Utah cities and counties to seek up to $70 million from Legislature to cover plummeting fuel tax revenue

(Francisco Kjolseth | Tribune file photo) This May 1, 2019, file photo shows crews starting to build a storage facility near 5600 West and the S.R. 201 as part of the Utah Department of Transportation's top construction project which will link the Mountain View Corridor from 4100 South to S.R. 201. The $335 million four-mile project, includes four lanes (two in each direction) and 13 new bridges. State and local road projects have been threatened by a big drop in motor fuel taxes during the coronavirus restrictions.

Utah’s cities and towns plan to ask the Legislature for $60 million to $70 million to help make up for motor fuel taxes lost during coronavirus restrictions. They say it is needed to keep local road projects on schedule.

They will seek adding that amount to bonds, or loans, the state is considering to keep its own highway projects moving, said Lincoln Shurtz, director of government affairs for the Utah Association of Counties.

He outlined those plans during a meeting Tuesday of the Joint Highway Committee, a group of city and county officials that advises the Utah Transportation Commission — and said local governments will negotiate with lawmakers about whether the money sought should be a grant or repayable loan.

“We’re anticipating somewhere between a 25% and 35% decrease” in the share of motor fuel taxes collected by the state that go to cities and towns, Shurtz said.

(Francisco Kjolseth | Tribune file photo) In this January 2017 file photo, Lincoln Shurtz with the Utah Association of Counties testifies before a legislative committee about 'alcopop' at the state Capitol in Salt Lake City in January 2017.

The Utah Department of Transportation earlier reported that during weeks of stay-at-home restrictions, travel on freeways statewide dropped to about 60% of normal — but has recently returned to near-normal levels as restrictions eased.

The Utah State Tax Commission reported Monday that motor fuel taxes in March, when stay-at-home restrictions came in the middle of the month, were down by 13%. Receipts are expected to be down more sharply in April, when stay-at-home directives were in place all month.

“The state Legislature is going to be doing the bonding package to keep its construction on schedule,” Shurtz said. Also, bonding could allow shifting some sales tax from transportation to other needs by replacing it with bond proceeds.

So counties and cities “are drafting a letter suggesting that they [legislators] should add to that roughly $60 million to $70 million” to cover local fuel tax losses and also help them keep city and county projects going, Shurtz said.

Cameron Diehl, executive director of the Utah League of Cities and Towns, said cities and counties will also seek help in Congress as it begins working on another possible relief package. He said they have been discussing it with the state’s congressional delegation.

“We’ve told them that a fourth stimulus needs to include additional revenue for state and local governments, but with more flexibility on how those funds can be spent,” he said, noting rules so far have not allowed this aid to be used on local road projects.

Shurtz said counties and cities are arguing that the sought-for relief would help fund “construction jobs important to the economy, kind of helping us come out of this recession.”

Local officials also argue that keeping road maintenance and improvement projects on track saves money in the long run by avoiding deterioration that costs even more to repair later.