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Road group seeks tax tied to gas cost

Published: Thursday, June 13, 2013 5:30 a.m. CDT
Caption
(AP photo)
A motorist puts fuel in his car's gas tank Tuesday at a service station in Springfield. The Transportation for Illinois Coalition is recommending eliminating the 19-cents-a-gallon motor fuel tax with a 10 percent levy that is tied to the price of gasoline at a time when fuel efficiency is improving.

SPRINGFIELD – Illinois transit advocates want to tie a tax on gasoline to the price at the pump as part of an aggressive fundraising effort to get a toehold on what they say are rapidly deteriorating roads, rails and bridges.

The Transportation for Illinois Coalition is pushing legislation to impose a 9.5 percent tax on the wholesale price of fuel – adding about 14 cents a gallon at today’s prices – along with vehicle license and registration fee hikes to bring in about $800 million a year, coalition co-chairman Doug Whitley told The Associated Press.

That’s still a far cry from what the coalition says is a price tag of more than $65 billion in the next five years to catch up with and modernize roads and mass transit.

And it comes at the same time the $31 billion statewide capital construction program adopted in 2009 expires, dropping the available money annually for transportation improvement by $2 billion, and no replacement on the horizon, said Whitley, who’s also president of the Illinois Chamber of Commerce.

Bill Fleishli, executive vice president of the Illinois Petroleum Marketers, however, criticized the idea, saying it would pinch retailers who would have to pay the tax upfront at the same time higher gas prices slow sales. Fleishli pointed to a legislative report that shows Illinois spends more on transportation than all but six states and said it needs to stop diverting transit-dedicated dollars to other purposes.

Whitley laid out the plan to the AP in advance of discussing it publicly. A coalition study found that without “significant investment,” by 2018, one in every three miles of roads and 10 percent of all bridges will be in “unacceptable” condition. Chicago-area motorists spend $292 annually in higher automobile operating costs because of poor road conditions.

“We face a transportation infrastructure crisis in the state of Illinois, and we do not have the revenues to do the fixes that we need in order to make sure our highways are operating at peak efficiency and our bridges are safe for travel,” said House Majority Leader Barbara Flynn Currie, a Chicago Democrat sponsoring legislation to implement the plan.

Currie and the legislation’s Senate sponsor, Transportation Committee Chairman Martin Sandoval, plan hearings on the issue before taking up the matter in the fall session of the General Assembly.

The wholesale fuel tax would replace the current 19-cents-a-gallon motor-fuel tax. Indexing the fee to the price of gasoline would mean that at today’s statewide average price of $4.20 per gallon, motorists would pay about 33 cents.

With increased fuel efficiency, state motor-fuel tax revenue has fallen 11 percent since its peak in 2007, to $1.22 billion in 2012, according to an analysis of Illinois Department of Revenue figures. The new tax would raise $1.66 billion in its first full year, or $440 million more.

The plan would also increase four-year driver’s license fees by $10 to $40; annual vehicle registration fees $15 to $116; and certificates of title $10 to $105. Those hikes would raise an additional $184 million a year. Eliminating the retailers’ tax credit on ethanol would bring in another $180 million.

The plan does not include Illinois Tollway roads in the Chicago metropolitan area. Users paying tolls support them.

It’s a tough sell for legislators, Whitley conceded, particularly with a statewide election next year, a still-unbalanced budget haunted by the unresolved pension crisis, and a 67 percent income tax increase set to expire in 2015.

“The atmosphere is pretty electric for all these needs to be showing up,” Whitley said.

But the motor-fuel tax was last increased to 19 cents in 1990 – when it represented about 16 percent of the retail gas price of $1.20 per gallon. According to AAA, the statewide Illinois average price per gallon was $4.20 Wednesday, of which the tax makes up 4.5 percent.

“Our state infrastructure system is a utility, and like a utility, needs to have recurrent, ongoing, long-term, sustainable investment,” Sandoval said.

Unlike the current motor fuel tax, which is paid after the sale, the new tax would be paid up front, according to Fleishli. That would cause cash-flow problems for smaller retailers, particularly with rising prices.

“It will put the squeeze on people, because you haven’t sold the product, and at $4 a gallon, it’s going to be a while before you sell it,” Fleishli said.

He noted the Legislature’s bipartisan Commission on Government Forecasting and Accountability found in a study last year that the $640 spent per capita on Illinois state and local roads in 2010 was higher than the national average of $504.

However, the same study found that Illinois’ motor-fuel tax – $102 per capita – was 43rd among the states. And the coalition study points out the Prairie State ranks No. 3 nationally in interstate-highway system size and in bridge inventory.

Fleishli mentioned a state auditor general report in May that found of $25 billion spent from the road fund in the past decade, less than half went directly to road construction. While it didn’t count construction salaries or even debt payments, “diversions” have hounded the road fund for years – something the transportation coalition has devoted time and energy in past years.

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