MO Holding with Planned Gas Tax Increase, IL Approves 6-Month Freeze

Facebooktwitterlinkedinmail

By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

With gasoline prices still hovering around $4.15 in St. Louis and $4.60 in the Metro East, Missouri legislators are keeping the planned motor fuel tax increase in place while Illinois policymakers have frozen their state’s gas tax increase until the new year.

Public transportation agencies and contractors working in the heavy highway sector say Missouri is wise to keep the voter-approved 2021 increase in place because prolonging needed maintenance and added capacity work will only prove more costly.

“The Missouri Dept. of Transportation continues working with legislators to help them understand how gas tax revenues are used and what it would mean to lose that funding,” said MoDOT Director Patrick McKenna, who noted that losing the authorized 12.5 cent-per-gallon graduated increase through 2025 could have equated to a loss of $3 billion to $3.6 billion in lost transportation projects. If Missouri legislators had voted to repeal the tax, he added, it would have severely hampered MoDOT’s ability to gain matching funds on federal projects and borrow necessary funding. Had there been a repeal of SB262, it would have immediately halted $1.7 billion in active and planned projects, McKenna said.

Illinois legislators took a different approach, last month approving a six-month freeze on the state’s gas tax increase that was scheduled to begin in July. The state’s gas tax will now remain at 39 cents per gallon until January 1, at which time it is expected to rise by 3.8 cents, greater than its planned 2.2 cent-per-gallon increase because of inflation.

Four other U.S. states have approved a gasoline tax repeal: Connecticut, Georgia, Maryland and New York.

Connecticut voted to suspend its gas tax of 25 cents per gallon for three months through June 30. Georgia legislators passed a similar suspension of its 29.1 cent-per-gallon tax, authorizing a motor fuel tax holiday from March 18-May 31. Maryland policymakers approved a 30-day suspension of its 36.1 cent-per-gallon gas tax from mid-March to mid-April. New York’s gas tax reprieve of 16 cents per gallon begins June 1 and runs through December 31.

Industry analysts say the trade-off between financial relief to consumers versus the cost of delaying road repair and reconstruction is not worth the minimum temporary relief to motorists.

A study performed by the American Road and Transportation Builders Association in 2020 set out to discover whether gas prices truly responded in any way to tax changes, as often touted by politicians. According to the study’s findings, while gas taxes attract plenty of media attention, other factors – crude oil prices, refinery capacity, how much inventory oil companies have and environmental rules specific to gasoline content – are significantly more influential on gas prices. The ARTBA study also found that when gas tax rates decreased, they did so by an average of 1.4 cents, yet the price at the pump only decreased by one-third of that.

Facebooktwitterlinkedinmail

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.