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State senator, Mitchell's Vehle, eyes 2015 boost in road taxes

This Jan. 7, 2009, photo shows a sign warning motorists that part of South Dakota Highway 20 is a gravel road in Prairie City. A South Dakota senator who has long urged additional funding for state highways says he plans to take a measured approach in his next attempt to boost the state taxes that support road construction and maintenance. (AP file photo)

By Chet Brokaw

PIERRE — A federal infusion of recession stimulus spending helped South Dakota catch up on road projects, and now a Mitchell lawmaker plans to take a look on whether the state should raise taxes to keep up with construction and maintenance.

Republican Sen. Mike Vehle, of Mitchell, chairman of the Senate Transportation Committee, plans to hold a series of hearings when the 2014 Legislature opens in January to gather information about the need for highway funding and how that revenue might be raised. Any bill to raise highway taxes would not be introduced until 2015, he said.

“The goal is to get some consensus,” Vehle said. “Do we have a problem, how bad is that problem, what can we do about it, what should be the process, and can we get everybody behind it?”

Vehle, who has long urged additional funding for state highways, said he usually holds a hearing early in a legislative session to get updates from the state Transportation Department and the state Revenue Department on road conditions and tax collections. In January, he intends to hold three or more such sessions to get input from contractors, the tourism industry, agricultural groups and highway users. Staff from the National Conference of State Legislatures also could explain what other states are doing and Congress’ plans for federal funding for highways.

“I think we need to make sure we’ve got our ducks in a row before we go out with something,” Vehle said.

The state’s motor fuels tax was last raised in 1999, but officials have said the cost of building and maintaining roads and bridges has risen substantially since then. South Dakota’s basic fuel tax is 22 cents a gallon for gasoline and diesel fuel. A 3 percent excise tax is imposed on vehicle sales.

Any effort to boost state road taxes could be tough to get past Gov. Dennis Daugaard, who pledged during his 2010 campaign that he would not raise any taxes except in an emergency.

“The governor has been consistent in his opposition to raising taxes and he would not plan to support what is apparently being proposed,” Tony Venhuizen, Daugaard’s communication director, said in an email.

Vehle said he hopes the governor would consider an increase in road taxes because he has supported efforts to build up South Dakota’s infrastructure. And the senator argues the gas tax is more of a user fee than a tax.

“Everyone wants good roads and safe bridges. It’s just that no one wants to pay for it. Well, someone’s got to pay for it,” the senator said.

Vehle said if a consensus can be reached on highway funding, he and others could spend the next year explaining the issue to the public before the Legislature votes in 2015 on any tax increases.

The 2011 Legislature passed a bill to increase vehicle registration fees, commonly called license plate fees, to give counties, cities and townships more money for roads and bridges. Daugaard vetoed the bill, saying it would unfairly hit South Dakotans while the economy was still fragile, but the House and Senate overrode the veto to pass the measure over the governor’s objections.

Also in 2011, Vehle shelved a separate proposal that would have raised the state gas tax and the excise tax on vehicle sales tax, the revenue sources used by the Transportation Department to maintain and build state highways, after it became clear it wouldn’t pass.

Vehle said he has not proposed a gas tax increase in the past two years because the state was able to get its highways in good shape with the help of $183 million in federal highway funds provided through President Barack Obama’s stimulus measure.

Even though only a tiny portion of the state’s highway system is in bad shape now, up to 20 percent of the roads could be in poor shape within a decade unless funding is increased, Vehle said. It’s cheaper to fix roads before they degrade to poor condition and have to be completely rebuilt, he said.

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