Street fight

Lawmakers debate raising gas tax to pay for roads

POLITICS | Alan Kozeluh

Illinois lawmakers used $300 million meant for roads to plug a budget hole earlier this year, so now they’re considering replacing the money with a higher tax on motor fuels.

The proposal would eliminate the sales tax on gasoline and diesel fuel, instead raising the separate motor fuel tax. A group of oil industry interests and gas station owners last week announced their opposition to any motor fuel tax increase ahead of the Illinois General Assembly returning from its spring recess this week.

Motor fuels like gasoline and diesel fuel are taxed twice in Illinois – once by the state sales tax and again by the motor fuel tax. The sales tax feeds the Illinois General Revenue Fund, while the motor fuel tax feeds both the Road Fund and the Motor Fuel Tax Fund.

Last month, the legislature passed a stopgap funding bill to get the state through the end of the 2015 fiscal year, which involved “sweeping” money from several special state funds. The Road Fund was swept for $250 million, more than any other fund, while the Motor Fuel Tax Fund was swept for an additional $50 million. That means lawmakers used $300 million which would have gone toward infrastructure maintenance to plug budget holes.

House Bill 3521, sponsored by Rep.

David Harris, R-Arlington Heights, would increase the per-gallon tax on gasoline from 19 cents to 35 cents and the per-gallon tax on diesel fuel from 21.5 cents to 36 cents. Meanwhile, it would exempt the fuels from the state sales tax and similar taxes.

Andrew Nelms, deputy director of the Illinois chapter of Americans for Prosperity, a conservative advocacy group started by the oil billionaire Koch brothers, said people paying taxes on motor fuels have no way of knowing whether those taxes actually go toward paying for roads, partially because of the sales tax that is also paid on fuel. Nelms said Illinois is one of only seven states to apply sales tax to gasoline in addition to the motor fuel tax.

“Our total state tax on a gallon of gas ranks in the top third in the nation,” Nelms said.

At 52 cents per gallon, Illinois currently has the 10 th highest taxes on gasoline in the country, according to the American Petroleum Institute. The Federal Highway Administration says Illinois also has the third greatest length of road, at 305,872 miles. The only states with more roads than Illinois are Texas and California.

Illinois’ motor fuel tax was last raised in 1990. It is 19 cents per gallon today, which is actually lower than many neighboring states, including Wisconsin at 30.9 cents, Iowa at 31 cents and Kentucky at 21.2 cents.

Jennifer Filson Morrison is managing director of the Transportation for Illinois Coalition (TFIC), which brings business and labor groups together on transportation issues. She says that maintaining roads is a key to Illinois’ economic status in the future.

“The economy and the state were built off of transportation,” Morrison said. “If we don’t maintain that, we lose the competitive edge that gives us.”

For Bill Fleischli, executive vice president of the Illinois Petroleum Marketers Association (IPMA), the General Assembly’s choice to sweep funds from the Road Fund means that Illinois has plenty of money for road maintenance. He also noted that newer, more fuel-efficient cars have resulted in a reduction of about 6.5 percent in the sale of motor fuels from 2008 to 2013.

“That’s over 400 million gallons that were not sold in Illinois, and taxes weren’t paid on them,” Fleischli said. “If you increase the taxes on motor fuel, volumes will be further reduced with the tax revenues.”

Morrison also noticed the reduction in sales of motor fuels, but for her, it just illustrated the need for more revenue.

“Cars are more fuel efficient, so actually the number of gallons being purchased – and therefore the revenues – have stagnated and declined rather than grown,” Morrison said.

Morrison also pointed out that Illinois interstates are reaching the end of their design lifespan.

“It’s fairly inexpensive to repair existing roads until they’re so worn out that repairs are happening every year,” she said. “That’s almost the point we’re at now.”

Contact Alan Kozeluh at [email protected].