Newsletter: Rozenboom Report (2/27/2015)


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The legislative session is nearing the halfway point, with the first funnel quickly approaching. Funnel week is a deadline for the legislature to get bills through all standing committees in either the House or the Senate, in order to remain in consideration for the rest of session. Funnel week helps us narrow our focus to bills that have gained support in at least one chamber. Any bills, other than tax or appropriations bills, which do not make it through the funnel are considered dead for this year. Many legislators are busy trying to get their bills through to make sure they have a chance at debate.

The bill to increase the fuel tax was approved by both chambers on February 24. This culminates a debate that has ongoing for a number of years, and is expected to provide an additional $215 million to address some of the critical needs of Iowa’s deteriorating road and bridge system.

Some historical perspective helps us focus on the issue. We all understand that building and maintaining infrastructure is a fundamental responsibility of government that is essential for support of the local and state economy; we also know that education is a vital function of local and state government. The concept of the Road Use Tax Fund (RUTF) was to create a pool of money to support road and bridge construction and maintenance. This fund was to be kept separate from Iowa’s general fund, and the money in the RUTF was to be constitutionally protected from those who might be tempted to spend it on other things. The creation of a separate fund was to prevent an annual “kids vs concrete” battle in the legislature. The wisdom of the legislators who established this plan to have separate funding sources for kids (education) and roads (infrastructure) served Iowa well for many years. Today’s legislators do well to be as wise as they were.

There are three primary sources of money for the RUTF. Annual vehicle registrations, new vehicle registrations, and the gasoline and diesel fuel tax provide most of the funding, along with a number of other permits and fees. The gas tax itself is considered to be a “user fee”, meaning that the more you drive, the more gas you buy, and the more tax you pay to maintain the roads. While not perfect, it’s been a good concept over the years, and one that is used by all 50 states.

Between 1925 and 1989 the gas tax was raised fourteen times, an average of every 4 -5 years, to adjust for inflation. In the last 26 years the gas tax had not been increased at all, which essentially means the state is trying to maintain roads with 1989 dollars. Also, actual vehicle miles traveled has declined the last ten years, while average fuel mileage has improved. The result has been a decline in the fuel tax contribution to the RUTF, and a corresponding decline in the condition of the road system in Iowa, particularly the rural road system.
Certainly the effect of the increased fuel tax will be felt by all drivers. The other options, borrowing money to fix roads, raising property taxes, or simply letting roads and bridge conditions deteriorate are not attractive options either. In the end, the legislature concluded that the “pay as you go” option will best reflect the values of Iowans, and will not pass debt on to our children.

Though gas tax was the hot topic this week, the Senate also undertook other bills that made Iowa a better place to live and raise a family for our disabled servicemen and women. House File 166 clarified the intent of the legislature in reference to the Homestead Tax Credit. Under the new bill, veterans would qualify for the credit if their disability rating is sixty percent or greater, or they have two or more permanent service-connected disability conditions in which one of the conditions has at least a forty percent rating and the combined rating for all the conditions is at least seventy percent. This broader qualification provides relief for more veterans who have sacrificed for our freedom and security.

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