PIERRE � A South Dakota legislative committee unanimously rejected a measure Wednesday that would have raised state highway taxes and fees after its sponsor requested the proposal be shelved for a year because of the current economic and political climate.
The bill's main sponsor, Sen. Mike Vehle, R-Mitchell, asked the Senate Transportation Committee to kill his bill after a lengthy hearing. The state and local governments need more money to take care of roads and bridges, but it's apparent the Legislature will not pass such a tax increase until the economy recovers, he said.
"I'm telling you now, I'm going to be back next year and I'm going to continue to work on it," Vehle said. "I believe in it."
The bill would have raised the gas tax, the excise tax on vehicle sales and the annual registration fees for noncommercial cars, trucks and other vehicles. By the time all increases were fully in place by July 2014, the state would have gained about $80 million a year from increases in the gas tax and excise tax, while counties, cities and townships would have received an extra $31 million a year from registration fees.
After the main funding bill was killed, the committee passed a related bill that would reduce the number of vehicles eligible to get a discount on the annual registration fee. Vehicles at least five years old, or about three-quarters of the cars and trucks on the road, now pay only 70 percent of the normal registration fee. The bill would give the discount only to vehicles at least 10 years old, or about half those on the road. That would provide local governments with an additional $4.5 million a year.
Vehle said the state needs to provide more money to cover substantial increases in the cost of building and maintaining roads and bridges. The road taxes and fees were last increased in 1999, but construction and maintenance costs have risen substantially since then, he said. Money from road taxes buys only about half as much as in 1999, he said.
The Legislature has rejected plans to boost road funding in the past three years, but a state Transportation Department study estimated that state needs an extra $160 million a year for state highways and an extra $80 million a year is needed for county, city and township roads.
Vehle said the study indicated that most state highways are in good or excellent shape now but will deteriorate by 2020 unless more money is available for maintenance and construction.
State Transportation Secretary Darin Bergquist, who has supported such bills in past years, testified Wednesday against the tax and fee proposal. He noted that Gov. Dennis Daugaard, who took office last month, is opposed to raising any taxes, particularly while the economy is still sluggish.
"Now is not the time to ask taxpayers to pay more," Bergquist said.
The DOT secretary said South Dakota's roads are in good shape now because the state got an extra $183 million in federal highway funds through the stimulus measure in the last two years. The Legislature should wait to see what Congress does in passing a new highway funding measure because that will determine how much state money is needed to match the federal funds, he said.
The bill would have raised the state motor fuel tax from the current 22 cents a gallon to 27 cents in July 2013 and to 32 cents in July 2014, when it would have provided an extra $61.4 million a year. The 3 percent excise tax on vehicle sales would have been raised to 3.5 percent in 2012 and to 4 percent in 2014, eventually providing an additional $18.7 million a year.
Increases in the annual registration fee would have been done in steps, with half in 2012 and half in 2013. The $42 registration fee for a typical car would have risen to $51 in 2012 and $60 the next year.
Vehle said South Dakota has one of the lowest annual registration fees in the nation, so it would make sense to boost them to help care for local roads.
Officials from townships, which care for some of the smallest rural roads, said they often have to raise property taxes because money from registration fees is not sufficient to cover all road maintenance costs.