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Iowa's GOP Governor Reluctantly Raises the Gas Tax

With little fanfare Wednesday, Gov. Terry Branstad signed a fuel tax increase that would hike prices at Iowa pumps for gasoline and diesel by 10 cents per gallon beginning on Sunday.

By Rod Boshart

With little fanfare Wednesday, Gov. Terry Branstad signed a fuel tax increase that would hike prices at Iowa pumps for gasoline and diesel by 10 cents per gallon beginning on Sunday.

"I know it's not easy and I know that there also are people who feel strongly on the other side, but there is a critical need for additional funding for our roads and bridges in the state of Iowa," Branstad told reporters before he received Senate File 257 and signed it into law after a quick review.

The six-term governor approved the measure less than a day after it was passed by the Senate and House.

"I believe that the leadership deserves credit for working together on a bipartisan basis to pass a piece of legislation that I think will be very beneficial to meeting the needs of the counties and cities as well as the state transportation network," Branstad said. "I think nobody's satisfied exactly, but that's the nature of a significant issue like this."

In less than a three-hour span Tuesday, the split-control Legislature passed a bipartisan transportation funding bill that is expected to generate more than $200 million annually to help address a yearly shortfall in money to address critical upgrades to roads and bridges in Iowa.

The measure passed the Iowa Senate 28-21, and the Iowa House 53-46. In the Senate, 16 of 26 Democrats and 12 of 23 Republicans voted for the increase. In the House, 23 of 43 Democrats and 30 of 56 Republicans supported the proposal.

Along with increasing the state's fuel tax by a dime a gallon, the measure will boost the excise tax on aircraft fuel two cents, increase single-trip permit fees, place restrictions on the authority for cities and counties to bond for transportation upgrades using property tax revenue, and make other changes.

Iowa's fuel tax has not been increased since 1989. Motorists currently pay a state fuel tax of 21 cents a gallon for regular gasoline, 19 cents on each gallon of ethanol-blended gasoline and 22.5 cents per gallon for diesel fuel. Each penny increase in the state gas tax would raise $23 million in revenue.

Branstad told reporters Wednesday that the March 1 implementation date will mean that additional tax collections will flow into the state road use tax fund for four months of the current fiscal year. Expectations are that a dime increase in tax revenue on every gallon of gasoline and diesel sold at Iowa pumps will generate between $18 million and $20 million per month and generate $204 million in fiscal 2016.

The six-term GOP governor said it would be up to the state Transportation Commission to decide how that additional money would be applied to the state's transportation program, but he indicated he has had discussions with DOT Director Paul Trombino about expediting projects yet this fiscal year which ends June 30.

(c)2015 The Gazette (Cedar Rapids, Iowa)

Caroline Cournoyer is GOVERNING's senior web editor.
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