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Economy / Taxes

Missouri’s Gas Tax Hike is Coming

By Elias Tsapelas on Sep 13, 2021
Old gas pumps
Goolia Photography / Shutterstock

Recently, the final obstacle for SB 262 going into effect was cleared, as an effort to put the gas tax on the ballot failed. This paves the way for Missouri to raise its gas tax for the first time in more than two decades. On October 1, Missourians will begin paying 2.5 cents more per gallon at the pump. Then for each of the next four years the tax will increase by another 2.5 cents, eventually reaching an ultimate 12.5 cents more per gallon compared to today.

Last month, I wrote about the many complicated questions surrounding the gas tax bill. The primary question is whether the bill runs afoul of the state’s Hancock Amendment, which is a constitutional amendment that requires tax increases above a certain threshold to be subject to a public vote. Several legislators expressed their concerns with the bill and urged the Governor to veto the legislation. In the end, Governor Parson signed the gas tax into law, indicating he’s not too concerned about the potential constitutionality issues.

Perhaps that’s why the bill’s fiscal note was changed before it was signed into law. Originally, the fiscal note stated, “the net increase in state revenues by this proposal exceeds the limit to revenue growth set forth by Article X, Section 18(e)” (meaning the bill’s tax hike is expected to bring in more revenue than the Hancock Amendment allows). But the updated fiscal note added an important caveat:

However, the calculation under Article X, Section 18(e) is based on the fully implemented impacts of all legislation passed during a session. Therefore, it is unknown at this time whether the cumulative impact of all legislation passed during the 2021 session will be greater than the limit allowed.

What this means is that Missouri will be implementing a gas tax hike on October 1 without knowing whether the law violates the state’s constitution. And if it’s later determined the tax hike doesn’t comply with the Hancock Amendment, the issue will be sent to voters for approval before collections can continue.

It’s an unfortunate situation that state taxpayers will soon be facing, and it’s made worse by the fact that it all could have been avoided if the legislature had simply sent the gas tax hike question to voters as it’s done in the past. My colleague Jakob Puckett has written repeatedly about the inadequacy of Missouri’s current gas tax to maintain our state’s deteriorating roads. But is raising taxes on Missourians without their input, and without knowing whether the way it’s being done is constitutional, the right answer? I, for one, don’t think so.

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About the author

Elias Tsapelas

Director of State Budget and Fiscal Policy

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