AASHTO Journal, 16 January 2015
South Dakota Gov. Dennis Daugaard used his Jan. 13 “State of the State Address” before the legislature to propose $50.5 million in higher taxes on vehicles and motor fuels to increase spending on state roads and bridges.
Daugaard used a series of slides to show deterioration in some road conditions and to project worsening infrastructure into the future, as he tried to sell lawmakers on the plan.
But it is about half the size of a proposal in the state Senate, which would raise the motor fuels tax more aggressively.
Daugaard’s proposal would raise nearly $40 million in the first year for state transportation needs, and nearly $11 million for counties and cities.
The state portion would come from boosting the excise tax on vehicle purchases to 4 percent from 3 percent now, and by raising the current 22-cent-a-gallon tax on gasoline and diesel fuel by 2 cents a year. The local portion would come from higher vehicle registration fees.
Daugaard also said his plan would keep increasing the motor fuel tax by 2 cents a year going forward. “A major reason that road funding is insufficient today is because the gas tax does not inflate over time,” he said. “If we begin to make a small adjustment each year, we can keep up with construction costs and maintain the most efficient pavement condition without putting future legislatures in a bad position in another 10 or 15 years.”
(Here is the video of that address, with his explanation of the tax plan starting about 29 minutes in).
Daugaard said that even under his plan “pavement condition will still diminish a little over the next few years.” He said because of the 2009 federal stimulus program “pavements today are a little better than we need them to be. Once things level out, excellent and good road surfaces will be between 70 and 80 percent – much closer to the ideal 80 percent distribution.”
By contrast, the bill in the Senate would boost fuel taxes more aggressively, news reports say, to raise more than $100 million the first year.
The governor also proposed having the state Department of Transportation swap out state funds with local governments for their federal highway funding, so that the state would take on the responsibility for handling the “increasingly arduous” paperwork and regulations associated with taking federal dollars.