Senate Study Bill 3141 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON TRANSPORTATION BILL BY CHAIRPERSON RIELLY) A BILL FOR An Act relating to funding for Iowa roads, including by 1 increasing the excise tax on motor fuel and special fuel 2 used in motor vehicles, providing for the use of certain 3 revenues, providing for related studies, evaluations, and 4 reports, and including effective date provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 6033XC (3) 84 dea/nh

S.F. _____ DIVISION I 1 MOTOR FUEL TAX 2 Section 1. Section 312.2, Code 2011, is amended by adding 3 the following new subsection: 4 NEW SUBSECTION . 21. a. The treasurer of state, before 5 making the allotments provided for in this section, shall 6 credit monthly from the road use tax fund to the TIME-21 fund 7 created in section 312A.2 the revenue accruing to the road use 8 tax fund from the excise tax on motor fuel and special fuel for 9 motor vehicles in the amount equal to the revenues collected 10 as follows: 11 (1) For the period beginning January 1, 2013, and ending 12 December 31, 2013, the following amounts: 13 (a) The amount of excise tax collected under section 452A.3, 14 subsection 1A, paragraph “b” , from five cents per gallon. 15 (b) The amount of excise tax on special fuel for diesel 16 engines of motor vehicles collected under section 452A.3, 17 subsection 3, paragraph “a” , subparagraph (2), from five cents 18 per gallon. 19 (2) Beginning January 1, 2014, the following amounts: 20 (a) The amount of excise tax collected under section 452A.3, 21 subsection 1A, paragraph “c” , from ten cents per gallon. 22 (b) The amount of excise tax on special fuel for diesel 23 engines of motor vehicles collected under section 452A.3, 24 subsection 3, paragraph “a” , subparagraph (3), from ten cents 25 per gallon. 26 b. This subsection is repealed June 30, 2028. 27 Sec. 2. Section 452A.3, subsection 1A, Code 2011, is amended 28 to read as follows: 29 1A. Except as otherwise provided in this section and in this 30 division , after June 30, 2012, the following excise tax rates 31 shall apply: 32 a. For the period beginning July 1, 2012, and ending 33 December 31, 2012, an excise tax of twenty cents is imposed 34 on each gallon of motor fuel used for any purpose for the 35 -1- LSB 6033XC (3) 84 dea/nh 1/ 5

S.F. _____ privilege of operating motor vehicles in this state. 1 b. For the period beginning January 1, 2013, and ending 2 December 31, 2013, an excise tax of twenty-five cents is 3 imposed on each gallon of motor fuel used for any purpose for 4 the privilege of operating motor vehicles in this state. 5 c. Beginning January 1, 2014, an excise tax of thirty cents 6 is imposed on each gallon of motor fuel used for any purpose 7 for the privilege of operating motor vehicles in this state. 8 Sec. 3. Section 452A.3, subsection 3, Code 2011, is amended 9 to read as follows: 10 3. a. For the privilege of operating motor vehicles or 11 aircraft in this state, there is imposed an excise tax on the 12 use of special fuel in a motor vehicle or aircraft. The 13 (1) Prior to January 1, 2013, the tax rate on special fuel 14 for diesel engines of motor vehicles is twenty-two and one-half 15 cents per gallon. 16 (2) For the period beginning January 1, 2013, and ending 17 December 31, 2013, the tax rate on special fuel for diesel 18 engines of motor vehicles is twenty-seven and one-half cents 19 per gallon. 20 (3) Beginning January 1, 2014, the tax rate on special fuel 21 for diesel engines of motor vehicles is thirty-two and one-half 22 cents per gallon. 23 (4) The rate of tax on special fuel for aircraft is three 24 cents per gallon. 25 (5) On all other special fuel, unless otherwise specified in 26 this section , the per gallon rate is the same as the motor fuel 27 tax. 28 b. Indelible dye meeting United States environmental 29 protection agency and internal revenue service regulations must 30 be added to fuel before or upon withdrawal at a terminal or 31 refinery rack for that fuel to be exempt from tax and the dyed 32 fuel may be used only for an exempt purpose. 33 DIVISION II 34 ROAD FUNDING NEEDS —— EQUITABLE SOLUTIONS 35 -2- LSB 6033XC (3) 84 dea/nh 2/ 5

S.F. _____ Sec. 4. Section 307.31, Code 2011, is amended to read as 1 follows: 2 307.31 Periodic review of revenues —— evaluation of 3 alternative funding sources. 4 1. The department shall periodically review the current 5 revenue levels of the road use tax fund and the sufficiency of 6 those revenues for the projected construction and maintenance 7 needs of city, county, and state governments in the future. 8 The department shall submit a written report to the general 9 assembly regarding its findings by December 31 every five 10 two years, beginning in 2011 2013 . The report may include 11 recommendations concerning funding levels needed to support the 12 future mobility and accessibility for users of Iowa’s public 13 road system. 14 2. The department shall evaluate alternative funding 15 sources for road maintenance and construction and report to 16 the general assembly at least every five two years on the 17 advantages and disadvantages and the viability of alternative 18 funding mechanisms. The department’s evaluation of alternative 19 funding sources may be included in the report submitted to the 20 general assembly under subsection 1 . 21 Sec. 5. NEW SECTION . 307.32 Operation, maintenance, and 22 improvement of state roads —— annual review. 23 The department shall convene a meeting, at least annually, 24 of representatives of Iowa cities and counties and the 25 department to review practices relating to the operation, 26 maintenance, and improvement of the state’s public road system 27 and to identify ways to jointly increase the efficiency of 28 those practices. 29 Sec. 6. ALTERNATIVELY FUELED, HYBRID, AND HIGH FUEL 30 EFFICIENCY VEHICLES. The department of transportation shall 31 evaluate mechanisms that could be used as an alternative 32 to the motor fuel tax in relation to alternatively fueled, 33 hybrid, and high fuel efficiency vehicles, including commercial 34 vehicles, to assure that owners and operators of those vehicles 35 -3- LSB 6033XC (3) 84 dea/nh 3/ 5

S.F. _____ are required to share in the cost of maintaining, operating, 1 and improving Iowa roads. The department shall recommend an 2 alternative funding mechanism in its next report to the general 3 assembly regarding alternative funding sources for roads as 4 required under section 307.31. 5 Sec. 7. EQUITABLE FEE STUDY. The department of 6 transportation shall conduct a study to determine whether 7 the various types of vehicles and equipment using the public 8 roadways are paying equitable fees used for the construction 9 and maintenance of Iowa roads. The department shall report 10 its findings and any recommendations to the general assembly 11 by June 30, 2012. 12 Sec. 8. EFFECTIVE UPON ENACTMENT. The following provision 13 of this Act, being deemed of immediate importance, takes effect 14 upon enactment: 15 1. The section of this Act relating to an equitable fee 16 study to be conducted by the department of transportation. 17 EXPLANATION 18 This bill contains various provisions relating to the 19 funding of Iowa roads. 20 DIVISION I —— MOTOR FUEL TAX. The bill increases the excise 21 tax on motor fuel and special fuel used in motor vehicles by 22 five cents beginning January 1, 2013, and by an additional 23 five cents beginning January 1, 2014. The additional revenues 24 shall be credited to the TIME-21 fund, subject to the statutory 25 limitation on annual deposits to that fund. After the repeal 26 of the TIME-21 fund on June 30, 2028, the revenues will accrue 27 to the road use tax fund. 28 DIVISION II —— ROAD FUNDING NEEDS —— EQUITABLE SOLUTIONS. 29 Under current law, the department of transportation is required 30 to periodically review current road use tax fund revenues 31 and the sufficiency of those revenues to meet projected 32 construction and maintenance needs of cities, counties, and the 33 state and submit a report of its findings and recommendations 34 to the general assembly every five years. The bill requires 35 -4- LSB 6033XC (3) 84 dea/nh 4/ 5

S.F. _____ more frequent reports, every two years. In addition, the 1 department is currently required to report to the general 2 assembly at least every five years regarding the viability of 3 alternative funding mechanisms for roads. The bill requires 4 the report on alternative funding mechanisms be made at least 5 every two years. 6 The bill requires the department to convene a meeting of 7 representatives of Iowa cities, counties, and the department at 8 least annually to review practices relating to the operation, 9 maintenance, and improvement of the state’s public road system 10 and identify ways to jointly increase efficiency. 11 The bill requires the department to evaluate and recommend 12 mechanisms to be used as an alternative to the motor fuel tax 13 for alternatively fueled, hybrid, and high fuel efficiency 14 vehicles including commercial vehicles. The department’s 15 recommendations are to be included in its next periodic report 16 to the general assembly regarding alternative funding sources. 17 That report is due by December 31, 2013. 18 The department is also required to conduct a study to 19 determine whether the various types of vehicles and equipment 20 that use the public roadways are paying equitable fees in 21 support of Iowa roads. The department shall report its 22 findings and any recommendations to the general assembly by 23 June 30, 2012. This provision of the bill is effective upon 24 enactment. 25 -5- LSB 6033XC (3) 84 dea/nh 5/ 5