By Joel Penhorwood
The nature of modern agriculture means farmers are more in tune than most with fluctuating gas and diesel prices. A newly proposed ‘Gas Tax’ by Gov. Mike DeWine would raise the state’s tax of fuel from the current 28-cents-per-gallon to 46 cents.
The reason behind the proposed increase? A significant shortfall in the state’s road and bridge maintenance budget, something the Ohio Department of Transportation (ODOT) looks to near $1 billion by 2030 if unabated.
Mike Steenhoek, executive director of the Soy Transportation Coalition, said it comes down to an increasing cost for road work, an unpleasant, though unavoidable, reality.
“Neither I nor anyone I know, particularly farmers, embrace the opportunity to pay more taxes to federal, state, or local government, but one of the things I do keep coming back to is the cost of building and maintaining roads and bridges goes up over time,” Steenhoek said. “That’s not a statement of opinion, that’s a statement of fact. If you’re not going to have revenue keep pace with it, you’re going to have a funding gap and you’re going to have dilapidated and degraded roads and bridges.
“Because a lot of people in the United States have come to that reality, we’ve had 26 states since 2013 that have actually voted to increase their fuel tax. These are states that are led by Republicans, led by Democrats, whether governor or in the legislature, there has been this growing consensus that we need to invest in these roads and bridges.”
Compared to neighboring states, the 18-cent increase would rank Ohio second only behind Pennsylvania’s 57-cent-per-gallon tax. Michigan stands at 44.1 cents, Indiana at 42.9, West Virginia charges 35.7-cents-per-gallon, and Kentucky’s 26-cent duty comes in close to Ohio’s current amount.
Gov. DeWine is looking for the funding change as part of the two-year, $7.4 billion transportation budget. The change would raise $1.2 billion a year for road and bridge work.
When it comes down to it, how much money will it cost the taxpayer? For 30,000 miles driven in a year at an average of 25 miles per gallon, the yearly tax amount would raise the expenditure for an average motorist from an estimated total of $336 to $552 under the increased funding.
“You’ve got to make sure the money the taxpayers invest actually goes to its intended projects. What really starts derailing it is when that money gets siphoned off for projects that are unrelated to infrastructure, so you need to make sure that money is going to roads and bridges,” Steenhoek said.
A notable part of the proposed increase is that after 2020, it would go up along with the rate of inflation. Steenhoek said the Soy Transportation Coalition is a supporter of that idea.
“We have suggested and continue to suggest that indexing it to the Consumer Price Index to inflation will help make sure that you don’t have these perpetual funding gaps, because when you have a fixed X-many cents tax per gallon of fuel, that results in a fixed sense of revenue,” he said.
Ohio officials said the continual change with inflation is needed in order to stop revisiting the same subject in subsequent years. However, the landscape of fueling travel is changing from more than just fossil fuels. Vehicles that don’t use gallons to measure fuel are being seen more often on today’s roads. Steenhoek noted the issue will be a focus down the road.
“When you have a fixed sense of revenue and escalating cost, you’re eventually going to find yourself in that same situation with funding gaps,” Steenhoek said. “Longer term though, as cars become more fuel efficient, as you’ve seen more alternative fuel vehicles on the road, the gasoline tax and the diesel tax will be less reliable in providing for the financial needs of roads and bridges. There is a lot of discussion about eventually do we need to transition to a tax or a fee associated not with the gallons of fuel you purchase, but the with the miles and number of miles you drive.”
Though talks on the subject have included user fees, DeWine did not recommend new charges to alternative fuel vehicle drivers.
“There’s obviously a lot of potential concerns with that,” Steenhoek said. “Longer term, I do think it makes a lot of sense to transition to that. The public’s not ready for it in a lot of areas of the country, but there are pilot projects that are going on in certain areas of the country to acclimate people to this potential, but again, the tax on gasoline and diesel will be less reliable in the future. I don’t think we have any plans of removing roads from operation — that may be an opportunity in the future to have a more sustainable way of paying for this surface transportation system.”
It should be kept in mind that when it comes to farm use, taxes undergo unique rules, and fuel is no different. Larry Gearhardt with the OSU Extension Taxation Program, said the following in a 2014 tax bulletin.
“Unlike the federal law, Ohio law does not contain a specific exemption from the fuel tax for ‘use on a farm for farming purposes.’ Instead, Ohio law provides that any person who uses any motor fuel for any purpose other than the operation of motor vehicles upon highways or upon waters within the boundaries of this state shall be reimbursed the amount of the tax paid. (ORC 5735.14). Therefore, the distinction turns on whether or not the use was on a public highway or water of the state.”
According to the Statehouse News Bureau, the transportation budget has to be signed by March 31.