Utah Gov. Herbert Signs Measure Raising Motor Fuel Fees for Transportation

AASHTO Journal, 3 April 2015

Gov. Gary Herbert signed into law a measure to increase Utah’s transportation revenue by increasing state user charges on motor vehicle fuels.

The governor’s office noted that Herbert had called on legislative leaders in his State of the State address this year to address the state’s long-term transportation funding needs, and that in the 17 years since the Legislature last increased transportation revenue the motor fuel tax had lost significant purchasing power.

AASHTO Journal earlier reported that the Legislature passed the measure late on March 12.

“A strong transportation infrastructure has played a critical role in our economic growth and it will continue to do so thanks to this bill,” Herbert said in his March 27 signing announcement. “This session we took the necessary steps to address the discrepancy between the funds we have set aside for transportation and the funds we will need to support our growing population and keep commerce flowing through our state for decades to come.”

The new law takes effect July 1 but its impact on fuel charges will come at differing times depending on the fuel type, with the largest impact next Jan. 1.

The main change is a conversion of the current per-gallon excise fee to a percentage sales tax with a fixed wholesale floor price, to prevent a decline in market prices from taking the fuel fee down below that price level fixed in law.

The net effect, says the Utah Department of Transportation, would be to increase the state fee by five cents a gallon effective Jan. 1, 2016. That is expected to generate about $25 million in new revenue during the 2016 fiscal year that starts in July, then $76 million in fiscal 2017 and $77 million in 2018.

The legislation also raises in increments the state taxes on lesser-used alternative fuels, including compressed or liquefied natural gas, starting in July and continuing each subsequent July through 2018. And it allows local communities to submit to voters proposals to raise local sales taxes for transportation needs.

State officials said the measure will allow Utah and its communities to boost investment in state and local roads, transit and bike facilities.

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