Fuel Tax Increase, P3 Bill on Verge of Passing Senate
Last Thursday, SB 540, a bill languishing on the Missouri Senate floor that would increase the state fuel tax two cents, was amended and gained that body’s approval. The amendments, which will tier the fuel tax increase and create a board to look at tolling major transportation infrastructure projects, is an improvement over previous versions of the bill and should be given due consideration by policymakers.
The first major change to SB 540 is that instead of raising both regular and diesel fuel taxes by two cents the regular gasoline tax will only increase by 1.5 cents and diesel tax will increase by 3.5 cents. This type of change makes sense, because the vast majority of taxable diesel fuel is bought by trucks, which can do much more damage to the roads per gallon consumed. In fact, both the federal government and 20 other states have higher diesel taxes than regular fuel taxes. This change will have little impact on the total amount of new revenue raised, which will be just under $80 million given current fuel consumption in Missouri. However, this should provide enough funds to MoDOT (around $60 million) to maintain federal matching funds and give a much-needed boost to municipal road improvement budgets.
Aside from these tiers, another change to SB 540, named the “Public-Private Partnership (P3) Authority Act,” may provide more long-term opportunities for improving the state highway system. Even if fuel taxes increase, the state still will not have sufficient revenue to make expensive but necessary improvements to our state roads. A prime example of this is I-70, which will need to be rebuilt from the ground up at a cost of billions of dollars. A reasonable method of solving this problem is to use modern toll roads to pay for better infrastructure, as many states already have.
However, there are constitutional issues with MoDOT tolling the state highway system, which have to do with the dispersal of State Road Fund money. A way to avoid this problem is to have private companies take over the job of financing, building, and maintaining state highways as toll roads. Missouri already has a federal waiver to rebuild I-70 as a toll road, and an amendment to SB 540 would create a board that would look for public-private partnerships to do just that. This bill also includes a check, in that any tolling proposal would have to be approved by the legislature.
The amended SB 540 is a sound policy solution to MoDOT’s funding problems and would be a great step forward for Missouri. However, the bill still requires final senate approval before going to the house and the governor. We’ll keep you updated.