Ohio mulls gas tax hike

OSCPA staff report

Anyone who drives on Ohio roads will have an interest in a hot topic now being discussed by the DeWine Administration and Ohio General Assembly: the State’s motor fuel, or gas, tax.

closed-construction-road-305264This tax has remained at 28 cents per gallon since 2005. But in response to concerns about the state of Ohio’s roads and bridges and a stated lack of funding to make necessary repairs, Gov. DeWine has proposed an 18-cent increase, raising Ohio’s gas tax to 46 cents per gallon effective July 1 if adopted – raising around $1.2 billion in the first year. The proposal also ties the tax to inflation in the future – the Consumer Price Index, or CPI – starting July 1, 2020. As with any legislation, the final product almost certainly will change from its as-introduced version.

Ohio Department of Transportation Director Jack Marchbanks testified Feb. 21 on the transportation budget bill to the House Finance Committee. He said because of flat revenue, inflation and mounting debt payments, a change in available resources is needed for ODOT and local government partners to maintain roadways and carry out new construction.

State and local governments split gas tax revenue 60/40, respectively. Of the new annual gas tax revenue, roughly $750 million of the tax increase would go to the state, counties would get $156 million, municipalities would get $181 million and $90.5 million would go to townships.

The ODOT estimates that someone driving 13,000 miles per year in a 2015 Ford F-150 pickup with a V8 engine would pay an extra $2.65 per week — $138 per year. The cost under the same mileage is estimated at $1.91 per week ($99 a year) for a 2015 Jeep Cherokee and $1.61 per week ($84) for a 2015 Honda Accord.

Since 2013, 27 states, including all of Ohio’s neighbors, have adjusted their fuel taxes in some way. Every surrounding state but Kentucky (26 cents) currently has a higher fuel tax: West Virginia (35.7 cents), Indiana (42.9 cents), Michigan (44.1 cents), and Pennsylvania (58.7 cents) – the highest in the nation.

The proposed increase in the gas tax was foreshadowed as members of the Governor’s Advisory Committee on Transportation Infrastructure had recently released their report outlining options for maintaining and enhancing Ohio’s transportation infrastructure.

As this issue works through the legislative process, possible changes that have been mentioned include no increase, a reduced or phased-in increase, a “user fee” on owners of alternative fuel and/or electric cars, an alternative way to tie future increases to inflation – or no inflation index at all – and an offsetting decrease in income tax owed.

Supporters say it would help improve Ohio’s roadways and lead to greater economic investment in the state, but opponents say it puts too much financial burden on consumers. Do you support or oppose the proposal? What changes would you make, if any? Let us know your thoughts.