DES MOINES — Farmers would lose the tax exemption on the fuel they use to run their equipment under one proposal being floated by Gov. Terry Branstad’s administration to raise money to fix the state’s roads and bridges.
Under the proposal, red-dye fuel — so named because of the color of the dye added to fuel to show that it is road tax free — would be taxed at the current excise tax rate of 5 percent, but the money would go into a new Modern Agriculture Infrastructure Fund to fix rural roads and bridges.
The proposal is one of nine in a two-page memo the Branstad administration has shared with a select number of lawmakers and lobbyists in advance of the 2014 legislative session. The Gazette obtained a copy of the memo.
The revenue-raising ideas, which include increased fees, tax swaps and other proposals, would pump money into a “critical” infrastructure repair backlog the Iowa Department of Transportation estimates at $215 million a year.
“They’re pretty innovative ideas from what I’ve seen,” said state Sen. Tim Kapucian, a farmer from Keystone and the ranking Republican on the Senate’s Transportation Committee. “But ultimately, they’re going to cost people more money.”
Branstad and Transportation Director Paul Trombino wouldn’t discuss the proposals when asked about them during an Oct. 14 news conference, but the governor insisted he wasn’t giving his endorsement to any of the ideas.
Instead, Trombino said, he would be taking the proposals to “stakeholders” to gauge support for an eventual legislative package.
“The red-dye, by definition, is used in vehicles that aren’t used on the roads,” said Don Petersen, director of government affairs for the Iowa Farm Bureau. “That’s not something that we could support. It goes against the idea of user fees, which is what we support.”
The Iowa Farm Bureau was among a coalition of high-powered lobbying groups, including the Associated General Contractors of Iowa and the Iowa Motor Truck Association, which put their muscle behind a three-year, 10-cent fuel tax increase in the last legislative session.
That bill died after a group of state senators who initially said they would support the legislation balked in the final weeks of the session.
“There’s still some bitterness there on how that all went down,” said State Rep. Josh Byrnes, R-Osage, chairman of the House’s Transportation Committee who pushed for the tax increase.
Byrnes said several of the ideas on the list “warrant further exploration,” but “I’m not ready to take fuel tax off the table just yet.”
Petersen said the Farm Bureau still is evaluating the proposals and noted that on-road vehicles, such as the semis that carry corn from the farm do pay fuel taxes.
“I’m thankful that folks are continuing to look at this,” he said. “There is clearly a need as has been shown over and over again.”
State Rep. Jim Lykam, D-Davenport, who is the ranking member of the House’s Transportation Committee, said the key to any of the proposals going forward is early, and public, support from the governor.
“He’s got the bully pulpit,” Lykam said. “I don’t think (Republican House Speaker Kraig) Paulsen or (Democratic Senate Majority Leader Mike) Gronstal are going to bring that to the floor if there’s a chance the governor will just veto it.”
Dustin Miller, a lobbyist with the League of Cities, said his organization is going over the proposals and expects to meet with Trombino soon.
“Until we go through and analyze them, it’s difficult to say where we are,” he said.
Meanwhile, lawmakers also have an eye toward the 2014 elections.
“That’s the type of stuff that bugs me,” Byrnes said. “So is a legislator only good for one year because, at least in the House, they run every two years? Unfortunately, I think, for some, the answer is yes.”