Yesterday, Ohio Department of Transportation (ODOT) Director Jack Marchbanks appeared before the House Finance Committee to rollout the DeWine Administration’s two-year transportation budget proposal. As expected, the proposal contains an increase in the state’s Motor Fuel Use Tax, better known as the gas tax.
As we blogged about previously, without additional revenue, the state will be forced to start delaying the performance of regular road and bridge maintenance and have no money available for improvements or new projects. The shortfall is approximately $1 billion annually.
To fill this gap, Gov. Mike DeWine has proposed an immediate – effective July 1, 2019 – gas tax increase of $0.18 per gallon. This would push the Ohio gas tax rate from $0.28 per gallon to $0.46 per gallon, putting Ohio’s tax in line with most of our neighboring states. The governor also proposes to index the rate to the Consumer Price Index, meaning it would likely increase automatically every subsequent July 1. The governor’s proposal does not include the establishment of a new fee on alternative fuel and electric vehicles that also utilize Ohio’s transportation infrastructure but whose owners do not pay the gas tax.
The additional revenue this $0.18 increase would generate equates to about $1.2 billion annually and will be split – as current proceeds are – between ODOT and local governments, with ODOT receiving roughly 60% and local governments the remaining 40%. That means ODOT would get about $750 million additional dollars per year.
The full transportation budget proposal will now be considered by the Ohio legislature, beginning in the House. Lawmakers have until March 31 to pass a final transportation budget.
The Ohio Chamber knows that investment in transportation infrastructure supports a vibrant and dynamic economic environment and ensures that Ohio businesses can move and access the goods and resources they need. That’s why, as part of our 2019-2020 Public Policy Priorities released just this week, we include support for efforts to ensure adequate and reliable funding for Ohio’s transportation system. This would include a reasonable increase in the gas tax.
Our Taxation and Public Expenditures Committee will be meeting on Wednesday to review and discuss Gov. DeWine’s transportation budget proposal. If you’re not already on the committee and would like to be part of this discussion, please let us know.