Fuel tax increase may pass next year
By Josh Mitchell
November 9, 2012 --
The Wyoming Legislature may pass a fuel tax increase next year to pay for backlogged maintenance on the state's highways.
A $135 million yearly shortfall to maintain the highway system was discussed at the annual Wyoming Taxpayers Association meeting, which took place in October at Little America Hotel & Resort in Cheyenne.
"The fuel tax is a concept we have supported for many years now," said Erin Taylor, executive director of the Wyoming Taxpayers Association.
The fuel tax is really a "user fee," Taylor said, adding, "There's really no direct correlation between the price at the pump and what you pay on the gasoline tax."
Under a proposed bill, the fuel tax would be raised by 10 cents per gallon, bringing the state's total fuel tax to 24 cents per gallon. Another part of the bill would raise registration fees for most non-commercial vehicles by $10.
In total, the bill would generate $89.9 million annually, with $65.4 million going to state highways and the other $24.5 million going to cities, counties and state parks, according to the Wyoming Department of Transportation.
Even so, the bill would not cover the entire state highway-maintenance shortfall.
"We're going to have to look for other sources of revenue," said state Rep. Mike Madden, R-Buffalo. One idea, Madden said, is diverting $12 million in airport funding to highways while feeding airports from another source.
The increase would get Wyoming's fuel tax up to a level comparable to the regional average, Madden said, adding that it has not been raised since 1998. Wyoming's gasoline tax is lower than surrounding states, with Colorado's being 22 cents per gallon and Montana's 27.75 cents.
A fuel tax increase does not mean people would pay more at the pump, Madden said.
"It's not a tax that's paid at the consumer level," Madden said.
Wyoming's low fuel tax does not result in cheaper gas, Madden said. For instance, he said there is not much difference in fuel costs in Cheyenne and Fort Collins, Colo.
Currently, the savings from the low Wyoming fuel tax benefit the fuel supplier, not the customer or the retailer, Madden said. Suppliers basically use Wyoming's lower gas tax as a bargaining chip to offer attractive prices to customers in neighboring states.
"We have left 10 cents on the table in terms of the regional price of fuel in the Wyoming area," Madden said, meaning neighboring markets benefit marginally from Wyoming's lower tax.
Madden added, "If (the state) started charging 10 cents a gallon more, the opportunity (for the suppliers) to charge our retailers 10 cents more goes away. They can't do that anymore because they won't be competitive anymore, and someone will come in and steal their business from them."
But a Wyoming Taxpayer Association fact sheet states that "statistically speaking" a 10-cent fuel tax increase would cost an average Wyoming household as much as $114 a year. That does not account for other market forces that could decrease that amount.
The fuel tax discussion also featured Joung Lee with the American Association of State Highway Transportation Officials, who said federal highway funding is flat or even declining in some cases.
That is bad news for Wyoming, because about 35 percent of the Cowboy State's highway funding comes from federal sources, which is above the national average of 20-25 percent.
The federal transportation bill, MAP-21, in its current form only runs for two years as opposed to the five or six years it has been approved for in the past. The shorter time period for the bill is due to the political gridlock in Congress, Lee noted.
The federal transportation bill offers $40 billion each year, and of that Wyoming is apportioned $250 million this fiscal year.
Also, Lee said the U.S. Highway Trust Fund, which is funded by the federal transportation tax, has been declining since 2007 due to less people traveling while the economy remains sluggish.
Inflation has also hurt the value of the 18.4 cent per gallon federal gas tax, which has remained flat for almost 20 years.
"In another 10 years, the purchasing power of the federal fuel tax is going to be less than half of what it was in 1993 when it was last raised," Lee said.
Therefore, new revenues for the Highway Trust Fund must be found to prevent it from crashing in 2015, Lee said.
Educating the public about the proposed state fuel tax increase is important, officials say. For instance, Madden said the public needs to be assured that the tax is per gallon, not per dollar.
Likewise, Frank Moretti, director of policy and research for TRIP, said doing nothing to the roads can also cost taxpayers in the form of damage vehicles can sustain from driving on beat-up highways.
A recent study by TRIP, a national transportation research group based in Washington, D.C., found that 14 percent of Wyoming's bridges are structurally deficient, and 20 percent of the roadways are in poor shape. Those figures are higher than the national average and will double in 10 years if nothing is done, Moretti added.
In addition to the poor condition of the highways, Wyoming has one of the higher traffic fatality rates in the country, Moretti said.
The people of Wyoming should not look at taking care of the roads as a burden but consider the fact that a well-maintained highway system can foster economic development, especially in the energy sector, Moretti said.