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fuel tax

Wyoming Needs Higher Fuel Tax For Roads, WYDOT Says

in Energy/News

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By Wendy Corr, Cowboy State Daily

The overwhelming majority of residents in Wyoming support the use of fossil fuels. But more taxes on those fuels? Well, that’s a different matter.

But Wyoming needs the proposed increase in fuel taxes to keep up with its highway maintenance, according to an official with the Wyoming Department of Transportation.

Doug McGee, public affairs manager for WYDOT, told Cowboy State Daily the department is facing a shortfall of about $354 million in unfunded needs per year. “Certainly, this fuel tax is very much needed to maintain our roads and bridges – our transportation system – to the level that Wyoming citizens expect,” McGee said.

House Bill 26, which would increase the state’s fuel tax from 24 cents to 33 cents per gallon for both diesel and gasoline, passed the House Transportation, Highways and Military Affairs Committee last week on a 6-3 vote. The extra 9 cents per gallon would be a 37.5 percent increase in the state’s fuel taxes and would bring Wyoming’s fuel tax to the same level as neighboring Idaho.

The increase would also boost the state’s ranking for fuel taxes from 33rd for gasoline and 34th for diesel to 18th and 19th, respectively, according to a report from the American Petroleum institute.

The Legislative Service Office reports that tax increase would raise almost $61.5 million.

McGee noted that the bill has a larger benefit than just raising money for roads — it would contribute to the economic well-being of the state.

“Wyoming’s economy — indeed, the nation’s economy — travels on Wyoming’s roads,” he pointed out. “We need good, solid infrastructure to keep our economy strong.” McGee added that tourism, the third largest economic sector in the state, relies on the highways and interstates that the bill would help maintain.

McGee said the department would receive a little over $40 million of the $61.47 million the increased tax would generate – and while that is just a fraction of the shortfall WYDOT is facing, every dollar counts.

“There are projects that we’ve had to delay,” he said. “There are very serious maintenance needs across the state. So $40 million dollars would make a big impact, and would be very important to the department.”

WYDOT Director Luke Reiner has said that for every dollar not spent on preventative maintenance on roadways, $4 to $8 will be required for complete highway reconstruction down the road.

The increase has won the support of a number of organizations including the Powder River Basin Resource Council, Wyoming Taxpayers Association, Wyoming County Commissioners Association, Wyoming Lodging and Restaurant Association, and Wyoming Association of Municipalities. The groups spoke in favor of the tax increase during a hearing on the bill held by the committee on Feb. 23. Many said that although they would not normally support increased taxes, the fuel tax proposal is different.

“The quality of our roads and bridges in Wyoming are in deterioration,” Jim Willox, president of the county commissioners association, was quoted as saying by The Sheridan Press. “Unless we immediately start taking paths to correct that, we will affect the economic well-being of our state in such a way that I don’t think we can recover.”

Rep. Donald Burkhart, R-Rawlins, has proposed an amendment to the bill that would spread the tax increase over three years.

The proposed increase will be considered in the Wyoming House of Representatives in the legislative session this month.

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Fuel taxes pale in light of future electric travel

in News/Transportation
Gas Tax

By Ike Fredregill, Cowboy State Daily

Fuel taxes alone can’t keep pace with the cost of highway maintenance in a future with electric vehicles and fuel-efficient engines, Sen. Stephan Pappas, R-Cheyenne, said. 

“The problem with the current fuel tax is it’s not sustainable,” Pappas said. “We’re changing our habits in the U.S. We’ve got new urban models, telecommuting, people are staying home, and many people don’t even own cars.”

While most of these challenges are hitting metropolitan areas the heaviest, Pappas said Wyoming can’t rely on rural insulation forever. 

“We may be working more remotely in the future than we currently do,” he explained. “Also, there’s a growing number of hybrid vehicles, and a number of purely electric vehicles as well.”

Fuel taxes could be in the spotlight during the 2020 Legislative Session as legislators scramble to close the growing funding gap in Wyoming Department of Transportation’s road maintenance budget.

A member of the Wyoming Legislature’s Transportation, Highway and Military Affairs Joint Committee, Pappas recently voted against an Interstate 80 toll road proposal, because he said he’s not sure a toll road could close the gap by itself.

“There’s a bunch of ways to skin a cat,” he said. “I don’t think there is a singular option that can fix the state’s highway situation. I think the answer will be multi-faceted.”

To that end, Pappas is drafting a bill to create a task force which will look at several revenue options for highway construction and maintenance. The bill draft is slated for presentation to his committee in October.  

Tax at the rack

Describing the state’s fuel tax as complex is somewhat of an understatement, said Wayne Hassinger, the WYDOT Fuel Tax Administration program manager. 

“There are no straight lines when it comes to fuel tax,” Hassinger explained. “When we hire a new employee, they go through 12-18 months of training to administer the fuel tax.”

Wyoming charges distributors, suppliers and importers fuel tax at the rack, the physical location fuel exits the terminal or refinery.

“A terminal is a location where multiple suppliers store their fuel,” said Kim Peters, the WYDOT Fuel Tax Program supervisor.

From the rack, fuel is loaded into semi-trucks and rail cars before being shipping to locations such as gas stations and bulk storage facilities.

“We impose the tax when it crosses the rack, but it’s a tax on the ultimate user,” Hassinger explained. “When you buy gas, you pay the tax, but it’s already been paid up the line. So somebody in that line is getting reimbursed when you pay it at the pump.”

In 2013, Wyoming raised both the gas and diesel tax from 14 cents to 24 cents a gallon, Hassinger said. Prior to that, the state had not raised the fuel tax since the late ’90s, he added.

While all gas and diesel is taxed at the rack, the point at which the end user refunds the supplier determines how the money is distributed throughout the state.

When the suppliers submit their tax returns, they identify where the taxed fuel was destined.

“There’s a (tax) distribution model for gas and a different distribution model for diesel,” Hassinger said.

If the fuel is gas and destined for a city, the city will get 15 percent of the tax collected. For diesel, cities’ collect 5 percent of tax collected within city limits.

If the fuel is sold outside city limits, the county receives a portion of the tax collected. Counties receive about 13 percent of taxes collected on gas and 20 percent of diesel taxes.

The remaining tax collected is earmarked for several accounts, with the primary being WYDOT’s highway fund, which is used for highway construction and maintenance, Hassinger explained. WYDOT can only spend fuel tax monies on road construction and maintenance, but he said counties and cities are permitted to use the revenue as they see fit.

The highway fund receives about 57 percent of tax collected for gas sales and 75 percent of diesel tax.

During fiscal year 2018, Wyoming collected about $83.3 million for gas taxes and about $84.5 million for diesel taxes. In late calendar year 2018, WYDOT reported to the Legislature about $135 million in unfunded operating expenses, including more than $72 million in construction and maintenance.

User fees

As the future of travel evolves, Pappas said the state’s methods of funding infrastructure need to keep pace. 

“America is really falling in love with the electric vehicle,” he said. “Experts predict 55 percent of all new car sales in the U.S. will electric by 2040.”

Hassinger said Wyoming was in the first wave of states to charge electric vehicles a use tax, which recently increased from $50 to $200 annually. But Pappas said the increase wouldn’t close the funding gap.

“If we were California, (electric vehicle user fees) might work out, but we’re not California,” he said.

The fee only applies to electric vehicles registered in Wyoming, so the state captures no additional revenue from electric vehicles registered in other states and traveling on Wyoming highways.

“You could charge Wyoming (electric vehicle) users thousands and thousands — it’s not going cover the cost of maintaining the roads,” Pappas explained.

The federal government also taxes fuel, but Hassinger said it hasn’t raised taxes in 30 years and Wyoming receives the lowest federal reimbursement allowable. 

“Fuel taxes are a user fee — when you pay fuel tax, you’re paying to use the road,” Hassinger said. “Every state is struggling with this: How to fund rising infrastructure costs with diminishing revenues. The national consensus is it’s likely going to be a mix of all sorts of things.”

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