To pay for roads, proposal would increase fuel tax, phase out a tax bracket

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(From left) Sen. Willie Simmons, D-Cleveland, and Rep. Charles Busby, R-Pascagoula, speak with Mississippi Transportation Commissioner Dick Hall and another attendee of Mississippi Economic Council’s Legislative Scrambler on Wednesday at the Mississippi Museum of Art in Jackson.

A new plan to pay for infrastructure repairs around the state emerged Wednesday.

The House has already passed several road funding bills this year. At the Mississippi Economic Council’s Legislative Scrambler on Wednesday, one of the ideas Rep. Charles Busby, R-Pascagoula, floated was a revenue bill that would raise the state’s fuel tax and eliminate the 4 percent income tax bracket.

Rep. Charles Busby, chairman of the House Transportation committee, speaks at the Mississippi Economic Council’s Legislative Scrambler on Wednesday about a House proposal to raise revenue for roads.

“What this bill would do, is it would add 3 cents per gallon to gasoline every year for the next four years and then index that tax after that (by tying it to the consumer price index),” said Busby, who chairs the House Transportation Committee. “It would put 3 cents per gallon on every gallon of diesel for 5 years and then index it.”

At 18.4 cents per gallon, Mississippi has the lowest gas tax of its neighboring states and the 46th lowest in the nation, according to the Tax Foundation. Pennsylvania, with the nation’s highest gas tax, levies 58 cents per gallon.

Phasing out the 4 percent income tax bracket would involve eliminating 1 percent each year for four years, Busby said.

He said the 4 percent income tax bracket generates about $150 million in revenues. About 20 percent of fuel in the state is sold to nonresidents, he said, thus that $150 million would multiply by 1.2, making this legislation “tax-neutral.”

Meanwhile, the new program could produce $180 million, even before including diesel revenue, he said.

“I believe the citizens of the state of Mississippi are in support of that, as long as they can be assured that those monies are going to be directed toward improving our infrastructure,” Busby said. “Together this program is going to get us to where we need to be. I believe it’s something that has the support of leadership, of the speaker, and solves our problem.”

The program would also include a $300 annual fee on electric vehicles and $150 annual fee on hybrid vehicles.

The proposal may have legs in the Senate. Lt. Gov. Tate Reeves, who has been a fervent opponent to raising the gas tax but outspoken about his desire to find more money for infrastructure, spoke earlier this year about his desire to eliminate the 4 percent income bracket.

Reeves led an effort in 2016 session to eliminate the 3 and 4 percent individual income brackets, though just the 3 percent elimination came to fruition.

“There certainly would be an appetite for me to continue to reduce individual income taxes in our state,” Reeves said earlier this month when asked about eliminating the 4 percent bracket. “I believe, if for no other reason than simplicity’s sake, having one tax bracket is better than having three.”

Reeves’ spokeswoman declined to comment when asked about Busby’s plan on Wednesday. Sen. Joey Fillingane, R-Sumrall and chairman of the Senate Finance Committee, said on Wednesday he would be willing to consider the proposal.

Sen. Willie Simmons, chairman of the Senate Highways and Transportation Committee, told the Mississippi Economic Council’s Legislative Scrambler on Wednesday that the Senate will have an infrastructure bill ready “real soon.”

Sen. Willie Simmons, D-Cleveland, who chairs the transportation committee said the Senate would review what the House sends their way, but Senate leadership is also seriously considering an infrastructure package that could get the Legislature closer to the Mississippi Economic Council’s suggested investment of an additional $375 million per year.

He said the Senate could incorporate language from road funding bills that have already been proposed by the House, but that other options are on the table.

“We are not prepared to give you the specifics, but sometime real soon, we will have a measure we are going to bring forward that will be very meaningful in taking care of the needs of highway and infrastructure,” Simmons said.

Early in this year’s session, the House passed an infrastructure bill that would pull $108 million from the state budget and divert it to road and bridge funding around the state.

House Bill 722, which diverts 35 percent of use tax revenue mainly to cities and counties for road and bridge repair, was passed by the House in just the second week of the session.

Although determining where to find that cash in the general fund would be difficult, Busby said this is the most attention the subject has gotten during his tenure as the chairman of transportation.

“I think we’ve got leadership on board for a change, and I think the body has come to recognize the condition of our roads and bridges, and how desperate these conditions are,” Busby said.

The representative cited a report from TRIP, a national transportation research group sponsored by insurance companies and businesses involved in highway and transit engineering and construction, among other groups, saying the poor condition of the state’s infrastructure can cost motorists up to $2,100 per year thanks to extra vehicle operating expenses, congestion-related delays and traffic crashes caused by inadequate roadway safety features.

Yet, Simmons said plugging $108 million into roads and infrastructure would still be a band aid.

“It would send the wrong message to the system that we are fixing the problem if we do a band aid approach,” Simmons said. “I think when the Senate comes with this package … it’s going to be something that we can actually begin to see a difference and meet the needs of the highway infrastructure.”

Contributing: Adam Ganucheau