Four new bills proposed for the spring legislative session, are aiming to increase Missouri’s motor fuel tax for the first time in over two decades.
The state’s tax stands at 17 cents per gallon, one of the lowest rates in the country. A ballot initiative to increase the tax, Proposition D, was rejected by Missouri voters in 2018. Proposition D would have bumped the tax up by 2.5 cents per year for four years. According to previous Missourian reporting, 54% of voters opposed the increase, compared to 46% who supported it.
What would the bills do?
If passed, three of the four bills would put a motor fuel tax increase on the ballot.
House Bill 1476, sponsored by Rep. Joe Runions, D-Grandview, would raise the tax to 19 cents per gallon in 2021, 21 cents per gallon in 2022 and 23 cents per gallon in 2023.
House Bill 1477, sponsored by Rep. Steve Butz, D-St. Louis, would raise the tax by 10 cents over five years, at a rate of 2 cents per year.
Senate Bill 539, sponsored by Sen. Doug Libla, D-Poplar Bluff, would raise taxes on gasoline to 19 cents per gallon in 2021. The tax would adjust each year for inflation after implementation. Libla sponsored a nearly identical bill during last year’s session, which did not become law.
All three would trigger the Hancock amendment, a constitutional amendment that requires all tax increases over a certain amount to be voted on statewide. That same amendment is why voters saw Proposition D on their ballots.
House Bill 1433, sponsored by Rep. Kip Kendrick, D-Columbia, would not trigger the amendment because the revenue generated falls below the threshold outlined. Kendrick said he views his bill as an intermediate solution, not a final fix. Under the bill, the motor fuel tax would increase to 19 cents per gallon in January of 2021 until Dec. 31, 2030. It would then decrease to 18 cents per gallon.
Funding Missouri’s infrastructure
Kendrick’s bill also includes a $450 million bond to help MoDOT repair road infrastructure. Kendrick said the tax would generate around $60 million a year, which would be used to pay off the bond over a 10-year period.
“We have significant long-term issues with MoDOT’s funding,” Kendrick said. “Missouri is in a situation where we’ve run our transportation reserve fund fairly low, and we have one of the lowest fuel taxes in the nation.”
MoDOT estimates a total of $825 million in unfunded annual transportation needs that it considers high priority, spread out across maintenance, improvements and investments.
A MoDOT report using 2016 data showed Missouri has a larger state highway system than all neighboring states, but the lowest fuel tax rate of any. According to data from the department, Missouri’s revenue per mile of state highway is $50,882, well below the national average of $238,076. In addition to the highway system, Missouri also has 97,000 miles of county roads and city streets and almost 14,000 bridges.
The sheer scale of Missouri’s road system, combined with doubling supply costs and rapidly rising labor costs, have resulted in a funding problem for the department. The report said that over the past 20 years, the purchasing power of Missouri’s motor fuel tax has dropped from 17 cents to 7.
Another report by the department said that while Missourians pay a relatively low amount per month to use the state’s roads and bridges — $30 in state and federal transportation taxes and fees — they absorb hidden costs because of road conditions. The report said travel on rough roads contributes to accelerated vehicle depreciation; additional vehicle repair costs; increased fuel consumption and increased tire wear. It estimated the cost of those consequences adds an additional $59 per month for drivers and $3 billion each year for the state.
The report concludes that additional investment to improve the road systems would reduce the costs to drivers. Kendrick said that in the last legislative session, lawmakers passed a $301 million bond proposal to be paid back using general revenue. But, he said, “general revenue is already stretched thin.”
He also said his proposal lowers the tax to 18 cents after 2030 to show voters that there is a good faith effort to reduce their costs.
“The one cent remaining in perpetuity is really to maintain the repairs on the roads that were fixed as a result of the bonding proposal,” Kendrick said.