Wyoming bill would increase the state’s fuel tax
January 7, 2021
The start of the regular session in Wyoming is less than one week away. One issue that lawmakers will discuss is a fuel tax increase to help cover transportation needs.
The Owner-Operator Independent Drivers Association believes increasing the fuel tax is the most equitable way for states to generate additional revenue.
The state’s current fuel tax rate of 24 cents per gallon is unchanged since 2013. At that time, the tax rate was increased by 10 cents.
Round three for a fuel tax increase
The legislative effort for 2021 marks the third time in as many sessions that legislators will consider the road funding option.
During the 2020 regular session, a bill sought to raise the tax rate on gas and diesel by 3 cents to 27 cents per gallon. The measure also included a provision to adjust the fuel tax rate on the consumer price index.
A year earlier, the legislation did not call for an increase in the tax rate but it did allow for indexing every two years.
Third time a charm?
The Joint Revenue Interim Committee has introduced a bill to tap the existing funding source to enhance support for state and local road projects. Specifically, the legislation would increase the fuel tax on gas and diesel by 9 cents to 33 cents per gallon. The tax on alternative fuels would be raised by the same amount.
Each penny increase is estimated to raise $6.7 million yearly.
The Wyoming Department of Transportation reports $135.6 million in unfunded operating expenses. The amount includes $72.3 million in construction and maintenance.
WYDOT Director Luke Reiner recently told lawmakers those numbers will only continue to rise with inaction.
He added that a 9-cent fuel tax increase would not fix the funding problem but that it would be “very helpful for this department.”
Fuel tax revenue distribution
The bill would raise an estimated $60.3 million annually for state and local roads, according to information provided by the agency.
A fiscal note attached to the bill shows that the state’s highway fund would collect about $40.2 million. Another $14.1 million would be allotted to county roads, while cities and towns would get $5.9 million. The remaining $1.2 million would be set aside for state parks.
Three-quarters of the diesel tax distribution goes to the highway fund. Counties collect 20%, and cities and towns get 5%.
About 58% of gas tax revenue is distributed to the highway fund. Counties receive 27.5%, and cities and towns collect 15%.
Reiner said that he sees the fuel tax increase as a short-term solution. He touts a road user charge program as a long-term solution.
“The RUC will come in time, if it is legislatively approved,” Reiner said.
The bill, HB26, awaits consideration during the regular session that begins Jan. 12. LL