South Dakota legislative committee begins debate on raising taxes and fees for roads

SD lawmakers begin debate on raising road taxes

PIERRE, S.D. — South Dakota needs to raise its gas tax and other highway taxes and fees to cover substantial increases in the cost of building and maintaining its roads and bridges, state and local transportation officials told a legislative panel Wednesday.

Legislature leaders have said lawmakers are reluctant to raise any taxes when the economy is struggling, but supporters of the highway funding measure said the state, counties and townships cannot wait any longer for the extra money they need to preserve roads.

A study by the state Transportation Committee estimated that an extra $160 million a year in state and federal funds is needed for state highways and an extra $80 million a year is needed for county, city and township roads.

David Sorenson, highway superintendent for Kingsbury County, said he understands no one likes to raise taxes, but delays in fixing roads will mean the work costs much more later. He said increased costs have forced his county, like others, to grind up some asphalt roads and turn them into gravel.

“We need to do something,” Sorenson said. “It’s going to get out of control.”

The Senate Transportation Committee heard testimony from people across the state, mostly county and township officials. The committee plans to vote on the measure Monday.

The bill, proposed by a legislative summer study panel, would raise road taxes in two stages, with half the increase imposed in May this year and the other half in 2012. It includes proposals to raise the state’s 22-cent-a-gallon gas tax by 6 cents a gallon and increase annual vehicle registration fees by $18 for a typical car by 2012. The state’s 3 percent excise tax on vehicle sales would rise to 4 percent.

By 2012, the state would gain an extra $54 million a year in revenue from the gas tax and excise tax on vehicle sales, while local governments would get an additional $30 million a year from the boost in registration fees.

The main opposition to the measure at Wednesday’s hearing came from Sen. Gordon Howie, R-Rapid City, a committee member who is running for governor.

“This $84 million will come straight out of the pockets of the taxpayers of this state,” Howie said.

Sen. Mike Vehle, chairman of the committee, said the measure is needed to prevent South Dakota’s roads from deteriorating. He said the taxes and fees are really user fees imposed on those who use the roads.

“If you don’t want to use the roads, you don’t have to pay the fee,” Vehle said.

The summer study panel had proposed a 10-cent-a-gallon boost in the gas tax, but Vehle reduced that to 6 cents at the start of Wednesday’s hearing.

Since road taxes and fees were last increased in 1999, the cost of maintaining and building roads has nearly doubled, Vehle said.

The only member of the public to oppose the bill was John Sumption, a farmer from Frederick, who said he is against a tax increase because the current system goes not provide enough money to take care of rural gravel roads. He said he has had to clear snow from roads near his farm because the county and township have not done the work.

“This is too much money and it doesn’t solve the problem,” Sumption said of the tax bill.

A number of county and township officials testified that costs have risen to the point they can no longer maintain roads sufficiently.

Howie noted that when many counties seek to impose a wheel tax, voters reject the idea. “When given a chance, taxpayers are saying we don’t want to be taxed more.”

However, several township officials said residents in their areas voted to raise their property taxes above state limits so they could do a better job of caring for roads.