In the aftermath of the transportation sales tax (Amendment 7) defeat last week, former supporters are still on a misinformation campaign.
They claim that Missouri’s roads are in dire straits (they aren’t), and of course, that a sales tax was the only good option.
They claim increasing a user fee such as Missouri’s gas tax, which is the sixth-lowest in the nation, is not possible.
Bill McKenna, one of the principal supporters of Amendment 7, stated: “You’ve got to realize how much money [the Missouri Department of Transportation] MoDOT needs. You’re not talking 2 cents. You’re talking 16 to 20 cents.”
That’s a significant tax increase, but former Amendment 7 supporters seem to have different estimates.
Missouri Sen. Mike Kehoe, R-Jefferson City, who introduced the Senate version of Amendment 7, said the gas tax would have to increase by 20 to 25 cents a gallon.
Luckily for Missourians, these numbers appear to be disconnected from any real assessment of MoDOT’s needs.
According to MoDOT Director Dave Nichols, the department needs a $485 million construction budget to maintain Missouri’s highways. This year, MoDOT’s construction awards are greater than $720 million.
MoDOT assumes that the federal government will scale back its support in the future, leaving MoDOT with less than $485 million by 2017.
That scenario may not come to pass, but if it does, MoDOT’s construction budget would fall to $325 million, about $400 million less than today and $160 million less than the ability to maintain the roads.
If the federal government continues to maintain current support, Missouri officials only need to ensure that the state has matching funds, necessitating less than $130 million in extra revenue.
The amount the Missouri fuel taxes would have to increase is nowhere near sales tax supporters’ claims.
Last year, more than 3.9 billion gallons of fuel were sold in the state. Therefore, to raise $400 million, the state would have to raise the fuel taxes 11 cents.
That maintains current spending ($300 million more than maintenance only) under dire circumstances.
If the federal government does not reduce funding, a 5-cent increase likely would be sufficient to maintain matching funds. Missouri officials also could increase the diesel rate more than the regular gasoline rate, a practice in place nationally and in many states to account for the disproportionate damage trucks do to highways.
McKenna’s 20-cent increase would raise $705 million for MoDOT and Kehoe’s 25-cent increase would raise $882 million (remember, Amendment 7 would have raised $397 million for the state highway system).
The defeated transportation sales tax proponents’ fuel tax estimates are exaggerated, much like their claims about the imminent collapse of the Missouri highway system.
Joseph Miller wrote this article for the Show-Me Institute in St. Louis.