The state of Missouri appears poised to approve its first fuel rate increase in a quarter century.
Action taken Tuesday, May 11, by the state’s House members clears the way for a bill to head to the governor that would raise the 17-cent fuel tax rate by 12.5 cents over five years. The chamber voted 104-52 to approve the state’s first rate increase since 1996.
In March, senators voted 21-13 to do the same.
According to a fiscal note attached to SB262, the tax applied to gas and diesel purchases raised $698.7 million in fiscal year 2020.
State officials report the state has about $8 billion in unfunded needs for the transportation system.
To help address funding needs, the legislation sponsored by Senate President Dave Schatz, R-Sullivan, calls for raising the fuel tax rate by nearly 60% to 29.5 cents per gallon.
The increase would be phased in over five years. Starting Oct. 1, 2021, the tax would be increased by 2.5 cents each fiscal year until July 1, 2025.
Collecting the additional tax is estimated to raise $455 million annually.
Included in SB262 is an option for most Missouri residents to apply for an exemption and refund. The option would be available to residents fueling vehicles with a gross vehicle weight not exceeding 26,000 pounds.
Supporters, including the Missouri Chamber of Commerce and Industry, say the bill’s passage is a significant step in the right direction to ensure the state remains a leading transportation hub in the Midwest.
“It will help our state meet the infrastructure needs of all Missourians – from major interstate repairs to local bridge replacements, Missouri Chamber President and CEO Daniel Mehan said in prepared remarks.
Alternative fuel vehicles
Owners of alternative fuel vehicles would also contribute more. The fees for decals would be increased by 20% annually for five years.
Fees for electric and hybrid vehicles weighing in excess of 36,000 pounds would see a 10% annual increase over the same time period.
I want to recognize Senate President @DaveSchatz26, and Reps @BeckyRuth114 & @DeanPlocher for getting SB 262 across the finish line. This bill provides much needed funding for road & bridge repairs, and we are excited to move forward on these critical infrastructure projects.
— Governor Mike Parson (@GovParsonMO) May 12, 2021
Governor expected to sign fuel tax bill into law
Gov. Mike Parson has indicated he supports raising the fuel tax. In 2018, he backed a failed fall referendum to raise the tax rate.
Earlier that year, a 23-member task force of state officials and private citizens released transportation funding recommendations to the General Assembly that included a fuel tax increase.
Supporters have said additional funding is necessary for the repair of roads and bridges to ensure the states maximizes federal matching funds. LL
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