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Branstad draws the line he’d cross on a gas tax increase

This news story was published on January 25, 2012.
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Rod Boshart, CR Gazette –

DES MOINES – Gov. Terry Branstad isn’t threatening a veto if the Legislature sends him a gas tax increase, but the Republican who was governor when motor fuel taxes were last raised in 1989 set conditions for his signature.

Branstad told county government officials he recognizes their needs, but feels a responsibility to prove to taxpayers the state is making the best use of its transportation resources before asking them to pay higher motor fuel taxes.

So Branstad called for the Transportation Commission and Legislature to approve to approve a list Jan. 24 of $50 million in proposed savings and efficiencies his DOT director wants to implement to help free up dollars to bolster highway and bridge upgrades.

That has to happen “before they even look at anything that would increase the fees that people who use our roads and bridges have to pay,” he said after speaking at the counties’ annual Transportation Day at the Capitol.

He’s not willing to consider an increase in the current year. However, Branstad said he recognizes “in future years there is a need that has been identified and the most appropriate way to do that is for the users to pay for that – the people who use the roads and bridges,” the governor said.

However, he said, “We still have a lot of people out of work and a lot of people that will be burdened by raising the motor vehicle user fee that they have to pay for their cars or trucks or for using our highways. That’s why I don’t think it make sense this year.”

“It’s never a good year to raise taxes,” said Mike Hadley, a Keokuk County supervisor. “We can’t cut any more pencils and paper clips.” This year the board is looking at closing bridges that will affect farm operations.

Hadley told the governor he didn’t run for supervisor to negatively impact anyone’s economic livelihood.

Branstad challenged Hadley and other local government officials to “go home and look at how you can do things differently” in order to improve the chances of getting the public to support a future gas tax increase.

“There is still a lot of skepticism that we are managing a well as we should,” he said.

Senate Transportation, Infrastructure and Capitals Appropriations Subcommittee Chairman Matt McCoy, D-Des Moines, is skeptical of the savings in Trombino’s recommendations. Still he appreciated the effort, but questioned whether it closed the funding gap that exists now – not in two years.

“To meet our critical infrastructure needs a minimum of $215 million a year in new revenue,” McCoy said, referring to projections by the DOT. “I am discounting there is a strong effort to set this things up for the future in terms of how we get to that $215 million beyond fiscal 2012.”

When a city official prefaced a question with, “You’re probably going to yell at me, too,” Branstad told him not to take it personally.

“I’m just passionate about this,” he said.

It will take more than passion to convince the public of the need to raise taxes, he said, and encouraged the local government officials to encourage the Transportation Commission and Legislature to approve DOT Director Paul Trombino III’s a 15-page report that included $33 million in annual savings and $17 million in one-time savings via detailed 13 programmatic and partnership efficiencies totaling $50 million in either one-time or annual savings.

The largest component of the proposed changes calls for the department to implement a fully integrated asset management system, working closely with local jurisdictions, to support the identification of the most efficient timing and selection of transportation improvements to maximize the life of the infrastructure and the benefits to the public. The projected savings would total about $11 million each year within the department’s yearly allotment of $200 million for highway pavement and bridge stewardship projects, according to the DOT report.

Trombino also is proposing a streamlined process for delivering highway construction projects ahead of schedule and under budget that potentially could net $10 million in yearly savings and a review of right-of-way acquisitions with an eye on aggressively reviewing existing parcels that have been purchased but no longer are needed. The state contemplates a savings of $1 million if those parcels could be sold.

DOT officials also will be asked to develop a long-term plan for managing interstate rest areas that could include the potential alternatives to service delivery. The agency also plans to explore sponsorship opportunities to offset the costs of maintaining rest areas, the Highway Helper program or driver’s licensing station “customer queue” management systems.

Other savings could be achieved by implementing online and remote renewal of driver’s licenses and other motor vehicle driver services – changes that could eliminate an estimated 124,000 customer trips to issuance locations while saving 29,000 hours annually for DOT staff and 12,000 hours for county treasurers’ employees that handle driver’s license-related duties.

Last fall, Branstad said he was willing to delay consideration of a state gas tax for at least a year in favor of finding efficiencies and savings within the state transportation system that could generate more money to upgrade roads, fix bridges and fund other critical needs. He issued the DOT directive just hours after receiving a citizen advisory panel’s recommendations that included raising the gas tax by 8 to 10 cents a gallon and increasing the state’s new vehicle registration fee from 5 percent to 6 percent.

The governor said he challenged Trombino to eliminate duplications, find efficiencies and identify administrative savings that would be the equivalent of 2 cents of fuel tax, or about $50 million.

Members of the Governor’s Transportation 2020 Citizen Advisory Commission asked the DOT Commission and department officials to recommend new funding mechanisms for high-efficiency and hybrid vehicles and study whether all vehicles using public roadways pay their fair share. The panel also recommended an increase of between 8 and 10 cents per gallon to the state’s motor fuel tax.

Branstad has said he would “definitely consider” a proposed state gas tax increase in the future, but believes the savings announced on Tuesday and more than $120 million in unanticipated federal and state transportation funding will get Iowa through a “robust” construction season in 2012.

“We do recognize in the out years there is a shortfall of about $215 million,” the governor added. “We need to come up with the most equitable way to deal with that. I happen to think that the most equitable way to deal with that is a user fee, but I also think we ought to be cognizant of the people who have to pay that.

Rep. David Tjepkes, R-Gowrie, chairman of the House Transportation Committee, said the DOT report will be of special interest to legislators crafting a bipartisan plan aimed at raising more than $200 million annually in extra revenue to address critical transportation needs not currently being met by the state road use tax fund.

The governor had directed Trombino to identify at least $50 million in administrative savings and efficiencies to aid in that effort and Tjepkes said however much the money the DOT can come up with would lower the amount of state gas tax that might eventually have to be raised to cover a projected shortfall in state and federal transportation aid.

Tjepkes and Sen. Tom Rielly, D-Oskaloosa, chairman of Senate Transportation Committees, have proposed a plan that would raise some vehicle registration fees and calls for an 8-cent motor fuel tax increase to be phased in over two years beginning in 2013 – a package that would raise about $180 million a year when fully implemented. However, Tjepkes said the vehicle registration fees have run into some resistance, but that money could be supplanted by the DOT savings or the proposed gas tax increase might be revamped upward to 5 cents per gallon beginning on Jan. 1, 2013, and another 5 cents on Jan. 1, 2014.

Tjepkes said House Study Bill 547 will be assigned to a subcommittee of himself, Republican Reps. Stewart Iverson of Clarion and Gary Worthan of Storm Lake, and Democratic Reps. Jim Lykam of Davenport and Dennis Cohoon of Burlington.

Like Branstad, he wants to see the DOT implement Trombino’s recommendations because “legislators want to know all efficiencies are being taken before addressing fuel tax increase.”

He expects to have Nancy Richardson and Allen Thoms – co-leaders of a citizens’ task force that conducted public hearings before recommending a gas tax and vehicle registration fee increases among ways to generate more revenue for roads and bridges – present their findings to legislators before his panel would start work on a bill that would include the proposed tax and fee increases this session.

Currently, Iowa drivers are assessed tax taxes of 21 cents per gallon for regular gasoline, 19 cents per gallon for ethanol-blended gasoline, and 22.5 cents per gallon for diesel fuel. Officials project that each penny increase to the state gas tax would raise about $22 million.

Iowans for Tax Relief, a Muscatine-base group that is influential with Republicans, issued a statement last week encouraging its members to urge their local legislators to oppose a gas tax increase.

“Iowans for Tax Relief is urging the Iowa Legislature not to raise the gas tax on Iowans at a time when gasoline prices are predicted to spike. ITR believes this is the wrong time to consider an increase when Iowans will already be spending a larger portion of their family budgets on transportation,” according to the group’s “Watchdog” newsletter. “Furthermore, there has been little discussion or research about the impact a gas tax increase would have on communities that border Iowa. ITR believes a study of border communities would find that significant numbers of non-Iowans who come to Iowa weekly to buy gas, groceries, etc, would rethink those trips and stay home if Iowa had a higher gas tax.”


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