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Senate panel eyes transportation sales tax idea

Senate panel eyes transportation sales tax idea

April 17th, 2014 in News

A widening project for a mile-long section of Highway 5 in Sunrise Beach, scheduled for this year, could be delayed be delayed by MoDOT's need to cut construction costs.

Photo by Ceil Abbott

Missouri Senate Transportation Committee Chairman Mike Kehoe expects his committee this morning will endorse two proposed constitutional amendments to improve state funding for transportation improvements.

The committee spent more than two hours Wednesday morning hearing the two proposals to increase the state's sales tax by a penny, for a 10-year period - if voters approve the idea in a statewide election.

Dave Nichols, state Transportation department director, told the committee MoDOT's known for several years that funding was a growing problem - and the "Bolder Five Year Direction" plan to reduce the workforce by 20 percent and sell buildings and equipment no longer needed was an effort to reduce the department's expenses.

"We have saved over $500 million, and that has translated into actual money that has gone into our roads and into our highway program," Nichols explained. "But the challenge is, we can't cut our way at the Department of Transportation to solve our funding problem.

"The fact is, our funding supply - the fuel tax revenue mechanism - hasn't changed in 20 years, whether it's at the state level or the federal level."

Missourians still pay a state charge of 17 cents for each gallon of gasoline or diesel fuel, that began in 1996. That's lower than seven of the eight states that touch Missouri's borders, and the same as Oklahoma for gasoline purchases (Oklahoma's diesel tax is only 14 cents a gallon).

At the same time, Nichols said, the costs of building roads and bridges has gone up with the normal inflation over that 20-year period.

Without increased funding from some source, Nichols testified, the department's revenues will continue to drop and, "in 2018, we're not going to be able to match federal funds - and that's a four-to-one return on our investment."

The one-cent sales tax increase is expected to generate about $800 million each year, and $8 billion over a decade - enough to help improve road conditions around the state but not enough to tackle every project Missourians have told MoDOT they want to see done.

And 10 percent of the money would go to local governments - 5 percent to cities and 5 percent to counties - for local projects, including mass transit, biking and pedestrian walking areas.

The Senate Transportation Committee heard Wednesday from 22 different organizations supporting the proposed amendment.

Randy Allen, president of the Jefferson City Area Chamber of Commerce, said: "Give us the chance to make this case to the voters."

Ray McCarty of Associated Industries and the Missouri Transportation and Development Council, and Jay Adkins of the Missouri Chamber of Commerce and Industry, both supported the sales tax idea.

And Ron Leone of the Missouri Petroleum Marketers and Convenience Stores Association - which has opposed previous fuels tax increases and toll road ideas - said everybody benefits from a broad-based, fair user fee like the proposed sales tax.

But support isn't unanimous.

Richard Sheets of the Missouri Municipal League worried that a statewide sales tax increase would "diminish local governments' ability to fund local projects" through local sales tax increases.

Jeanette Mott Oxford, director of the Missouri Association for Social Welfare, said the sales tax is too regressive and would hurt the poorest Missourians the most. "We're especially concerned about the 40 percent who make less than $31,000 a year," she explained.

Joseph Miller of the St. Louis-based Show Me Institute said their studies show the state should increase the fuels tax - a direct user fee - instead of the sales tax that hits everyone.

Kehoe, R-Jefferson City, and others noted it would take about a 25-cent increase in the fuels tax to raise the same amount of money as the one-cent sales tax increase.

Rep. Dave Hinson, R-St. Clair, sponsors the House-passed bill, and Kehoe sponsors the slightly different Senate version.

"Even the people who spoke against this in the House committee realize that we have a funding problem as far as transportation goes in our state," Hinson told the senators. "Their basic issue was the way of raising those revenues."