Some Business Owners Not Pleased as Gas Tax Progresses on in the Iowa Senate

By Lynn Campbell  
IowaPolitics.com

Delia Meier, whose family owns the Iowa 80 Truckstop in Walcott, which calls itself “the world’s largest truck stop,” says an increase in Iowa’s gas tax would be bad for business.

“I’m on the eastern side of Iowa and currently on diesel fuel, we’re 1 cent higher than Illinois now,” Meier said. “So I’m already at a disadvantage. Adding another 10 cents or even 8 cents just makes me that much further out of the market. It’s not something that we can absorb. Not only do we lose customers, but Iowa loses revenue.”

Meier said trucks can go 1,000 miles without re-fueling, and Iowa is 300 miles wide. She said increasing the gas tax will move Iowa from the 38th to the 18th highest state in fuel tax and will lead truckers to bypass Iowa truck stops like hers, which employs more than 500 people and has been open 24 hours a day, seven days a week since 1964.

When interviewed previously by Iowa City Patch, a local tax cab company owner said that these gas increases lead to real costs for businesses that depend on vehicles.

But Meier’s concerns weren’t publicly discussed when a second legislative panel on Wednesday gave its stamp of approval to increase Iowa’s gas tax to pay for improvements to the state’s roads and bridges. Lawmakers only made comments in favor of the bill.

“I think the general public is furious about this topic,” Meier said. “I think they don’t believe that this could possibly be considered (in a year that) the economy’s down, fuel prices are up. Why would this be considered this year? I think there’s quite a bit of disbelief that this could possibly be happening.”

The Iowa Senate Transportation Committee voted 11-2 in favor of Senate Study Bill 3141, which would increase Iowa's gas tax by 5 cents in 2013 and another 5 cents in 2014. The bill also calls for the state to look at ways to get hybrid, high-fuel efficiency and other alternatively fueled vehicles to pay their share for Iowa’s roads.

“I think it’s high time we do this,” said Iowa Senate Transportation Chairman Tom Rielly, D-Oskaloosa. “I think this is all about safety. It's about improving the safety of our roads and putting people back to work.”

State Sen. Daryl Beall, D-Fort Dodge, said he sees this as a user fee, rather than a gas tax.

“As a user’s fee, a lot of the users of those roads are out-of-state drivers,” Beall said. “This allows them to pay for it. But it’s also an investment in Iowa jobs.”

Wednesday’s vote came after an Iowa House subcommittee on Monday voted to increase Iowa’s gas tax by 8 cents a gallon. House Study Bill 547 would raise the tax paid on new vehicle purchases from 5 percent to 6 percent of the purchase price. It also calls for new yearly fees for hybrid vehicles and for vehicles that run on alternative fuels, like propane or natural gas.

Iowa currently charges 21 cents a gallon of tax for gasoline, and 19 cents for ethanol-blended fuel. The last time increase the state increased its gas tax was in 1989.

“It’s a good state to do business in right now,” said Meier, who’s also president of Truck Stops of Iowa, an association representing all of the largest truck stops in the state. “An 8-cent or a 10-cent increase on diesel fuel makes us very uncompetitive with the surrounding states … That kind of label really hurts us in Iowa to be a high-tax state.”

The governor’s Transportation 2020 Citizen Advisory Commission in November identified a $1.6 billion annual shortfall for transportation infrastructure needs. That included $215 million a year that’s considered “critical.” The panel recommended increasing Iowa’s gas tax as much as 10 cents a gallon.

City and county officials have been especially vocal in advocating for an increase in the state’s gas tax, saying money is needed to repair crumbling roads and bridges, which are key to Iowa’s agricultural services and wind-energy companies. Other backers of the plan include economic development groups, the Iowa Farm Bureau and labor unions.

Kelly Danaher, 29, of Riverside, who makes a 40-minute commute to Mount Pleasant for work each day, sees a bright side in a potential gas-tax increase.

“As much as it sounds horrible to have to spend more money for gas, maybe it might be an incentive for people to look for alternative sources beyond gasoline,” Danaher said. “I now commute to work and I hate it. It’s super expensive and terrible and has been a big issue in our budget.”

But 62.1 percent of 600 Iowa registered voters oppose a proposal to increase the gasoline tax by 8 cents per gallon and increase registration fees for new vehicle purchases, while 34.1 percent are in favor of it, according to a poll by the Legacy Foundation, a nonprofit that promotes individual liberty, free enterprise, and limited and accountable government. The Feb. 6-7 poll had a margin of error of plus or minus 4 percentage points.

Regular unleaded gasoline averaged $3.45 a gallon across Iowa on Tuesday, according to AAA, which lobbies for driver and passenger rights, and safer vehicles. That’s up 9 cents a gallon from last week, and up 31 cents a gallon from a year ago. The national average was $3.52 a gallon, up 4 cents from last week. 

Iowa State University economist David Swenson said an eventual 10-cent-a-gallon increase in the gas tax would amount to $32 a year for the average commuter. However, the potential increase in the gas tax comes as Iowans brace for the possibility of paying $4 or $5 for a gallon gas this summer, according to some analysts.