Senate committee approves bill to shift vehicle and tire sales tax revenue to highway fund

Senator Wally introduced Senate Bill 16-42 to change how certain sales and use tax revenues are allocated, directing a larger share of motor-vehicle and tire-related sales taxes to the state highway fund while preserving a municipal share for local road maintenance.

"What it would do is shift more transportation related tax revenue into the state highway fund and ensure that municipalities receive a share of the remaining revenue so they can manage their roads," Senator Wally said during his presentation.

Sponsor remarks and committee questions laid out the mechanics: instead of 100% of sales tax and use tax revenue from new and used tires going to the highway fund, the bill would direct 95.397% there and provide the remaining balance to municipalities; the bill would similarly direct 95.397% of vehicle sales tax revenue into the highway fund. The sponsor said the change aligns revenue streams to transportation needs "without raising taxes."

Committee members asked how the funds get to municipalities; Senator Wally said the allocation would be deposited into the highway fund and then transferred to municipalities according to existing formulas and that the precise mechanism would be provided to Finance.

After discussion, Chairlady Massey moved the bill. The Clerk conducted a roll-call vote; each senator recorded an "aye." The committee recorded nine ayes and reported that Senate Bill 16-42 passes and will move to Finance Ways and Means for further debate and any required fiscal work.