Case Study #1: Iowa

Arizona is not alone in its quest to modernize and improve its transportation infrastructure. States across the country are developing strategic transportation plans and seeking stable and sufficient revenue streams. The state of Iowa stands out as an example of a successful bipartisan commitment to funding transportation needs.

This February, Iowa Governor Terry Branstad (R) signed into law legislation increasing the state’s gas tax for the first time in 26 years. The gas tax increase of 10 cents per gallon and the increase in oversized/overweight vehicle permit fees are expected to generate about $200 million per year dedicated to transportation infrastructure. This legislation provides a sustainable source to maintain and repair Iowa’s 114,000 miles of roads and 25,000 bridges and to prepare for future transportation needs.

Iowa’s pressing need to make safety improvements to roads and bridges and to expand its system to accommodate growth led to an impressive show of bipartisan support. In the House, 23 of 43 Democrats and 30 of 56 Republicans voted in favor. In the Senate 16 of 26 Democrats and 12 of 23 Republicans voted in favor.

A strong and diverse coalition of supporters contributed to the bill’s success. The coalition included the Iowa Farm Bureau, chambers of commerce, the trucking industry, Iowa County Engineers Association and the Iowa State Association of Counties. Their success did not appear overnight. These groups and others had been working diligently for years to build their case and get the legislation right.

Supporters of the bill chose the gas tax because Iowa’s constitution prohibits revenues from the Road Tax Use Fund from being diverted for other purposes. Additionally, infrastructure problems in some areas were so severe that many counties had resorted to issuing bonds to finance road projects. This was putting a strain on Iowa property tax payers. Credit rating agencies such as Moody’s responded positively to the news, calling the legislation “credit positive.” Further, analysis showed that about 20% of gas taxes are paid by out of state motorists.

As we look to develop a transportation funding solution that meets Arizona’s unique needs, we can learn from states like Iowa and the eleven others that have made changes to their fuel tax structure since 2013. Leadership from the governor, strong stakeholder coalitions and support from both urban and rural interests stand out as important ingredients for a successful program.

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