What’s Happening with the Gas Tax?
As many Missourians have heard by now, a bill to raise the state’s gas tax for the first time in 25 years (SB 262) passed the House and Senate and is waiting on the governor’s desk. The governor indicated that he expects to sign the bill once his office finishes reviewing the bill’s language. But there are reasons to believe this review will unearth some concerns regarding its constitutionality.
Six members of the House recently sent a letter to the governor stating their belief that the bill will violate Missouri’s constitution, specifically the Hancock Amendment. The provision in question limits the amount the general assembly can raise taxes in a given year without first being approved by a public vote. (See here for more information about the amendment).
If signed into law, SB 262 would raise the state’s gas tax by 2.5 cents per gallon for each of the next five years, for a total increase of 12.5 cents by 2027. But there’s a catch: residents can get a refund for the additional gas taxes paid due to this bill. The fiscal note for the bill estimates that once fully implemented in FY 2027, it could exceed the Hancock Amendment cap, which for this year is $111.8 million. Depending on how the bill’s fiscal impact is calculated and the number of refunds claimed, it is possible that in the years prior to 2027, the tax collected could also exceed the Hancock limits.
While there’s certainly more to the story regarding whether the legislature violated the Hancock Amendment, the gas tax bill becoming law certainly opens the door for a variety of questions and potential court challenges. The Hancock concerns are explained in more detail here, but here are a few of the major questions at hand:
- How much revenue will the gas tax hike raise?
- How many Missourians will take advantage of the available refund option?
- How will Hancock Amendment compliance be determined?
- How will the other bills signed into law by Governor Parson impact this calculation?
One way to avoid all this potential mess is to send the gas tax question to voters. In fact, a referendum petition has been filed that would accomplish just this, but it has yet to receive approval for circulation by the secretary of state. If the petition were to succeed, the Hancock Amendment concerns would be avoided because taxes approved by voters are not subject to the amendment.
Missouri may soon be raising the state’s gas tax, but there are a lot of questions to be answered before we know for sure. In the meantime, keep enjoying the second-lowest gas tax in the country.