House Bill H0260

2015 Freedom Index Score: (-4)

Analyst: Parrish Miller
Date of analysis: March 18, 2015

ANALYST'S NOTE: House Bill 260 increases gas taxes, transfer fees, and electric and hybrid vehicle
registration fees. This bill is estimated to increase taxes and fees by more than $80 million. House Bill
260 adopts some, but not all, of the bad ideas from House Bill 144 (-21 Freedom Index score) which was
introduced in February. House Bill 260 increases the gas tax on regular and diesel fuel by 5 cents per
gallon whereas House Bill 144 increased it by 8 cents and 12 cents a gallon respectively. House Bill 260
increases the transfer fee by 200 percent whereas House Bill 144 increased it by 300 percent. House Bill
260 also increases the registration fees for electric and hybrid vehicles by slightly less$125 and $60
versus $140 and $75 respectivelythan did House Bill 144. Finally, while House Bill 144 included a
mechanism to increase fuel taxes in future years, House Bill 260 includes a mechanism to reduce fuel
taxes in future years. This is not to say that House Bill 260 is a positive proposal, but merely to provide
context relative to the scope of the conversation.

Point No. 5 Does it directly or indirectly create or increase any taxes, fees, or other assessments?
Conversely, does it eliminate or reduce any taxes, fees, or other assessments?
ANALYSIS: House Bill 260 modifies Section 41-4909, Idaho Code, to increase from one cent per
gallon to three cents per gallon the "transfer fee" imposed on "the delivery or storage of all
petroleum products as defined in subsection (23) of section 41-4903, Idaho Code, delivered or
stored within the state of Idaho." This two cents per gallon increase is a 200 percent fee
increase. [Page 3, lines 28-46] (-1)
ANALYSIS: House Bill 260 creates Section 49-457, Idaho Code, which imposes two new and
additional registration fees on electric vehicles and hybrid vehicles respectively. Subsection (1)
reads as follows: "An electric vehicle fee of one hundred twenty dollars ($120) shall be collected
in addition to all other registration fees assessed pursuant to this chapter on each electric
vehicle registered." [Page 8, lines 4-7] (-1)

Subsection (2) reads as follows: "A hybrid vehicle fee of sixty-five dollars ($65.00) shall be
collected in addition to all other registration fees assessed pursuant to this chapter on each
hybrid vehicle registered." [Page 8, lines 8-10] (-1)
ANALYSIS: House Bill 260 modifies Section 63-2402, Idaho Code, to increase by six cents a gallon
the gas tax on both regular (-1) and diesel (-1) motor fuel from the current rate of 25 cents per
gallon to a rate of 31 cents per gallon. This is a 24 percent tax increase. [Page 9, lines 25-34]
ANALYSIS: House Bill 260 modifies Section 57-814, Idaho Code, to require that if receipts to the
general fund for the fiscal year exceed the receipts for the preceding fiscal year by 4 percent or
more, then .4 percent of all general fund collections will be transferred to the highway
distribution account. These cumulative amounts shall be continuously appropriated thereafter.
These requirements will sunset on July 1, 2021. [Page 8, lines 36-45]
House Bill 260 modifies Section 63-2402, Idaho Code, to stipulate that at such time as the total
ongoing appropriation that has been made to the highway distribution account pursuant to
requirement referenced in the above paragraph reaches $20 million dollars, the increased tax
imposed upon motor fuels shall be reduced by one cent, and thereafter such tax shall continue
to be reduced by one cent each time an additional $20 million dollars has been so appropriated.
This reduction will continue until the motor fuels tax is back at 25 cents per gallon. These
requirements will sunset on July 1, 2021. [Page 9, lines 25-34]
It would be preferable if this reversal of the tax increase did not hinge on a growth rate tenfold
the amount transferred to the highway distribution account, but so be it. If Idaho hits the 4
percent growth threshold next year, the general fund will be around $3.1 billion. The .4 percent
transfer called for in the amended Section 57-814, Idaho Code, will only amount to about $12.4
million. Even if the state saw 4 percent growth every year, it would take until fiscal year 2025
before the gas tax returned to 25 cents per gallon. Considering that these provisions sunset in
2021, the full elimination of this tax hike is mathematically impossible. (Even at an impossible 10
percent general fund growth rate, the tax would not be fully reset until fiscal year 2023.)
While it is positive that a mechanism exists to gradually undo at least a portion of the negative
of raising gas taxes, this is not guaranteed to occur and even if it does, it will not repay Idahoans
for the additional moneys expropriated from them pursuant to this bill. The most impactful
element of these provisions is the fact that general fund dollars are being used to fund
transportation. There has been a long-standing taboo against allowing transportation funding to
compete directly with education and health and welfare for general fund dollars. While this bill
does not fully reverse this unspoken prohibition, it does establish a toehold for those who
believe that these appropriations should be discussed relative to each other and who advocate
acknowledging the fungibility of tax revenue. (+1)