The Ohio Chamber filed testimony on Monday to address the original language in House Bill 62 (Transportation Budget) during the Tuesday meeting of the House Finance Committee meeting. In the testimony we stated our support of a gasoline tax increase to maintain and improve a transportation system that is vital to Ohio’s economy; our opposition of an index for future rate increases; and our argument for a lower than 18 cent rate increase for diesel fuel. The Ohio Chamber is concerned that a large increase in the diesel tax will impact shipping costs, intrastate users of diesel fuel, and negatively impact Ohio’s strong warehouse and distribution network. Finally, the testimony outlined our support of the inclusion of alternative fuel vehicles into the fee structure.
At 7:15 pm Tuesday night the Finance Committee announced a substitute bill that lowered the gas tax increase from 18 cents to 10.7 cents, phased in over three years starting on October 1, 2019. But the substitute bill increased the diesel tax rate by 20 cents as compared to the original proposal of an 18 cent increase. The diesel increase did include a 3-year phase-in. The substitute bill did eliminate the indexing provision and added provisions to include a fee for hybrids and electric vehicles and a tax for vehicles using CNG.
Although this substitute bill altered and shortened our testimony, the Ohio Chamber received good news on the inclusion of a gas tax increase to maintain the transportation system and with the removal of the indexing language. Finally, as the bill moves forward through the legislative process, the Ohio Chamber will continue to advocate for a lower diesel tax rate increase. The Ohio Chamber was concerned that an increase at the 18 cents level would negatively impact Ohio’s business. The concern remains with the new 20 cent increase.
The Ohio Chamber will keep its members updated as the bill moves forward. The House is scheduled to vote on the bill at the Thursday House session.
UPDATE MARCH 6
Late this evening, the House made several more changes to HB 62, the transportation budget, before passing it out of committee by a 30-3 vote. One Republican and two Democrats voted against favorably reporting the bill.
None of the issues the Ohio Chamber discussed in its testimony were topics that were further adjusted. This, unfortunately, includes the diesel tax rate increase, which remains at 20 cents, phased in over three years.
The most significant revisions made tonight were an increase in funding for transit from $70 million per year to $100 million per year and a change to the formula for how the new gas tax revenue is divided between the state and local governments. Under current law, the state gets approximately 60% and local governments the remaining 40%. Now, the state’s share will be reduced to 55%, with local governments realizing a corresponding boost to 45%.
A proposed amendment to lower the fees on electric vehicles from $200 to $150 and the fees on hybrids from $100 to $75 was defeated.
The next step for HB 62 is a vote by the full House, scheduled for tomorrow afternoon.
UPDATE MARCH 7
After one final change was made via a floor amendment, the House voted 71-27 this afternoon to pass HB 62. The amendment shortens the phase-in period for the 10.7 cent gas tax increase from three years to two, a change requested by the DeWine Administration. Two other amendments were offered but tabled: one would have increased the dollar thresholds below which construction projects paid for using state dollars are exempt from prevailing wage requirements and the other would have restored the amount of funding going to transit to the governor’s original proposal of $40 million annually.
The bill will now officially go to the Senate, though the Senate Transportation, Commerce & Workforce Committee has already held five hearings on transportation infrastructure in preparation for HB 62’s arrival.
The Ohio Chamber is likely to testify early next week and will urge the Senate not to maintain the House language that bifurcates the diesel and gasoline tax rates.