2021 Road Use Tax Fund (RUTF) Study

(2021) 2021 Road Use Tax Fund (RUTF) Study. Transportation, Department of

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Abstract

A key component of Iowa’s transportation system is the public roadway system owned and maintained by the state, cities and counties. In order to regularly evaluate the conditions of Iowa’s public roadway infrastructure and assess the ability of existing revenues to meet the needs of the system, the Iowa Department of Transportation’s 2006 Road Use Tax Fund (RUTF) report to the legislature included a recommendation that a study be conducted every five years. That recommendation was included in legislation adopted in 2007 and signed into law. The law specifically requires the following (2021 Iowa Code Section 307.31): “The department shall periodically review the current revenue levels of the road use tax fund and the sufficiency of those revenues for the projected construction and maintenance needs of city, county, and state governments in the future. The department shall submit a written report to the general assembly regarding its findings by December 31 every five years, beginning in 2011. The report may include recommendations concerning funding levels needed to support the future mobility and accessibility for users of Iowa’s public road system.” “The department shall evaluate alternative funding sources for road maintenance and construction and report to the general assembly at least every five years on the advantages and disadvantages and the viability of alternative funding mechanisms.” To initially comply with this requirement, the Iowa Department of Transportation (DOT) prepared a 2011 RUTF Study (www.iowadot.gov/pdf_files/RUTFStudy2011.pdf). This study relied heavily on the work of the Governor’s Transportation 2020 Citizen Advisory Commission (CAC), established by Governor Terry E. Branstad to assist the Iowa DOT as it assessed the condition of Iowa’s roadway system and evaluated current and future funding available to best address system needs. The 2011 RUTF Study ultimately led to the passage of Senate File 257 in the 2015 legislative session that was signed into law on February 25, 2015. The major component of this bill was the increase of the state fuel tax rate on March 1, 2015, in order to meet the critical need funding shortfall identified in the study. Because the 2016 RUTF Study was completed shortly after the implementation of the 2015 fuel tax increase, the study it was difficult to accurately assess the long-term impact on construction needs. Therefore, the 2016 RUTF Study focused on the actions taken since the 2011 RUTF Study and on alternative funding mechanisms. This 2021 RUTF Study includes a complete reexamination of projected public road system needs and available funding. The funding forecast includes the additional federal revenue from the Infrastructure Investment and Jobs Act of 2021 that was signed into law on November 15, 2021. To mitigate past and future impacts of construction cost inflation and increasing vehicle fuel efficiency, the study includes a recommendation that the legislature consider implementing indexing of state fuel tax rates based on the Consumer Price Index for all urban consumers (CPI-U).