AASHTO Journal, 27 February 2015
Gov. Terry Branstad signed into law Feb. 25 a bill that raises gasoline, diesel and many other motor fuel and permit fees as of March 1, to replenish the state’s road use funding and tackle infrastructure project backlogs.
Branstad acted quickly on a measure that cleared both legislative chambers only a day earlier, after it swiftly moved through transportation and finance committees of both chambers earlier in the month.
Since the bill provided for it to take effect the first day of the month following its signing, Branstad’s action meant state transportation user fees on gasoline, diesel and natural gas motor fuels were rising 10 cents a gallon on March 1.
The AAA motor club reported average gasoline pump prices in Iowa were about $2.24 a gallon on Feb. 25, up from $1.91 a month earlier but down from $3.41 at the same point last year.
Iowa media largely reported on the legislation as a gas tax hike that would raise about $215 million a year, and be the first increase in that fuel user fee to pay for transportation infrastructure since 1989.
However, Branstad’s signing announcement described a multilayered measure that also limits the length of county bond or loan debt for road projects to no more than the life of the asset being financed, and uses a number of revenue options.
Besides raising the state levy on gasoline to 30 cents from 20 cents a gallon and raising various trucking permit fees,the new law hikes the diesel fee 10 cents to 32.5 cents a gallon. It requires similar levy increases for liquefied petroleum gas (propane), compressed natural gas and liquefied natural gas used as motor vehicle fuels.
It alters a series of fuel distribution tax formulas to increase basic state fees on ethanol-blended gasoline and biodiesel but also provides favorable pricing differentials for ethanol and some biodiesel to encourage use of the blends. And it increases the per-gallon tax rate on special fuel for aircraft.
In addition to revenue raisers, the legislature included provisions for the Iowa Department of Transportation to come up with $10 million in cost-cutting efficiencies for the fiscal year starting July 1 and again the following year, on top of any efficiencies required elsewhere.