Official says no need to boost SD highway taxes

Bergquist met with the Senate Transportation Committee to present an update on highway funding, and another session is planned later to discuss details about the condition of South Dakota’s roads and bridges.

A state Transportation Department study done six years ago indicated the state needed an extra $160 million a year for highway and bridge work. Bergquist said highway financing is in much better shape now because revenue from existing tax rates has increased and the state got $183 million in extra federal highway money in 2009 under the stimulus program.

The stimulus money financed a lot of projects in a three-year period, Bergquist said.

“We did a lot of good pavement work at that time that helped drive the overall condition of our roads,” Bergquist said.

Senate Transportation Chairman Mike Vehle, of Mitchell, is holding a series of hearings early in the legislative session to gather information on South Dakota’s state and local roads and whether additional funding might be needed in the future. Any bill to increase general state highway taxes would not be introduced until at least next year, he said.

“Do we have a problem? When does that manifest itself? How do we fix it? If that requires revenue to fix it, what do we have to do?” Vehle said.

The state’s 22-cent-a-gallon motor fuels tax raised nearly $133 million last year, and the 3 percent excise tax on vehicle sales collected about $73 million. Total state tax revenue for highways is about $25 million more a year than was anticipated six years ago, Bergquist said. The state gets about $275 million a year as its share of federal highway funding.

“There is not a need today for additional state revenues,” Bergquist said after the legislative hearing. “Obviously what happens at the federal level has the potential to skew that substantially.”

Bergquist told state lawmakers he hopes Congress provides highway funding for the rest of the federal fiscal year as part of an overall budget bill expected to be approved in the next few days. Federal taxes are providing about $35 billion a year to the federal highway trust fund, but Congress has been adding other money to spend about $50 billion a year on highways.

One proposal would cut federal highway spending to $35 billion a year to match revenue receipts, which could cost South Dakota $80 million to $90 million a year, Bergquist said. That would have a devastating impact on South Dakota’s ability to maintain roads and bridges, he said.

South Dakota’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.

The 2011 Legislature passed a bill to increase annual vehicle registration fees, commonly called license plate fees, to give counties, cities and townships more money for their roads and bridges. Gov. Dennis Daugaard vetoed the bill, but the House and Senate overrode the veto to pass the measure.