State Gas Tax Update: One Up, One Down

This has been an eventful week for gas taxes. To update two posts that appeared recently, Gov. Terry Branstad of Iowa signed legislation that increases the gas tax by 10-cents on March 1. In California, a board voted to decrease the tax by six cents.

2 minute read

February 27, 2015, 9:00 AM PST

By Irvin Dawid

Gov. Branstad, a Republican, wasted no time is signing the bipartisan 10-cent gas tax increase legislation that passed the General Assembly on Tuesday. He signed it Wednesday, so the increase goes into effect Sunday (March 1) as the bill stipulated. The gas tax will increase from 22.5-cents per gallon, not changed for over a quarter of a century, to 32.5 cents. The average state gas tax in the United States is 27.66 cents.

The additional tax will "generate $215 million annually to address critical road and bridge improvements," wrote Rod Boshart for KCRG ABC News. 

Mark Tauscheck of KCCI Des Moines writes that motorists may not necessarily see the tax increase at the pumps on Sunday as fuel that is currently in station tanks need not be taxed. He explains that aspect of the tax increase in greater detail in the video.

The news was not good for transportation officials in the Golden State, though no doubt many motorists will be pleased. As posted last week, the state Board of Equalization (BOE), tasked with keeping tax revenue equivalent to the 8 percent sales tax that existed prior to the complicated 2010 gas tax swap, voted on the decrease, though the amount was reduced from what was initially indicated.

Adam Randall of the (Ukiah) Daily Journal does an excellent job of explaining the six-cent decrease to the current 36-cent gasoline excise tax resulting from Tuesday's unanimous vote by the BOE. The decrease tax effect on July 1.

California has the second highest gas tax after Pennsylvania (due to the Pa. 2013 gas tax legislation). On July 1, it will likely drop below New York, Hawaii, and Connecticut to the fifth highest in the nation. [See Nebraska's chart (PDF) that ranks total state gas taxes from highest to lowest based on the American Petroleum Institute's tax information.

No sooner had Branstad signed the bill than he announced that the stalled Highway 20 project would now be "fast tracked."

Thursday, February 26, 2015 in KCCI Des Moines

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