Committee begins discussion about taxing gas and diesel

By Tom Lacock, Cowboy State Free Press reporter

EVANSTON – Two bills to increase revenue for road maintenance through taxing fuel sales in Wyoming will be drafted at the direction of a legislative committee.

The votes came today during a meeting of the Travel, Highway and Military Affairs Committee in Evanston.

The Committee directed the Legislative Service Office to draft legislation that would apply sales tax to gas and diesel purchased in the Cowboy State. The money from the tax would go entirely to build and maintain roads in Wyoming.

The motion to draft the legislation passed by a vote of 6-5 after much discussion. That effort was followed by a motion to draft legislation that would increase the fuel tax by 10 cents-a-gallon.

Committee members were quick to point out draft bills are a starting point for discussion.

“It’s got a long ways to go,” offered Casper Republican Sen. Bill Landen.

“I voted for both of the bills, just to get them going to see what shakes out,” said Rep. Mike Gilmore, D- Casper.

Others offered outright opposition to an increase in the tax.

“No matter how you will put it out there, all the public will hear is ‘You are putting down another tax,’ and I can’t support that,” said Sen. Dan Dockstader, R-Afton.

Kevin Hibbard, budget officer for the Wyoming Department of Transportation, said Wyoming’s gas taxes are by far the lowest in the region at 14 cents per gallon on gas and diesel.

Montana is the highest in the region at 27 cents per gallon on gas, While Colorado and South Dakota are the closest to Wyoming at 22 cents per gallon. Hibbard said 52 percent of the nearly $72 million WYDOT received in gas tax a year ago came from non-residents.

Hibbard said Georgia is the only state in the Union that has a lower gas tax than Wyoming, but gas sales are subject to sales tax, which skews the numbers.

The state last raised the gas tax since 1998.

WYDOT Chief Engineer Del McOmie said since the last gas tax increase, inflation has caused Wyoming to have half of the buying power it held in 1998. At the height of their funding in 1998, WYDOT was working on 135 projects per year. That number dropped to 76 in 2006.

McOmie said the quality of Wyoming roads is also showing that funding decrease. In 2000, 61 percent of Wyoming roads were in good to excellent condition. McOmie said given the current funding, WYDOT estimates that by the year 2015, that number will flip to show just 41 percent of Wyoming’s roads in good or excellent condition.

“You can spend a little now, or you can spend a lot later,” McOmie said. “It just boils down to what you want to do.”

WYDOT has seen its funding for road projects drop from $200 million in the 2009 biennium to just $50 million this year. It also picked up $180 million in stimulus funds this year.

Wyoming does continue to use more federal money than its own cash for road maintenance. The state’s road money is made up of 78 percent federal dollars and just 21 percent state money. Hibbard said most states contribute about 65 percent of the money spent on roads and receive 35 percent of their road money from the feds.

“The federal government give us dollars and then assigns a mission to those dollars,” Hibbard said. “That is transportation. A large portion goes to interstates and a larger portion goes to the national highway system.”

He added that raising the gas tax is tough when the economy is slow, but even tougher when the state is in good financial shape.

“The only opportune time (for a tax increase) is when we aren’t starving, but we aren’t rich either. That doesn’t come around very often,” Hibbard said.

WYDOT told the subcommittee that a one penny-per-gallon increase in gas tax equates to $6.79 million dollars in road money each year. Among the options in funding increases were an outright rise in the fuel tax as well as adding sales tax.

“If it is working for some of these other states, maybe it is something we should at least look at,” said Seth Carson, D-Laramie, a committee member.

Committee Co-chairman Roy Cohee, R-Casper, said he thinks the idea is worth looking into, but doubted it would pass the Legislature the first time it is presented.

The concept of taxing gas strictly through sales tax was also discussed.

“There is a chance that in the long term we could get more revenue, but I think there is a chance we could lose money if the price of gas goes down,” said Hibbard. “From my standpoint, I can anticipate what the revenue is going to be and the price of gas scares me. There are inherent risks associated with that.”

Sen. Michael Van Flatern, R-Gillette, said he was interested in looking at a sales tax on gas because it would allow budget-tightening cities and counties a taxing option.

Representatives from the Wyoming Trucking Association, the Wyoming Taxpayers Association and the Wyoming Contractors Association all supported an increase in the gas tax.

Concerns brought up by the groups included finding a way to tax more fuel efficient vehicles as well as keeping construction firms in the Cowboy State.

Jonathan Downing, executive vice president of the Wyoming Contractors Association, said only one other state lost more construction jobs than Wyoming.

It is difficult, he said, for in-state road construction firms to envision a successful future with the current funding model for road construction in Wyoming.

“The current funding approach does not allow for good planning or making that investment in Wyoming,” Downing said. “That is the challenge we are seeing of the business in Wyoming staying in Wyoming.”

He also said the Contractors Association has discussed a promotional campaign to help sell a tax increase, which would educate citizens on the cost of maintaining roads in the state.

Ken Hamilton of the Wyoming Farm Bureau Federation said his group has consistently stood against the fuel tax increase, pointing out many of the agricultural community goods come and are sold through use of shipping.

“If your membership has been against a tax increase for the last 20 years, when would you say they will be in favor of it?” asked Cohee. “Another 10-20 years?”