With one of the lowest gas taxes in the nation, supporters of Proposition D are hoping voters say yes to prove more money for roads and bridges.

With one of the lowest gas taxes in the nation, supporters of Proposition D are hoping voters say yes to prove more money for roads and bridges. 

Efforts to pass fuel tax increases have traditionally had a tough time getting voter approval. As recently as 2014, Missouri voters turned down a proposed constitutional amendment asking for a .75% sales tax over a 10-year period to generate more funding for transportation. Supporters are hoping for a much different outcome this time around.

“One of the things we find that is most important is breaking down the complexity of transportation funding. That is one of the most complicated aspects of the city government particularly. Certainly at the national level as well,” said Patrick McKenna, Director of the Missouri Department of Transportation (MoDOT).

The passage of the fuel tax increase on Missouri’s November ballot was sent to the voters by the General Assembly through HB 1460 and was the subject of McKenna’s speech advocating for Missouri voters to vote “yes” on the measure that has three constituents: The gas tax increase, Olympic prize tax exemption and freight traffic reduction and road fund.

The measure would increase the tax on gasoline, diesel, natural gas, and propane by 10 cents per gallon. Gasoline and Diesel would be phased in over four years by two and one-half cents per year. For both compressed and liquefied natural gas and propane used as an alternative motor vehicle, the tax increase to 27 cents per gallon would take effect after Dec. 31, 2025.

Currently, the law set the tax rates for natural gas and propane used as motor fuel at five cents per gallon through December 2019, 11 cents per gallon through December 2024 and 17 cents per gallon following that.

For compressed and natural gas, rates would be calculated on gasoline gallon equivalents, and liquefied natural gas rates would be calculated on diesel gallon equivalents. The revenue is dedicated to the Missouri State Highway Patrol (MSHP). The measure would also require the tax rate for motor fuels and alternative fuels consisting of electricity, hydrogen, propane, compressed natural gas and liquefied natural gas—be equivalent.

The state currently generates $50,000 per mile managed at the state level. $2.5 billion a year is generated from transportation user fees. About $1.5 billion of the $2.5 billion comes from Missouri user fees. User fees consist of the gas tax, license and registration fees as well as sales tax, according to McKenna.

About 33 percent of the money comes from the federal government. The money is also generated from user fees through the federal gas tax of 18.4 cents currently in place, which is based on gallons sold collected at the wholesale level, so it doesn’t scale the price of gas.

“This is different than many other forms of taxation that go into the general economy. Sales tax and income tax generally grows with the size of the economy, but that is not the way user fees for transportation work,” said McKenna.

Income tax and property taxes are fees that are not generated for transportation, an important distinction notes McKenna. They are constitutionally separated, and are not resources available for the Department of Transportation to use.

Less than $20 million of the $2.5 billion generated per year come from the cost associated with enforcing motor vehicle laws in the state, which are covered by the user fees totaling to around $240 million. The reason the revenue is allocated to MSHP is for public safety.

“The way the gas tax works now, and the way funding is allocated now you can see the MoDOT and the MSHP are funded out of the same source of funds,” said McKenna. “So when the gas tax for public safety goes in, it will provide budgetary cover for the highway patrol in a way that is covered from this new source of funds – should the voters support it—that frees up those same resources for the Department of Transportation to work on roads and bridges.”

The House bill, HB 1460, was formerly the Olympic bill authorizing a tax deduction for Missourians who win Olympic medals. The gas tax along with the freight traffic reduction and road fund was added to the bill so the gas tax would get final passage by the Senate and House to appear on the ballot.  “We looked at it from a polling perspective, and to vote for improving highways it would get turned down again, so they tried this,” said McKenna.

The measure further creates the Emergency State Freight Bottleneck Fund with money allocated from the general fund that would be invested and managed by the state treasurer, with funds to be used on road infrastructure.

“Many people think of this as a conversion of funds. This is not a conversion of funds; we actually have Constitution nexus for the use of these funds,” said McKenna. “The Department of Revenue who collects the gas tax, the license and registration fees, and motor vehicle sales tax collect those resources and their budget resources bring $20 million a year and it’s capped constitutionally at 3 percent, so it is limited in what they can collect.”

The funding will be available to be appropriated by the legislature or the highway patrol out of this incremental source of revenue, and that frees up what they were spending otherwise for improvements of roads and bridges, according to McKenna.

“It follows the constitutional construct in a very smart way. It enabled enough support to get through the legislature, and that I think is critical to really have the support for a campaign to be stood up separately and be supported by many in the legislature,” he said.

Cost to Drivers

For every 2.5 cents increase in the motor fuel tax, the average driver will spend an additional $1.28 per month.

When Prop D is fully phased in at 10 cents after four years, the average driver will spend $5.10 per month for safer state roads and law enforcement, according to the coalition supporting Proposition D, the SaferMO committee.

What is the cost of doing nothing?

According to the report of the 21st Century Missouri Transportation Task Force:

Even though a typical Missouri driver pays about $30 per month in direct highway-user fees, the costs imposed on travelers by condition shortfalls has been increasing and adds up to about $172 per month—costs that could be reduced by improving system conditions.

How Revenue generated to support roads and bridges is allocated

State: 70 percent

Cities: 15 percent

Counties: 15 percent

The Highway Patrol also receives transportation funding for administering and enforcing the state’s motor vehicles laws and traffic regulations.