Wyoming's 9-cent fuel tax hikes to raise $60.3M/yr for roads finding broad industry backing - Casper, WY Oil City News
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Wyoming’s 9-cent fuel tax hikes to raise $60.3M/yr for roads finding broad industry backing

Trucks line the parking lot at Burger King next door to the Flying J Travel Plaza on Thursday morning. (Dan Cepeda, Oil City)

CASPER, Wyo. — A proposal to increase Wyoming’s gasoline and diesel fuel taxes has support from a range of different industries who describe the highway system in terms like “Wyoming’s life blood.”

Along with “comparable increases in the tax distributions on fuel used in snowmobiles, motorboats and off-road recreational vehicles,” House Bill 26 would generate an estimated $60.3 million in additional revenue for the state each year (or $6.7 million per penny), according to the Legislative Service Office.

WYDOT Director Luke Reiner told the House Transportation Committee that raising the fuel tax would make Wyoming’s fuel tax comparable with states like Idaho, Utah and Montana. (WYDOT)

Representatives from the following organizations expressed support for fuel tax hikes during the House Transportation, Highways & Military Affairs Committee’s Tuesday, Feb. 23 meeting:

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  • Powder River Basin Council:
    • Monika Leininger told the committee that the council represents family farmers and ranchers and that “an increase in the fuel tax is the most equitable” way to raise funds for highway maitenance and construction.
  • Wyoming Trucking Association:
    • “Almost 70% of Wyoming communities rely completely on the highway system to receive any goods or services,” Sheila Foertsch said. “We are supportive of a fuel tax increase at this time.”
    • Foertsch said members had expressed support for a six cent increase and also advocated for a phased implementation of the hikes.
  • Wyoming Lodging and Restaurant Association and the Wyoming Travel Industry Coalition:
    • Chris Brown said that 80-85% of people traveling to Wyoming come via highways and that maintaining roads is key to the tourism industry.
  • Wyoming Stock Growers Association:
    • Jim Magagna said the association has “seldom” been in favor of tax increases in their 149 year history but that members voted unanimously in Sept. 2020 in favor of the nine-cent hike.
    • “Unlike many tax increases….this is a tax increase that supports a very fundamental infrastructure,” Magagna said.
    • He added that people carrying heavy loads of livestock have been unable to use “certain roads due to bridge weight restrictions,” causing them to use less efficient routes.
  • Wyoming Crop Improvement Association:
    • Keith Kennedy said the association “reluctantly” supports the tax increase.
    • “These roads are important both for our inputs and for us to market our products,” he said.
  • Associated General Contractors of Wyoming:
    • Katie Legerski said that the fuel tax provides a predictable and secure revenue source.
    • She said enough money to fund regular maintenance is key to avoid larger costs down the road from reconstructing extremely deteriorated roads.
  • Wyoming Petroleum Marketers Association
    • Mark Larson said that “roads and highways are Wyoming’s life blood” and that there is “no debate among my members as to the need [for the tax hikes].”
  • Wyoming County Commissioners Association:
    • Jim Willox said that the fuel tax also supports county road budgets and that deterioration in the state is happening “at an alarming rate.”
    • “Our road system is an economic driver for the state and it is critical that we invest in it,” he said. “Nobody likes paying taxes and I would say that is one thing we unanimously all agree on, but this is a fair tax that is charged [to] the users.”
    • Kelli Little noted that counties manage about 15,000 miles of roads in the state, more than WYDOT and that the fuel tax supports the state’s entire road system.
  • Wyoming Taxpayers Association
    • Ashley Harpstreith said the association advocates for tax policies which are justified, equitable, create stable revenue streams and are accountable and that the fuel tax meets these criteria.
    • “By doing nothing to adequately invest in our transportation system, we are simply passing the expense to build the transportation system to future generations,” she said.
  • Wyoming Association of Municipalities
    • David Fraser noted: “It is an interesting cross section of organizations who support this.”
    • He said that local governments also benefit from the fuel tax: “We are all part of that network.”

Some organizations do not support the proposal. Tony Gagliardi said on behalf of the National Federation of Independent Business who have 127 members in Wyoming that a survey found 64% oppose the tax hike as proposed.

However, Gagliardi said members are “not opposed to increases in fuel taxes across the board” but that they want to ensure any fuel tax increases specifically go toward road maintenance and construction, want to see a list of project with timelines and costs and want to know that bidding practices are fiscally responsible.

Reiner told the committee that WYDOT revenue sources “levelled out” around 2010, and that “our ability to satisfactorily maintain our roads is declining based on inflation.”

Brett Moline with the Wyoming Farm Bureau Federation said members of the organization are “not convinced that WYDOT has made as many cuts as it can.” He added that a nine cent tax hike would equal a 37% increase.

He said that if the bill moves forward, he’d like the legislature to add language restricting use of the funding to maintenance and construction of roads.

WYDOT Director Luke Reiner explained to the committee the need for the fuel tax increases. He explained that WYDOT contracted DYE Management to study the gap between the funding level needed for their operations compared with their budget.

The study found that WYDOT had a total of $354.3 million in unfunded operating needs per year, including $103.7 million for construction for preservation of roads and bridges in the state and was short $9.9 million per year in terms of funding needed to keep up with road surface maintenance:

Reiner said that some roads have some serious issues, such as a bridge on I-80 which has a hole in it.

“It is a problem if you hit it with a motorcycle,” he said. “That’s happening.”

He pointed to another example of a rusted bridge over the Snake River on Highway 22 where weight restrictions had to be implemented. He said the weight restrictions cause economic impacts such as cattle or gravel trucks not being able to travel over the bridge while fully loaded.

WYDOT Director Luke Reiner presented the House Transportation Committe with information about why the fuel tax increases are needed. (WYDOT)

“Our infrastructure directly supports our economy of the state,” Reiner said. “It is just absolutely critical for us to maintain it.”

He noted that WYDOT has taken steps to reduce costs such as closing ten rest areas and reducing staff by 10% over the last decade:

While snow removal costs have been down this winter and will free up some funds for highway projects, Reiner noted that this alone wouldn’t solve WYDOT’s spending gap. The state could also be hit with more snow in coming years.

Reiner said that a bright spot in terms of highway funding in Wyoming is level of support the state gets from the federal government.

“We are what is called a recipient state,” Reiner said. “We get back more than we put in in terms of fuel tax.”

He noted that federal funds require a state match and that for some grants, WYDOT state-funding levels are too low to meet the match.

The following chart shows sources of funding WYDOT relies on and its trajectory over the years:

Reiner added that WYDOT saw about $63.% million in one-time federal highway COVID relief funds which was a boon to the state but would not solve the state’s long term transportation budget needs.

“My opinion is we can’t cut ourselves out of this issue,” Reiner said. “It is not services we are cutting. It is actually something concrete.”

“The trend is our roads are getting worse and we need to put money to maintain them.”

Rep. Mark Baker (Sweetwater County) offered an amendment to House Bill 26 during Tuesday’s House Transportation Committee meeting. That amendment proposed only hiking the tax on diesel and not hiking the gasoline tax.

Baker said that he had conducted a poll via social media. He said that 229 people responded and only 16 people supported a fuel tax hike.

He said he thinks the tax hike is supported by industry but not supported by the general population so he proposed raising the diesel tax since commercial and industry vehicles tend to rely more on that fuel.

Rep. Marshall Burt (Sweetwater County), however, expressed opposition to the idea both because private citizens sometimes have vehicles that use diesel and because “raising it just on the diesel would go against the trucking industry.”

Rep. Landon Brown (Laramie County) said he didn’t like the idea of imposing fuel taxes inconsistently.

“This would affect truckers disproportionately,” he said. “If you are going to use the roads, you should be paying for it.”

“Instituting this only on truckers seems unfair.”

Baker said that he thinks trucks and diesel do the most damage to roads. However, he withdrew his amendment and said he’d bring it back up when the bill is considered on the floor of the House.

House Transportation Chair Donald Burkhart, Jr. (Carbon County) offered an amendment that would phase in the fuel tax increases. Fuel taxes would increase by three cents per year each year for three years under the proposal. This amendment was adopted by the committee.

Burkhart offered another amendment that would limit the use of the funding from the increased taxes to only road maintenance and construction.

He said the last time the legislature increased the fuel tax in 2013 (a ten cent hike), they also stipulated that the funding was specific to road maintenance and construction.

The committee passed the amendment as well as House Bill 26 during Tuesday’s meeting. That will send the proposals to the House Committee of the Whole for consideration.