Idaho bill pushes 8-cent gas tax hike

BOISE – A bill calling for sharp increases in Idaho’s gas and diesel fuel taxes, as well as a 50 percent increase in car registration fees, was introduced in the Idaho House on Monday, although even its sponsor said the proposal is just a starting point.

“They’re just ideas so that people understand what we’re looking at,” said House Transportation Chairman Joe Palmer, a Republican from Meridian.

Palmer said the legislation as proposed would raise nearly $200 million more a year for road funding.

His bill includes an 8 cent increase next year in Idaho’s 25 cent-per-gallon gas tax, with additional 1 cent increases in subsequent years. Idaho hasn’t raised its gas tax since 1996; the per-gallon tax, the main source of state funding for roads in Idaho, has lost a big chunk of its buying power to inflation and more fuel-efficient vehicles, even as the number of drivers and miles traveled has increased.

Palmer’s bill also calls for a 50 percent increase in registration fees for cars and 25 percent for trucks; a 12 cent increase in the per-gallon tax on diesel fuel; and new annual fees on electric and hybrid cars that use little gas.

The bill also would shift $22 million from Idaho’s general fund to road funds.

But Gov. Butch Otter warned against that kind of shift in his State of the State message to lawmakers at the start of this year’s legislative session, saying the state’s general fund pays for education, for which he wants a funding boost next year.

“He’s the governor – he can do whatever he wants,” Palmer said. “We’re just putting out options.”

He added, “I definitely expect more legislation to come out of other committees.”

Meanwhile, the state’s transportation director said if Idaho upped its investment in maintenance, it could eliminate all restricted bridges in the state in 10 years.

“It is no secret that Idaho does not have enough funding to support the needs of its aging infrastructure,” Brian Ness, Idaho Transportation Department director, told the Legislature’s joint budget committee. The state has a $543 million annual shortfall in transportation funding, he said, including $262 million more needed just to preserve the system in its current condition.

“The department is being squeezed between a revenue shortage and ever-increasing costs,” Ness said. House Republicans also have been working on a proposal to make big shifts in Idaho’s tax system, possibly raising the sales tax from 6 percent to 7 percent while eliminating the tax on groceries. Most of the new money would be dedicated to roads. But the proposal also would scrap Idaho’s graduated state income tax, instead moving to a flat rate of 6.6 percent. That would lower the rate for top earners and raise it for those who make less. Also on Monday, the House tax committee unanimously endorsed a proposal from a Caldwell senator to exempt materials for public roads from Idaho’s sales tax. The idea behind the measure is that the tax break would lower the bids contractors submit for public road work, allowing the state to do millions more in work each year. Sales taxes now go to the general fund, which would make that another indirect shift from general funds to road funds.

Wayne Hammon, head of the Associated General Contractors, told the House committee, “We believe that it’d be a good step forward.” No one spoke against the bill.Otter has pushed without success for a big increase in road funding since his first term in office, when he made it a top priority. The Legislature rebuffed him in 2008 and 2009, led in part by then-state Rep. Raul Labrador, now a 1st District congressman.