After weeks of debating how high to go on a gas tax increase in Ohio, lawmakers settled on a hike of 10.5-cents per gallon of gasoline and 19-cents per gallon of diesel.
The increase, part of the state's transportation bill, was signed into law by Republican Gov. Mike DeWine on Wednesday.
Beginning July, 1 it will raise $865 million a year in additional revenue which will be split 55/45 between state and local governments.
The new revenue should be enough to maintain roads for the next few years but it will fall short of what's necessary to cover fixes needed for a decade, DeWine said.
“The real disagreement was over how long a time we were going to focus on fixing problem,” DeWine said. “Things are changing and as our cars change the situation in a few years may be very different. We ended up with money that we need to keep roads in decent order to have some money for safety and some money for the new projects over the next several years.”
Ohio Department of Transportation Director Jack Marchbanks said earlier this year that flat revenues, highway construction inflation, and mounting debt payments has left ODOT with a funding shortfall of about $1 billion annually on average over the next 11 years.
House Speaker Larry Householder, R-Glenford, said a commission created by the bill to study Ohio’s future transportation needs will help the state understand its evolving funding needs.
“When you look this budget, it is probably going to be satisfactory for five, maybe six, years but in the time between we will be studying to find out what the state will look like down the road and how will we pay for roads and infrastructure going forward,” Glenford said.
“This bill is a good compromise, making substantive investments in our local communities to fix roads and bridges without overburdening working people, seniors and families,” said state Rep. Jack Cera (D-Bellaire), the ranking Democrat on the House budget committee.
There was broad bipartisan support for the bill.
The bill delivers a 12.5% increase for the local community share of new gas tax revenue, resulting in more than $700 million during the next two years.
DeWine said that local governments in the state had not benefited from the money borrowed by ODOT in the last 8 years. “That money has all been spent by the state so local governments had no relief for a long period of time,” he said.
The bill also increases the state’s earned income tax credit to 30% from 10%. The increase in the tax credit, aimed at low-income workers, would cost the state $38 million in lost revenue each year.
It also includes $140 million for the state’s public transit systems over the next two years but the money will come from the state’s general fund. The state currently provides roughly $33 million a year for public transit.
The increase is a significant improvement but is still only half of what ODOT’s transit needs study recommends, according to Amanda Woodrum, a senior researcher at Policy Matters Ohio, a nonprofit think tank.
“The Ohio legislature took a couple good steps in the right direction,” Woodrum said. “We look forward to working with lawmakers over the next few months to make Ohio’s EITC refundable. Over the long run, we will continue to advocate for further increases in funding for public transit, and putting it back in the transportation budget where it belongs.”
Ohio's budget stabilization fund has been replenished after being drawn down during the recession. It now totals $2.7 billion, or 8.3% of GRF revenues.
Michigan is in the middle of its version of the gas tax debate.
Gov. Gretchen Whitmer is making the case to phase in a 45-cent-per-gallon increase in the state's fuel tax as the best way to fix the state’s roads.
The gas tax increase would bring up to 90% of roads to good or fair condition by 2029, said Chris Kolb, the state budget director. The state's gasoline tax is now 26.3 cents per gallon.
Rep. Lee Chatfield, R-Levering, said last month that House Republicans would be drafting a version of their own plan. No proposal has been presented yet.
“I am looking forward to partnering and to negotiating with this Governor," Chatfield said. "Unfortunately the proposal that she put forward is a nonstarter for people and my caucus because the people in our district cannot afford it so the gas tax will not be raised 45 cents.”
Whitmer has said she will not sign any state budget without additional money for a "real" road-funding plan, setting up a potential government shutdown showdown this fall with legislative leaders. The state is constitutionally required to have a balanced budget in place when the new fiscal year starts Oct. 1.
