AASHTO Journal, 30 January 2015
Iowa Gov. Terry Branstad was fresh off a November re-election victory when he urged legislative leaders to negotiate on new transportation funding. One of the options under consideration would build a “hybrid” fuel taxing system of lower per-gallon charges plus a percentage tax that would allow receipts to grow over time.
But the national average pump price of gasoline has withered over the past year to just over $2 now, with most of that drop hitting after the Nov. 4 voting. Gas prices are even lower in Iowa, and the decline has been steadily erasing the likely revenue Iowa lawmakers could count on from such a revenue option.
The Sioux City Journal reported Iowa Transportation Director Paul Trombino briefed members of the Senate Transportation Committee about the revenue estimates on Jan. 21, saying the latest prices would yield less than half the revenue of an earlier estimate based on higher pump prices.
The committee chairman said the hybrid taxing option’s take would now be only $103 million, down from $230 million earlier, while a “critical needs deficit” for transportation spending stood at $215 million. “So it wouldn’t even come close to addressing the problem,” the chairman said.
Trombino reportedly told lawmakers that projected receipts to be obtained by an option of increasing traditional per-gallon excise taxes were also lower than earlier estimates, because fuel usage and vehicle miles traveled continued to decline in Iowa.
On Jan. 22, Gov. Branstad told the Quad City Times the new numbers would probably require modification of some revenue proposals, but said talks were continuing. The report said House and Senate leaders from both parties met with Branstad, later saying all options remain in the mix.
Branstad told the newspaper the price decline could mean elements of the hybrid option have to be adjusted, either with a higher gas tax level or a higher percentage tax. “It could be either or a combination thereof,” he said. “There are a lot of ways you could adjust that.”