Passing gas...

...tax increases (and decreases)

Here’s the punch line: Before they go home, the Iowa Legislature should suspend the state gas tax until the Iran war ends and the Strait of Hormuz is opened.

The good old days of gas prices…before Trump and Israel attacked Iran and Lebanon.

Now, back to the beginning: As of this wriring, the 2026 Iowa legislative session is said to be on its last legs. Yet to pass: The so-called tax “reform” bill. Also yet to pass: Hardly anything to address the “affordability” crisis that many Iowans are facing – the ability to cover the basic expenses of life.

The Senate wants to increase the gas tax and tax on electric vehicles by tying it to inflation. The current tax is 30 cents a gallon for gasoline and 32 cents for diesel.

I served on the House Ways and Means Committee all 16 years I was in the Legislature. In 2015, an elaborate song-and-dance was orchestrated to ensure that the last gas tax increase was “bi-partisan” in proportion to the actual number of Republicans and Democrats in the House. I was asked to cast the deciding Democratic vote to get the bill out of committee. (The Republicans had to put Speaker Kraig Paulsen on the committee to cast the needed Republican vote.) This was designed to ensure that no one got blamed at election time.

The 10-cent increase raised the tax by 50 percent. It’s never a good idea to wait so long to do something that the cost of doing it jolts the system and catches people unprepared. (For that matter, the state minimum wage should also be raised and adjusted for inflation every year, just like federal tax brackets are.)

But I digress. Gas taxes go into the Road Use Tax Fund. The RUTF is used by the state, cities and counties to build and maintain roads. The cost of doing that goes up every year, and the Covid pandemic did not help. Citizens/voters/drivers want good roads. We are reminded every time we hit a pothole or confront a detour. But ss the price of gas goes up -- for example because of wars on Iran – people drive less. Gas tax receipts go down. So indexing the tax to inflation is probably a good idea. Ultimately, it’s a “user fee.” People who use roads and bridges the most pay for them.

But voting to raise gas taxes at the same time people are paying $4 per gallon and more at the pump is, well…Houston, we have a problem. And not because Houston is a center of the petrochemical world.

Here’s how it can be done: Starting June 1 until January 31 (when the Legislature convenes again), the Legislature can suspend the gas tax and use $250 million or so of the state’s $3.4 billion “taxpayer relief fund” to cover the resulting hole in the road use tax fund. Every Iowan who drives would benefit. Relatively speaking, those who most need help affording the basics of life benefit more. Automatic indexing of the tax can kick in when the crisis subsides and gas prices recede.

This is not a new idea. In fact, I proposed it in 2022, the last time gas was more than $4 a gallon, after the pandemic was “over,” Russia attacked Ukraine and refinery capacity was strained. The amendment was offered in committee. Republicans “pulled the bill” to avoid voting on the amendment because they feared voting against it. The amendment even had provisions to ensure that fuel retailers passed the savings on to consumers.

Then the “road lobby” perked up their heads and sped into action. Road builders didn’t want to establish a precedent that “messed” with the road use tax fund, even though it wouldn’t have cost them a dime. I guess they were afraid that legislators wouldn’t keep a promise to “backfill” the fund for lost revenue. They scrambled to the office of Democratic leadership. The amendment was never offered again.

In my humble opinion, the proposal still has merit. Iowa can afford to do it. People get help they need. Doesn’t cost anyone. Simple.

Maybe that’s the problem. What am I missing?