Senators hit brakes on tax hike for Utah car rentals

(Jeff Martin | AP file photo) A Hertz "Fast Lane" sign directs rental car drivers to a biometric scanning machine at Hartsfield-Jackson Atlanta International Airport, in Atlanta on Dec. 7, 2018.

People who rent cars in Utah just avoided a proposed 1.5% tax hike.

The Senate voted 27-0 on Monday to advance SB150 to make numerous changes in Utah’s transportation system — but only after removing the controversial rental car tax hike.

That tax would have generated an estimated $4.5 million a year that would have gone toward mass transit projects. It was stripped following opposition from rental car companies, who argue they are already taxed at high rates.

SB150 contains numerous other tweaks and changes to Utah’s transportation systems.

For example, it orders the Utah Department of Transportation to develop by Dec. 31, 2021, a plan on how to eventually enroll all cars in the state into a “road user charge” program — which will charge them a fee for each mile they travel in the state.

Such a program may eventually replace the gasoline tax in the state. The gasoline tax has failed to keep up with inflation to fund highways in part because more electric vehicles escape it entirely, and even gas-powered cars get better mileage and pay less.

The state on Jan. 1 launched a voluntary road user charge program for the owners of the 51,000 electric and hybrid vehicles in the state.

Owners can choose to pay 1.5 cents for every mile they drive, usually measured by a transponder they plug in under the dashboard, paid automatically from a customer account connected to a credit card. They will be charged no more during the year than the amount of the higher registration fees such alternative-fuel cars face.

State officials are hoping to use lessons learned from that pilot program to eventually spread the program to all types of vehicles.

SB150 also would remove a cap on how many “transit oriented developments” the Utah Transit Authority may have, which is now eight. Several cities who want such developments in their areas pushed to eliminate that cap.

UTA in the past was involved in a series of scandals involving TODs, which are business and residential projects near transit stations that are designed to improve access to them and increase ridership. UTA often contributes extra land it obtained during construction of transit lines to those projects in exchange for a share of the profits from private developers.

Most of the past controversies about UTA transit-oriented developments involved what auditors found were sweetheart deals with developers and conflicts of interest involving former board members.

The bill also creates a mechanism to allow creation of “transportation reinvestment zones.” Through them, two or more public agencies can agree to capture future increases in property or sales taxes expected from new transportation projects to help fund their construction.