toward passage.
For years elected officials in the Show-Me State have touted the need to come up with a long-term funding plan to help the state complete road and bridge projects. The state’s 17-cent fuel tax rate has remained unchanged since 1994.
The state’s Department of Transportation has said there is an $825 million gap in annual road and bridge funding. Transportation officials say a dire situation to fund road and bridge work will only worsen until legislators get a deal done.
Despite the nearly unanimous viewpoint that more money is needed, nothing significant has been accomplished.
In November 2018, voters rejected a question to raise Missouri’s 17-cent fuel tax by 10 cents over four years. The tax increase would have raised another $437 million annually.
Some progress was made during the 2019 regular session. Legislators approved $301 million in borrowing to pay for construction and repair of 215 bridges on the state highway system.
Fuel tax increase effort moves forward
The Senate Transportation, Infrastructure and Public Safety Committee voted 5-2 to advance fuel tax increase legislation to initially raise nearly $130 million annually for state and local roads. The bill awaits further consideration in the Senate.
Missouri raised $717 million in fuel tax revenue during fiscal year 2019 – about $13 million less than the previous year.
Sponsored by Sen. Doug Libla, R-Popular Bluff, SB539 would increase the gas tax 2 cents from 17 cents to 19 cents. The diesel rate would be increased 6 cents from 17 cents to 23 cents.
The tax rates would also be adjusted annually for inflation via the consumer price index. According to a fiscal note attached to the bill, fuel tax revenues would top $180 million per year by 2024.
The state would continue to collect 73% of fuel revenue. Cities receive 15% and counties collect 12%.
Libla’s bill would avoid a requirement to get voter approval for the gas tax increase. The state’s Hancock Amendment mandates that any proposed rate hike in excess of two cents must go before voters for final approval.
The diesel tax increase would need voter approval.
The Owner-Operator Independent Drivers Association was among the groups to provide testimony at the Senate committee hearing on SB539.
The Association says a fuel tax increase would make the most sense to raise transportation revenue. Libla’s bill, however, is not a perfect bill.
“We hope to work with the sponsor on the (consumer price index) and addressing the differential in taxation between gasoline and diesel,” OOIDA consultant James Harris told lawmakers.
The truckers group added that the state must act now to make improvements to avoid massive expenses later.
“Better roads will help cut down on congestion, reduce wear-and-tear, and make highway freight even more efficient in Missouri, allowing our economy to continue to thrive,” Harris testified.