Pritzker’s gas tax relief plan faces opposition
Gov. JB Pritzker’s plan for pausing a scheduled automatic increase in the state’s motor fuel tax is facing opposition from several quarters, including engineering companies that design road and bridge projects.
On Thursday, officials from the American Council of Engineering Companies of Illinois said pausing the scheduled increase could have long-term consequences that could endanger funding for future transportation projects.
“We're open to working with all parties to find options for relief,” ACEC Illinois president Kevin Artl said during a news conference. “But I think the history here in Illinois is that when you skip payments, it only makes things worse. And in this instance, skipping this adjustment will lead to a half a billion dollars in lost funds for infrastructure projects over five years.”
The automatic, inflation-adjusted increase in the tax was part of the funding package for the $45 billion “Rebuild Illinois” capital improvements plan that lawmakers approved in 2019. Proceeds of the tax are used for transportation projects such as road and bridge repairs.
Administration officials have estimated this year’s increase would be a little more than 2 cents per gallon. But in his budget proposal for the upcoming fiscal year, Pritzker called for a one-year pause in that increase, which would save consumers about $135 million over the year.
That was part of a nearly $1 billion package of tax relief measures that Pritzker offered to help soften some of the impact of inflation on Illinois consumers. Administration officials have said the one-year pause in the tax increase would not affect funding of any future projects or the state’s ability to repay bonds that are backed by motor fuel tax revenues.
But P.J. Fitzpatrick, with the firm HR Green Inc., said the inflationary increases in the motor fuel tax were an important element of the Rebuild Illinois program because without it, revenue from the tax could not keep up with the rising cost of construction projects
“HR Green works on quite a few IDOT-related projects, in addition to some local agency projects. And some of the projects we've worked on have experienced some delays in funding over the years,” he said. “This delay in funding has created what we'll call a backlog of projects, and that backlog prior to the Rebuild Illinois program was created because as inflation increased, the funding stayed flat and the ability to fund those projects didn't exist.”
Other groups that benefit from state transportation funding have come out against the proposed tax freeze as well, including road construction companies and the International Union of Operating Engineers Local 150, which represents road construction workers.
State lawmakers are still working on a budget package for the upcoming fiscal year, and they have not yet acted on Pritzker’s proposed one-year pause on the gas tax hike.
“There’ve been different groups who’ve had differing opinions pro and con on that,” House Majority Leader Greg Harris, D-Chicago, said during a separate news conference Thursday. “So that’ll be one of the topics both the House and the Senate are going to discuss. Do you keep it as the governor introduced in his budget? Do you do a modification? Or is there a better alternative somewhere?”
Artl noted one option that’s been floated in the General Assembly is to replace some the revenue that would have come from an increase in the gasoline tax with a portion of the revenue from the state sales tax on motor fuel purchases.
State law already provides for an incremental shift of the sales tax charged on motor fuel from general revenues to the road fund. For the upcoming budget year, road fund’s share of motor fuel sales tax will increase from 16 percent to 32 percent, making for a $109 million increase to the road fund.
Artl said the engineering profession would prefer to leave the motor fuel tax program in place.
“At the end of the day, we wanted the adjustment for inflation in the package in Rebuild Illinois because we learned the lessons of the past,” he said. “And when you don't have that automatic index to reflect the current state and cost of living, you automatically fall behind.”