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News >  Idaho

Otter pushes gas tax increase

Higher vehicle registration fees also sought to maintain roads

Betsy Z. Russell Staff writer

BOISE – Gov. Butch Otter intends to push Idaho lawmakers to raise the state gas tax, increase car and truck registration fees, and tax rental cars to pay for pressing road and bridge maintenance needs around the state.

“What will be revealed in January is whether we have the political will, the political courage to make the choices that are needed,” Otter’s chief of staff, Jason Kreizenbeck, told a gathering of the Associated Taxpayers of Idaho on Wednesday, reading from prepared remarks that Otter had intended to deliver to the group himself. Because the governor was suffering from bronchitis, Kreizenbeck delivered the speech instead.

Key details were missing – including how much Otter, a Republican, will propose in gas tax increases – but here are the main points of the transportation plan:

•Otter has ordered the Idaho Transportation Department to immediately cut its administrative expenses by 6 percent. Because the department receives no state general funds, it wasn’t subject to Otter’s recent midyear cuts in the state budget. The governor also wants a group of business leaders to advise the department on efficiency, and he is looking for savings pursuant to a legislative audit that’s soon to be completed.

•Idaho’s gas tax, which has stood at 25 cents per gallon since 1996, and vehicle registration fees would go up, with the increases phased in over a five-year period. Said Otter, in the prepared speech: “We’re trying to accomplish 2008 goals with 1996 dollars.” The registration fees alone would raise about $15 million the first year, and the state would continue to charge differing fees based on the age of the vehicle, like current registration fees.

Otter also wants a tax on rental cars, “other internal steps” to shift money to road and bridge construction, and a task force to study Idaho’s truck registration fee system. Truck registration fees also would be raised in the coming year; the task force would recommend additional steps for future years to improve equity. “The bottom line is generating significant and reasonable ongoing revenue,” Kreizenbeck told the gathering.

•The governor wants sales tax revenues from the sales of automobiles, tires, auto parts and related items tracked as a possible first step toward tapping into some of those funds for transportation. Idaho currently devotes none of its general fund money, which comes largely from sales and income taxes, to transportation, relying instead on fuel taxes, registration fees and federal funds.

“We are not talking about sweeping, grandiose plans for building new highways,” Kreizenbeck told the audience of about 400 legislators, local officials, lobbyists and business people. “We are talking for the most part about maintenance – the kind of work and investment that everyone here knows is a necessary part of doing business and a proper role of government.”

In Washington, Gov. Chris Gregoire has pledged to avoid tax increases in 2009 but acknowledges that some legislative leaders are contemplating it.

In Idaho, initial reaction to Otter’s proposals was mixed, but mostly positive, among legislators.

“I’ve said all along that we need to focus at least on maintenance so that we don’t fall farther behind,” said Idaho House Speaker Lawerence Denney. He joked, “With the volatility in the gas prices right now, if you didn’t report on it nobody’d notice that we’d raised it 10 cents a gallon.” But, he said, “with the down economy it’s going to be a tough sell.” He praised the governor for looking to user fees for funding.

Idaho Senate President Pro-tem Bob Geddes said, “I think the governor showed some tempering from what his position was last year.”

Last year, after first calling for a large, flat increase in vehicle registration fees, Otter angrily rejected a smaller $68 million compromise package from lawmakers.

Geddes said, “I think the governor is ready to come up with a package that works for not only the Department of Transportation, but for the people that have to pay for it.” However, he said, “I don’t think the crisis was created because we have 6 percent too much administration. I think we could run a little leaner in administration.”

Senate Education Chairman John Goedde, R-Coeur d’Alene, said, “My ears went up when he said he was going to start tracking sales tax revenue from motor vehicle-related sales, because anything that could get deferred from general fund revenue to transportation would have a definite impact on education. I see education as the catalyst that, when our economy turns, will springboard us into the limelight. We have to have workers that are ready to take the jobs that are already there.”

House Assistant Minority Leader George Sayler, D-Coeur d’Alene, said the governor’s proposals are “kind of a consolidation of what’s been talked about the last year or two. I do agree that we need to increase the fuel tax – it was a mistake at the time probably not to adjust it” for inflation when it last was raised in 1996. Sayler said the accountability piece is important to gain legislative approval, but most of all, “We need to be adequately funded.” Fixing the transportation system, he said, “should help us get out of the hole a little sooner.”

Kreizenbeck said Otter will reveal the details of his plan in his State of the State message to a joint session of the Idaho Legislature on its opening day, Jan. 12.

Betsy Z. Russell can be reached toll-free at (866) 336-2854 or For more news from Boise, go to
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