A bill in Juneau would double motor fuel tax for first time in 50 years

Alaska Trucking Association says DOT needs the money for better road maintenance
Freight trucks coming and going from the Port of Alaska in Anchorage.
Freight trucks coming and going from the Port of Alaska in Anchorage.(Taylor Clark)
Published: Mar. 24, 2021 at 6:41 AM AKDT
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ANCHORAGE, Alaska (KTUU) - The state of Alaska currently has the lowest motor fuel tax of any other state in the country at just eight cents a gallon according to the Alaska Department of Transportation. House Bill 104 aims to double that to 16 cents a gallon for all motor fuel sold or otherwise transferred in the state.

The last time the gas tax in Alaska was raised was in 1970.

For individual motorists, the fiscal impact of the tax would be fairly small if passed. However, gas plays a huge role in many jobs in the state and the economy as a whole.

The way Joe Michel with the Alaska Trucking Association put it, “If you got it, a truck brought it.” He pointed out that even people who don’t own a vehicle would eventually feel the effects of a hike on gas taxes.

“Raising the fuel tax will cost Alaskans more,” he said. “Not just at the pump but at their goods and services that they buy at the grocery store and things of that nature. If it costs more to move the freight to where it needs to go, everything is going to cost that much more.”

Michel said the Alaska Trucking Association represents 250 organizations in the state - large and small. He said undoubtedly this tax would affect their bottom lines.

While he said no one wants to pay more costs to run a business, he said they aren’t making any money if the trucks can’t take goods where they need to be because of bad road conditions.

“As long as the motor fuel tax dollars are spent specifically on road maintenance, the Alaska Trucking Association would be fine in pitching in and doing our fair share for the state of Alaska. But it needs to be spent on road maintenance,” Michel said.

There is language in the bill that states that the money from the motor fuel tax could be spent in other areas, like the construction of highway projects and ferries. Michel said the association would like to see changes in that language.

According to John MacKinnon, commissioner of the DOT, the maintenance and operation budget from the general fund — where money from the motor fuel tax goes — goes directly into maintaining the 5,200 miles of road and 237 airports that the DOT is responsible for maintaining.

“That’s where that M&O budget goes,” MacKinnon said, “The maintenance and operations budget for the Alaska Marine Highway System is a separate piece of the budget. So we don’t intermingle those funds.”

Meaning that money from the motor fuel tax could certainly go into the ferry system. However, MacKinnon clarified that it would be the Legislature appropriating the funds.

MacKinnon and Michel agree that more money is needed to maintain the road system and keep them safe for travel.

Michel talked about how the truckers he represents are often driving in off-hours, through the night when there are fewer people on the roads. He said they are constantly concerned about safety on the highways where DOT has challenges in maintaining them.

“If we were to have a winter that had some major snow events multiple times over the winter, we would be in trouble simply because DOT wouldn’t be able to keep up,” Michel said.

MacKinnon said road maintenance in 2021 is far better than in 1970 when the tax was last raised because of better methods, equipment and a lot of hard work from the people who work for the DOT. Still, he said this winter was one of those winters that Michel was talking about and it showed.

“We’ve had the most extreme weather we’ve had in Turnagain Pass since 1983, and we’re not geared up to handle the extreme conditions. We’re geared up to handle the average conditions that we can expect,” he said.

MacKinnon said the Silvertip Maintenance Station responsible for Turnagain Pass was reopened in December by order of the governor after being closed for about a year. He said they found out in the year it was closed that they needed it open to keep up. He said they’ve also reopened one in Chitina and Birch Lake outside of Fairbanks.

But they’re still working with a lot fewer resources to get the work done. So MacKinnon said adjacent maintenance stations that are near closed ones have a higher workload.

“72 fewer positions than we had six years ago. We have about $22 million less of an operating budget than we had six years ago. And that results in a lower level of service that we’re able to do,” he said.

MacKinnon also pointed out that there are about twice as many people living in Alaska as in 1970, and way more multi-car families. While that does mean more revenue from more gas being used, it also means more wear and tear on roads.

Also, electric and hybrids cars have become a thing since 1970 and now they’re more popular than ever. Even in a state that uses as much gas as Alaska, studies from the Alaska Center for Energy and Power show that the number of electric vehicles registered in the state doubled from 2018 to 2020 to about 1,600. This bill would affect them too.

Electric vehicles that use alternative fuel sources would be charged $100 every two years if the bill passed and hybrids would pay $50 every other year. MacKinnon feels that is fair.

“We’ve got vehicles on the road that are using the roads yet not contributing much if anything. The Motor Fuel Tax is intended to be a user fee,” MacKinnon said. “You know, you drive on the road, you use the road, you pay for it through your motor fuel tax. It’s probably one of the cleanest taxes out there. If any tax could be called clean, it’s one of the cleanest.”

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