Mississippi gasoline tax increase appears unlikely

JACKSON — A key legislator and a transportation leader say it’s unlikely the Legislature will pass an increase in Mississippi’s gasoline tax to shore up the highway construction program.

“I don’t think it’s politically possible,” said Dick Hall, one of three elected members of the Mississippi Transportation Commission. “But I would less than honest if I didn’t say it was not needed.”

The chairman of the House Transportation Committee said he would expect little support for any increase.

“With the economy like it is, I don’t think the political environment is so that is going to accept an increase,” said Rep. Warner McBride, D-Courtland. “I don’t think there’s the support on the transportation committee to pass an increase.”

In Mississippi, drivers pay state and federal taxes of 37.2 cents per gallon of gasoline and 43.2 cents per gallon of diesel.

Mississippi’s excise tax is 18.8 cents per gallon on gasoline and diesel, with 0.4 cents going to an environmental protection fee. In coastal Hancock, Harrison and Jackson counties, there is an additional 3 cents per gallon seawall tax.

The 1987 four-lane road construction project began with a three-phase plan for 1,077 miles of highway segments being completed by 2001 at a cost of $1.6 billion. Those numbers were extended along with the gasoline tax that was to have been repealed at the turn of the century.

In the 20 years since, Mississippi Department of Transportation officials have warned that inflation was eating away at highway construction and maintenance dollars.

MDOT executive director Larry” Butch” Brown, in speech before a Tupelo business group earlier this month, called for a 5-cent per gallon increase in the gasoline tax. Brown said new sources of income for highway construction is “absolutely critical.”

“If we don’t get new taxes, we’re going to be in trouble,” Brown said.

If MDOT doesn’t find new income, it will be a maintenance-only department in three years, Brown said.

Hall agrees.

“If this continues with the present trend, we will reach a point where there won’t be any new construction. It will take what resources we have just to maintain what we have,” he said.

Hall said part of the problem was how lawmakers structured financing for the ’87 program. Hall was in the Mississippi House at the time and later served as chairman of the Senate Appropriations Committee.

“One of the mistakes we made was that we didn’t attach that thing (gasoline tax) to some kind of inflation factor. We made it a flat tax,” Hall said. “That was a mistake. We also didn’t have any provision in there for maintenance. That was a mistake. The money for construction and maintenance is coming out of the same pot.”

Hall said he can’t accept the arguments that it is the wrong time for an increase in the gasoline tax.

“When it was $2 a gallon, it was the wrong time. When it was $4 a gallon, it was the wrong time. When’s the right time?” Hall said.

Hall said the economic benefits of a modern transportation system have to weighed against the political and monetary costs.

Hall said the business community pushed the ’87 program through the Legislature and it take the same fervor to do so again. Without the commitment, Hall said nothing will happen politically.

House Speaker Billy McCoy, D-Rienzi, said he sees little support for a general tax increase.

In 2008, McBride proposed tying the gasoline tax to the consumer price index but found little support for it.

“I surmised from that that they wouldn’t support an increase” in the gasoline tax, he said.

In 2009, McBride led the House to pass a $300 million bond bill for MDOT. While the bill died in the Senate, McBride said he will try it again in the 2010 session.

“I think it is the only option,” he said. “We spent a lot of time last fall bringing so-called financial experts and others, we just never could find something else — another way of financing it — we thought everybody was comfortable with.”

The last time the Legislature issued bonds for road work was in 1999; $100 million to finish up the ’87 program. McBride said those bonds should be paid off this year.

“We’ve been issuing several hundred million of dollars of bonds every year maybe some of those other people could miss a year on their bond issues and let us take care of some transportation needs that we have,” McBride said.

McBride said the bond money was to get design and engineering started. He said it was unlikely that the money would go to construction.

He said $100 million of the bonds was to go to bridge work, which he said is a vital need across the state.

As would be expected, other states are dealing with transportation funding issues.

In Oregon, anti-tax groups are pushing petitions to force an election on a transportation package that’s funded with a 6-cent-a-gallon gasoline tax increase as well as higher fees on motorists.

In Tennessee, road builders say fuel taxes aren’t keeping up with transportation needs, but state highway officials aren’t pushing for a tax hike. Tennessee motorists pay 39.8 cents in state and federal taxes per gallon of gasoline. The state portion, last raised in 1989, is 21.4 cents, and the federal portion, last set in 1993, is 18.4 cents.

Road builders say the combination of fewer miles being driven because of high gas costs and better fuel economy in newer vehicles has been a double whammy for highway revenue, hurting construction programs.

Jack Elliott Jr./The Associated Press