SENATE BILL REPORT

SB 5338

BYSenators Patterson, Bender, Bluechel and Nelson; by request of Governor

Modifying transportation tax rates and distributions.

Senate Committee on Transportation

Senate Hearing Date(s):February 7, 1989; April 10, 1989

Majority Report:  That Substitute Senate Bill No. 5338 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Patterson, Chairman; Nelson, Vice Chairman; Bender, Conner, McMullen, Murray, Sellar, Thorsness.

Senate Staff:Gene Schlatter (786-7316)

                  April 10, 1989

AS REPORTED BY COMMITTEE ON TRANSPORTATION, APRIL 10, 1989

BACKGROUND:

The current gas tax is 18 cents per gallon.  There are two parts of the 18 cents allocation:  (a) 17 cents distributed to state and local jurisdictions; and (b) 1 cent which is divided into thirds and distributed to UAB, RAP and DOT.  Gross weight fees have not been adjusted for nearly 20 years.

SUMMARY:

The proposed increase in the legislation recommends that the current rate of 17 cents per gallon be increased to 20 cents per gallon, effective July 1, 1989.  In reality, the total rate of 18 cents increases to 21 cents under the proposal.

Fee increases of 60 percent are imposed on gross weight and overloads.

Proceeds of the revenues are to be distributed after the 17 cents per gallon is deducted as follows:

      1)15 percent to transportation improvement fund; of the 85 percent remaining revenues:

      2)47 percent to state highway purposes

3)!tl34 percent to counties

4)!tl19 percent to cities and towns.

EFFECT OF PROPOSED SUBSTITUTE:

The fuel tax is increased by 7 cents per gallon:

!tp1,2,1,1 FUEL TAX!tj1!tlCENTS

DOT!tj1!tl2.10

Special "C" !tj1!tl .75 (account created)

Cities (regular distribution) !tj1!tl .65

Counties (regular distribution) !tj1!tl .45

County Arterials !tj1!tl .75 (account created)

TIB!tj1!tl2.00

RAP !tj1!tl .30

!tlTOTAL!tl7.00

The current motor vehicle excise tax (MVET) is reduced from 2.454 percent to 2.0 percent based on a new depreciation schedule.

A surtax of .2 percent is added on MVET and the revenue is placed in a newly created transportation fund for transportation purposes.

The MVET collections are aligned with annual registration fees.

Future MVET distributions to transits and cities (police and fire protection) are limited to consumer price index increases for six years.

The gross weight fee is increased by 25 percent.

Local option transportation taxes are authorized:

      --Fuel tax (10 percent of state rate), or

      --Sales tax on fuel (limit 3.5 percent)

      --Registration fees (limit $15)

      --Commercial parking tax

      --Street and road utility tax

The .1 percent MVET for the ferry operating budget is made permanent.

August 1, 1989 is the effective date for the fuel tax increase and local option taxes; January 1, 1990 is the effective date for the weight fee increases and MVET provisions.

Appropriation:    none

Revenue:    yes

Fiscal Note:      none requested

Senate Committee - Testified: No one