DES MOINES — A penny-per-gallon gas tax that for more than a quarter-century has funded efforts to clean up underground petroleum tanks near gas stations will end later this year under a measure Gov. Terry Branstad signed into law Monday.
During a bill signing at the Capitol, Branstad said the program had served its purpose and there is enough money left over to address any future problems that arise related to the storage tanks. The tax expires on Dec. 31.
“This is really a historic day,” Branstad said before signing the bill. “We’re getting rid of a tax.”
The Iowa Legislature created the cleanup program and its tax in 1989 to pay for costs tied to environmental contamination from the underground tanks located near gas stations. Branstad described the “sites” as difficult to address because of insurance coverage issues. The program provided environmental remediation assistance, site insurance and loan financing.
The environmental protection charge has collected 1 cent per gallon of motor fuel and generated roughly $21 million a year, which was deposited into a road use tax fund.
Iowa Department of Natural Resources Director Chuck Gipp said the law could mean drivers in Iowa pay less for gasoline in the future, noting that gas retailers will be paying less in taxes.
“They certainly should be able to reduce their price at the pump by a penny,” he said.
The cleanup fund has about $36 million in remaining funds, according to the nonpartisan Legislative Services Agency. About $22 million will be used on outstanding claims linked to sites with underground storage tanks. Gipp said the rest will be available for future issues, which can be uncovered amid construction projects.
Branstad said he felt strongly the tax, “needed to go away, especially since we have enough money to take care of any sites that might be discovered in the future,” he said.
There was no registered opposition to the legislation, though Gipp said there was interest from some parties to use the money to build more compatible tanks for ethanol blends. Gipp, a former state representative, said such a proposal should go through the channels of state government instead of using money that had a specific designation.
The Iowa Environmental Council, a nonprofit group focused on issues that include clean water, did not take a position on the legislation. Ralph Rosenberg, the council’s executive director, said the group did express a concern about depleting the source of funding.
“We are always concerned about underestimating or understating the pool of resources to pay for an environmental leakage,” he said.