Home » NEWS » Banking & Finance » Race to the pump: Feds appear ready to beat state on new gas taxes

Race to the pump: Feds appear ready to beat state on new gas taxes

gas-pump-regulations-for-people-with-disabilitiesThe chairman of the Senate Transportation Committee says it seems Congress is about to pre-empt Mississippi’s  opportunity to take advantage of plummeting gasoline prices by enacting new motor fuels taxes.

While Mississippi legislators wait for a late 2015 completion of a private-sector study on state transportation infrastructure needs and how to pay for them, Congress is poised to act this year, said state Sen. Willie Simmons, a Cleveland Democrat who has tried and failed the last couple of years to convince legislators to address a backlog of road and bridge maintenance needs.

Business leaders, through a transportation task force created by the Mississippi Economic Council, are taking a comprehensive look at state transportation needs, including airports and seaports as well as state and local maintained roads and bridges. The panel’s recommendations, however, won’t be ready for legislators to consider until the 2016 session.

» READ MORE: Senate transportation chair seeks emergency money for roads, bridges

In the meantime, Congress is signaling a willingness to address the nation’s long-term transportation needs as it sets about renewing the Federal Highway Trust Fund. The fund, which covers roads, bridges and mass transit, is due to run out of money in May, after having been renewed for one-year last year.

Like Mississippi, the federal government taxes by the gallon. Also like Mississippi, the federal excise tax – 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel – has remained the same for more than two decades, having been enacted in 1993. Mississippi’s excise tax, in place since 1987, is 18.8 cents a gallon on both gasoline and diesel.

“The federal government has the same kind of user tax system we have,” Simmons said.

With the feds looking to increase their motor fuels excise tax this year and the state the following year, Mississippians would be hit “with a double whammy,” the Democrat from Cleveland added.

Suddenly, the windfall residents are seeing from cheap gasoline would vanish, he said. “It’s like what happened with tobacco prices. The feds did it [increased per pack taxes] the same time we did. That took the price up tremendously.”

Ultimately, what the federal government does “could impact what we do,” Simmons said. “If the feds pass an increase early on, how much are the business community and citizens willing to take in the way of increasing user fees?”

The potential for substantial flak in 2016 is “why it would have been good if we had done it last session”, he said.

Statewide interest in the issue was demonstrated by the capacity audience that turned out for a briefing on the MEC’s Blueprint Mississippi Transportation/Infrastructure Study as part of an afternoon of Capital Day activities Jan. 7.

The briefing, which drew around 150 business and government leaders, included an electronic survey of the audience. The survey ranked repairs and maintenance of Mississippi’s highways and bridges above all other transportation infrastructure needs.

Roads and bridge repairs and upkeep won out over such pursuits as expanding the state’s highway system and upgrading airports and seaports..

MEC organizers devoted the session to the Blueprint Transportation/Infrastructure Task Force created last year to develop the long-range approach for meeting Mississippi’s transportation needs.

Fifty-six percent of the audience members deemed the state’s transportation system inadequate.

State transportation officials have put the backlog of road and bridge needs at more than $2 billion. A 2013 report by the Joint Legislative Committee on Performance Evaluation and Expenditure Review, or PEER, supported that assessment. While it concluded that the Mississippi Department of Transportation must do better at accounting for the money it spends, the PEER review also concluded state funding had fallen far behind road and bridge maintenance needs.

Mississippi, PEER said, must spend about $400 million more per year to keep roads and bridges from getting worse.

PEER’s needs assessment deemed the state’s 18.8 cents a gallon tax on motor fuels, in place since 1987, antiquated as vehicles have become far more fuel efficient in recent decades.

Sanderson Farms CEO Joe Sanderson, chairman of the Blueprint Transportation/Infrastructure Task Force, said the 15-member MEC panel plans to present its blueprint and proposals for funding it sometime before the 2016 legislative session. It has met twice in recent months and will meet regularly throughout 2015.

The size of the Jan. 7 audience “tells me we have a lot of interest” in the transportation infrastructure issue, said Sanderson, who has some familiarity with the state’s transportation system from the more-than 500 tractor-trailers his poultry company runs throughout its multi-state operation.

Sanderson noted the success Mississippi achieved with money from the motor fuels tax when it added 1,807 miles of four-lane highways. The road building effort brought the state into the top tier of states with modern highway systems. However, state leaders subsequently failed to address maintenance needs, he said.

Further delays, he predicted, “will lead to greater costs in the future.”

Conversely, Sanderson added, “Investing in transportation will pay long-term dividends” that include new jobs, improved commerce and safer roads and bridges.

Sanderson said he has met three times with MDOT officials and is beginning to understand state road-and-bridge needs. “They have been very forthcoming with me,” he said of state transportation officials.

“I feel good about where we are. We’re looking at it from a 360-degree view. It’s not going to be fast, but it is going to be thorough.”

In coming weeks, Sanderson and the task force will look closely at city and county transportation infrastructure, which accounts for 65 percent to 75 percent of publicly maintained roads and bridges.

MDOT maintains fewer road miles than do local jurisdictions, but roads and bridges the state maintains handle the majority of vehicle traffic, according to Scott Waller, MEC’s COO.

Waller, in briefing the audience on the task force study, noted the participation of researchers and professors from the University of Southern Mississippi, the University of Mississippi and Mississippi State University.

The process includes reports on how other states are addressing transportation infrastructure, according to Waller.

Overall, the task force must make sure it does the right research to determine genuine transportation needs and that it continually verifies the correctness of the research, Waller said.

“We are starting to see it come together on where the deficiencies are” (on the state level) and how they can be addressed, he added.

A crucial step will be to ensure state leaders act on the report. “The goal is not only to develop the policy but to see that the process is carried out,” Waller said.

That process likely will entail persuading state lawmakers to allocate revenue, and possibly enact either new fees or taxes. Sanderson said some sort of “bond or user fee” could be used to cover the costs.

“The people who use the roads are the ones who will pay for it,” he said.


… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.

If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.

Click for more info

About Ted Carter