August 29, 2014

Debating the gas tax complicated by urban-rural fight

Statehouse leaders say changing the formula that distributes state gas taxes for road and bridge projects is just too risky, politically, and would derail any bid to raise the state gas tax. Cities say they don’t get a big enough share of the money for roads and bridges — and counties say the same thing. Governor Terry Branstad says it’s an urban-versus-rural battle.

“Looking at the politics of it, you’re probably going to lose the Farm Bureau if you reduce the money going to counties and rural areas,” Branstad says.

The Farm Bureau has been a backer of a plan that would raise the state gas tax. The Iowa Chamber Alliance — representing Iowa’s larger urban areas — has called for increasing the gas tax and sending a greater share of the taxes to cities. House Speaker Kraig Paulsen of Hiawatha, the top Republican in the legislature, says changing the distribution formula would “kill” any bid to raise the gas tax.

“Too complicated, too controversial — we’ve already been through that debate,” Paulsen says. “I don’t see us going back down that road.”

Senate Republican Leader Bill Dix raises melons and pumpkins on a farm near Shell Rock and he says agrees shifting the formula to send more money to cities would kill any bid to raise the gas tax.

“Iowa is a diverse and agricultural state and in order to move those farm commodities to market, to added-value markets that have been such a big part of the growing Iowa economy, we need to make sure that we’re maintaining those rural infrastructures as well,” Dix says. “Talking about changing that formula to favor urban areas moves that debate backwards as opposed to forward.”

Dix sees “growing support” in the legislature for a hike in the gas tax, but only if lawmakers reduce other taxes, like commercial property taxes.

“Myself personally and I think Senate Republicans generally came here, though, primarily focused on reducing the overall tax burden on Iowans and creating more growth,” Dix says. “That needs to be our number one priority and needs to happen first.”

Just over a year ago a task force appointed by the governor called for a 10-cent-per-gallon increase in the state gas tax, to boost the flagging budget for road and bridge construction. Governor Terry Branstad would sign a gas tax increase into law, but he’s not asking legislators to pass one.

“I don’t intend to make a recommendation,” Branstad says. “I have indicated that I’m open to considering things, but my focus is on reducing taxes — and specifically the property tax — and I think anything that’s done has got to be a net tax reduction for the citizens of Iowa.”

Earlier this month a representative of the state’s road builders publicly urged Branstad to become a more ardent advocate for boosting the gas tax. Senate Democratic Leader Mike Gronstal of Council Bluffs agrees Branstad’s public backing is key if the gas tax increase has a chance in the legislature.

“I think, pretty obviously, as the leader of the Republican Party of Iowa, for his own members it probably takes a little more encouraging words than he’s given it so far,” Gronstal says.

Paulsen — the House speaker — says he doesn’t know whether the gas tax increase could get 51 votes in the House.

“It came up in a pretty significant fashion in three different legislative races in the state,” Paulsen says. “Two out of the three people who were advocating for a gas tax or user fee increase lost, so I don’t think anybody knows.”

Kevin McCarthy of Des Moines, the House Democratic Leader, last week said if lawmakers raise the gas tax, they need to lower other vehicle fees which were raised a few years ago to try to fill part of the $215 million hole in the state’s road construction fund.