The Iowa Department of Transportation is widening the discussion of options to increase revenue for construction projects by suggesting a bump in new registrations for vehicles from 5 percent to 6 percent.
This option is one of nine laid out by the Iowa DOT to encourage Iowa Legislature to consider a variety of options instead of focusing on raising the gas tax.
“This isn’t a recommendation and it’s not a legislative proposal,” said Iowa DOT Division Director of Planning, Programming and Modal Stuart Anderson. “The sole focus has been on gas tax. We want to look at other options as well as have a dialogue about it.”
Iowans paid about $300.6 million to register new and used vehicles with the 5 percent fee.
The increase to 6 percent would generate an estimated $60 million for road construction projects — the most effective of the nine plans suggested by the Iowa DOT.
M&M Motors’ Jack Davis understands the need to find increases for revenue, but worries the money won’t go to projects for all Iowans to see.
“You never know what effect it might have (on sales),” Davis said. “If we have these increases, does the money go where they said it’s going to go or does it just go for raises.”
Iowa has about 9,400 miles of road in the DOT system and about 4,000 bridges. Projects are programmed over five-year periods, so Stuart Anderson said it is difficult to say exactly where the next projects will take place.
Rick Benson of Creston Automotive didn’t think it would impact sales, but shared Davis’ concern and would like to see cuts in government spending to increase revenue instead of increasing fees.
The Iowa Automotive Dealers Association’s 13-member board is against the Iowa DOT’s suggestion for the fee hike.
The association represents about 400 dealers, including M&M Motors, Creston Automotive and Stalker’s Chevrolet.
“We are good-roads people and have always been a part of that coalition,” said the association’s President Bruce Anderson. “You have to have infrastructure to run on.”
But Bruce Anderson said the fee increase is an unfair burden on Iowans. If a car is purchased by an out-of-state resident, the new owner would not pay Iowa’s registration fee to contribute to the fund.
Bruce Anderson believes an increase in the gas tax would be more effective. He estimated 22 percent of Iowa’s gas sales come from out of state drivers passing through the state.
Iowa DOT’s Stuart Anderson said the rapid increase of fuel-efficient vehicles and alternative fuel has led to a declining source of revenue.
“The concepts we put out there is to turn the discussion toward a growing source of revenue,” said Stuart Anderson.
Bruce Anderson also worries about the aging of Iowa’s vehicle fleet. He said the average of vehicles in the state is 11 years.
“People are wanting and need to get into new cars,” Bruce Anderson said. “It’s a reason not to buy a car (registration fee increase).”
Despite the division of which option is best, Stuart Anderson is encouraged the dialogue of other options is taking place and hopefully encourages the Iowa Legislature to settle on the best option.