Like motorists everywhere, Wyoming residents want safe, well-constructed roads without potholes or other dangers.
But not everyone is willing to pay any extra at the gas pump to build or maintain highways. That presents a problem in a state with 63,319 lane miles and a nearly $73 million highway budget deficit. How many voters feel that way and how much pressure they put on state lawmakers next year should largely determine whether a proposed 3-cents-per-gallon increase on gasoline and diesel makes it through the Legislature.
I expect the fuel tax to be one of the most contentious issues of the 2020 session. Based on the Joint Interim Revenue Committee’s 8-6 vote to endorse the measure in Cheyenne last week, I predict it will pass the House but run into trouble in the historically anti-tax Senate.
Several important groups that supported the last fuel tax increase say they haven’t polled their memberships on the new bill, but their officials said they generally like the concept. They include the Wyoming Taxpayers Association and the Wyoming Lodging and Restaurant Association.
The Wyoming Department of Transportation presented a solid case to the committee when it sought the increase, which should lay the groundwork for a coalition to convince the public it’s the best option available to pump more money into our roads. Seventeen groups formed such a coalition in 2013.
Wyoming’s last fuel tax increase in 2014 was 10 cents per gallon, which like all tax hikes in Wyoming wasn’t particularly popular with Joe Sixpack. It may not have cost then-Gov. Matt Mead or many legislators running for re-election their jobs, but believe me, they heard about it while campaigning.
Some folks still bring it up every time the Legislature considers any kind of tax increase and remind lawmakers they expect them to toe the conservative line against higher or new taxes, period.
Since Wyoming’s action, 27 other states have raised their gasoline and/or diesel taxes.
WyDOT Director Luke Reiner said the 3-cents hike would raise about $20 million per year. About $13.5 million would be used to build and maintain roads, with the remainder split between city and county governments and reducing the department’s operating expenses.
It’s not going to solve WyDOT’s budget shortfall, which Reiner said includes about $135.6 million in unfunded operating costs. He estimated current construction needs at $69 million annually, and the maintenance budget is short about $3.4 million.
But as noted by the director and Rep. Tim Hallinan (R-Gillette), who suggested the committee sponsor the bill, the proposed increase would help cover increased highway expenses due to inflation through at least 2022, when the issue could be revisited by legislators.
That reasoning could prove successful next year if enough legislators can convince their constituents that 3 cents per gallon is only a small amount taken from their wallets for a few years, and the tax may not even be raised again.
But there’s one major problem with that logic: there’s no reason for just a short-term fix.
A bill to index the tax to the rate of inflation not only failed in the Legislature earlier this year, it died without even being assigned to a committee. There was absolutely no appetite for a bill that would automatically increase fuel taxes in the future without having to go through the legislative process.
But that’s how many states are doing it. According to an analysis by the Institute on Taxation and Economic Policy, since 2013 eight states have abandoned fixed-rate gas fuel tax structures in favor of variable-rate tax structures “that will allow them to raise sustainable gas tax revenues for the long haul.”
ITEP said 22 states, which are home to 59% of the U.S. population, now levy variable-rate fuel taxes under which the tax rate tends to rise over time.
No organization that testified supported any type of indexing, including phasing in an increase over several years. Sheila Foertsch, managing director of the Wyoming Trucking Association, said her group voted in May to back the 3-cent tax increase, but it won’t do so if indexing is included.
House Minority Leader Cathy Connolly (D-Laramie) expressed concern that the bill could face an uphill battle during the next session, only to then have to repeat the grueling process in a few years without indexing. Given that possibility, Connolly suggested it might be wise to consider a higher tax rate increase now.
She’s correct, but I don’t expect it to happen. Several legislators objected to any increase at all.
Sen. Bo Biteman (R-Sheridan) said he’s been at several town hall meetings where the issue was discussed. “There’s just not any support for any kind of fuel tax increase,” he said, and accused legislators who support the bill of having “tunnel vision” that causes them to keep looking at ways to raise revenue instead of cutting costs.
Rep. Jim Blackburn (R-Cheyenne) wanted some clarification about whether the fuel tax funds only pay for highway construction and maintenance. He asked Reiner if an increase would also be used for other expenses, like Highway Patrol personnel.
The director’s confusing, bureaucratic answer didn’t persuade Blackburn to vote for the bill. Reiner said all the fuel tax monies, which now total $110.1 million of WyDOT’s Fiscal Year 2019 budget of $631.5 million, goes into “the same pot” of money to cover the department’s operating expenses.
That includes both the Highway Patrol and road construction and maintenance. So, while theoretically fuel tax funds can help pay part of WyDOT’s law enforcement expenses, the patrol is currently “fully funded.”
I’m basing my skepticism about the bill’s future in part on the Revenue Committee’s vote. House members supported the measure 6-3, but three of the five senators voted against it.
That doesn’t bode well for any bill that will need two-thirds support in both chambers to even be considered during the 2020 budget session.
There’s a lot of time between now and next February for the education of both the public and state legislators about the importance of raising the fuel tax at least a modest amount. Indexing clearly isn’t even going to be considered, and that’s short-sighted but also a reality.
After the vote, Hallinan told me he’s confident the bill will pass during the budget session.
“Three cents [a gallon] isn’t going to hurt anyone,” he said.
He’s right about that. But those 3 cents will still cause consternation in some quarters, including rural areas and particularly among agricultural producers. Brett Moline, director of public and governmental affairs for the Wyoming Farm Bureau Federation — who admittedly has never seen a tax hike he can support — spoke against this one as well.
Moline said the 3-cents increase would drive up transportation costs. An industry already surviving on profit margins of 2% or less, he said, can’t afford higher production expenses.
That same argument was advanced six years ago and failed to stop the dime-per-gallon increase. But anti-tax fever has likely grown stronger in the interim in many parts of the state, and judging from letters to Wyoming editors and public comments at committee meetings, some resentment clearly lingers from the last increase.
The fuel tax bill will result in a lot of emails, phone calls and even personal visits to lawmakers. It can prevail, but not without a lot of hard work by people who see that it’s necessary if we want to stop highway deterioration and reduce future costs.
Mark Larson of the Wyoming Petroleum Marketers Association, an organization representing convenience stores, said members strongly supported the 2014 fuel tax hike because “they realize that highways are the lifeblood of the state.”
Store customers were angry, Larson recalled. “But we weathered the backlash.”
He and other supporters of the bill had better buckle-up. It’s going to be a rough ride.