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DOT says Road Use Tax Fund should be in decent shape despite drop in travel due to pandemic

DES MOINES — It looks like the state, counties, and cities are going to end up in good shape with funding to repair roads after things didn’t look so good at the start of the pandemic.

The Iowa Department of Transportation’s Stuart Anderson says traffic dropped by more than 40 percent in April — which meant a drop in fuel taxes paid into the Road Use Tax Fund.   “Traffic did slowly rebound after mid-April  when we were at  the peak drop in traffic,” according to Anderson. “It’s grown until about mid-August when we hit about ten to 15 percent below previous levels. And it has really stayed at that level since that point.” 

And while regular vehicle traffic dropped off during the pandemic — truck traffic did not. “It’s been at or above previous year levels — which makes some sense because freight still needs to move and people are still buying things.  How they are buying them might be different — but there is still a lot of freight being moved on the system.” Truckers carrying that freight continued buying diesel fuel and paying the taxes on it. 

Fees for the licensing and sale of cars are another component of the road fund.  Car sales dropped dramatically early in the pandemic — but Anderson says they also turned around. “They definitely have rebounded,” he says, “and we also have seen vehicle prices increase — particularly in the used car market — because of the heavy demand. And so that has impacted the revenue stream we collect  for the Road Use Tax Funds.” 

The state receives 47-and-a-half percent of the Road Use funds, counties get 32-and-half percent, and cities receive around 20 percent.  Anderson says the state received 122 million dollars in federal pandemic relief funds that will be used to offset losses. “And the COVID impact having been — we are estimating 50 million dollars through the end of June — then this would more than cover the loss of state revenue,” Anderson says.  “Local governments to varying degrees have also had their local revenues impacted by COVID-19.  However,  that has impacted the street and road system as well.”

Anderson says they will be making a recommendation this week to the Transportation Commission on the distribution of that federal funding.

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