Wyo fuel tax still up for Senate debate
By Bill McCarthy
February 6, 2013 --
For about a decade some Wyoming lawmakers and employees of the Department of Transportation have unsuccessfully sought to raise money to fund the state's deteriorating highways.
This year there is a vibe in the state capitol that makes it appear more likely that the state tax on fuel will rise from 14 to 24 cents a gallon.
"This could be the year, but it has to get through another whole (chamber) of the legislature," said Sen. Michael Von Flatern.
The Republican from Gillette had just finished chairing the Senate Transportation, Highways and Military Affairs Committee, which voted 4-1 to recommend the full Senate pass the tax.
House Bill 69 already passed the House 35-24 and with the committee vote was headed for the Senate floor. Gov. Matt Mead supported the tax increase and is expected to sign the legislation into law should it make it to his desk.
Wyoming's tax of 14 cents per gallon on gasoline and diesel is the lowest in the region and was last raised in 1998.
Politically dangerous territory
Von Flatern is a pilot and has been working on transportation issues since he came into the Senate in 2005. Over the years, Von Flatern has taken the lead in looking into politically dangerous solutions to nagging problems like the money pit that is Interstate 80.
Von Flatern was optimistic this year. There appears to be more support among lawmakers that is encouraged by the Republican governor's very public commitment supporting the issue, he said. But the Senate chamber still could kill the idea. WYDOT says it needs about $134 million a year to maintain highways in their current condition. The bill would add about $71.8 million annually in new revenue. Only $47.4 million would go to WYDOT for highways. About $16.4 million would go to county roads, $6.7 million to city roads and $1.2 million to snowmobile trails, according to a breakdown by WYDOT.
County commissioners and other local government officials have been solidly behind the tax increase.
Lobbyists for most of Wyoming's major industries, including mining, tourism and trucking, support the tax as necessary for economic growth in Wyoming.
Only some agriculture interests have spoken against it at House and Senate hearings.
Brett Moline, director of public and governmental affairs for Wyoming Farm Bureau Federation, said ag producers do not have the ability to pass the tax on to purchasers of their products. They oppose the tax.
Wyoming Wheat Marketing Commission executive director Keith Kennedy said wheat farmers could support the measure if there was a five-year sunset on the legislation so that it could only be renewed if the money was effectively spent on highways.
The original language in the bill required that WYDOT use the tax increase only for road maintenance and repair.
But Sen. John Schiffer says there is no way to objectively measure the effectiveness of the spending of the tax.
"A sunset without an evaluation is meaningless," said Schiffer. The Republican from Kaycee is a rancher and member of the transportation committee.
And not all agriculture interests are against the tax.
Jim Magagna, executive vice president of the Wyoming Stock Growers Association, said most of his members supported the measure. They need good roads to market.
Those who are against the tax have been more vocal, however, Magagna said.
Kemmerer Republican Sen. Stan Cooper agreed. He said his constituents who have been in touch are adamantly against the tax increase.
Cooper cast the lone vote against HB 69 in the transportation committee.
A regressive tax
Dan Neal, executive director of the Equality State Policy Center, suggested that those who are adamantly against the tax increase may be people with lower incomes.
The ESPC supports the tax increase as necessary for road safety and economic development, Neal said, but the tax is regressive. The less money a person makes the higher the percentage of his income that will go to the fuel tax.
Neal said that there is an opportunity to use the federal income tax credit and federal Internal Revenue Service data to provide a rebate to those who are hit hardest by the tax.
While no committee picked up Neal's suggested amendment, Neal said he wanted to start a conversation about the idea. Hopefully, he said the ESPC can get the idea back before the legislature next year.
Schiffer said that there are constitutional prohibitions against using the tax money for the rebates. "This is not the vehicle you can do that in."
While the tax is regressive, it also has the potential to aid those who might be disadvantaged.
Cheyenne disabilities rights activist Gregg Crisp told the Senate Transportation Committee, for example, that the tax is important to issues of access to jobs, shopping and quality of life for the disabled and bears on the ability of the disabled to safely navigate the streets and highways.
Expect 5-cent rise at pumps
Rep. Mike Madden is chairman of the House Revenue Committee and a supporter of the tax increase. The Buffalo Republican has a doctorate in economics and statistics from Iowa State University and has developed models of how the tax would operate in the regional economy.
A fuel tax is not easily shifted to consumers, he said. Retailers pay the same price at the regional level. So, gas prices at the pump in neighboring states are about the same as Wyoming.
Right now all the other states in the region with higher fuel taxes benefit from Wyoming's lower tax rate as do the suppliers, Madden said, while Wyoming roads suffer for it.
"I'm here to tell you: It can't possibly go up 10 cents," Madden said, but the price of gas will rise at the pump, probably in the neighborhood of 5 cents.
The supply chain will absorb the rest of the tax, he predicted.
Madden also added that of the 245 suppliers that pay the tax to the Wyoming Department of Revenue, just 51 have Wyoming addresses. The rest are headquartered or reside in other states.
He said 52 percent of Wyoming highway users are from out of state.
Rejane "Johnnie" Burton is a member of the Wyoming Taxpayers Association board of directors, a former director of the federal Minerals Management Service, former director of the Wyoming Department of Revenue and a former legislator.
She has urged support for the tax hike.
Wyoming does not have passenger rail service or commuter air service, she said. So good highways are imperative.
"As leaders I think you have to look at what's good for the state — the whole state," she said, even if there is considerable political risk.
Wyoming Business Report freelance writer Bill McCarthy covers the legislature and other news from Cheyenne.