For Jayshree Patel, it is still unclear what is going to happen on July 1.
Will higher prices on gas mean fewer customers stopping in at her Peru Mobil station off the interstate on Route 251?
“We won’t know yet until it happens,” she said. “It doesn’t affect (customers) until they see the sign. Then they may go mad.”
Illinois drivers and retailers in the fuel business are about 10 days away from a big tax increase in both gasoline and diesel fuel. The gasoline tax doubles from 19 cents to 38 cents per gallon and the diesel tax jumps from 21.5 cents to 45.5 cents per gallon. This is the first time the gas tax has been raised in Illinois since 1990.
Patel said we may see some windfall in the fuel business in the local area.
“Small businesses will be affected,” she said. “There is already so much competition.”
But for Illinois’ convenience store economy as a whole, the increase could be a big issue, especially for those doing business closer to state borders where gas can be found cheaper on the other side.
“It’s devastating to us,” said Bill Fleishli, executive vice president of the Illinois Association of Convenience Stores and Illinois Petroleum Marketers. “Overnight, they are going to double it. It’s going to be a catastrophe. They’ve put us on the endangered species list.”
Fleishli said he has heard from colleagues in neighboring states who are “doing cartwheels” right now at the prospect of the higher prices in Illinois.
“I think you’ll see truck stops close,” he said. “It will put some stress on the industry.”
How much more will drivers pay?
The average U.S. driver travels about 13,474 miles per year, according to the U.S. Department of Transportation. Gas mileage is going to vary depending on the vehicle you drive, but the Environmental Protection Agency projected the average car got 25.2 mpg in 2017. Based on those averages, a driver would expect to pay $100 more per year on gas with the tax increase.
How will it affect the trucking industry?
Thanks to a measure called the International Fuel Tax Agreement, Illinois will not lose revenue from interstate truckers who skip on filling up in state.
The agreement has semi drivers track their mileage through each state and the individual states are compensated for fuel depending on how many miles the driver travels within their borders.
“Whether you buy fuel in Illinois or not, they’ll get their tax,” said Bill Jaegle, owner of Wm. Jaegle Transport, LLC in Tonica.
But the tax increase will up the cost a little for logistics companies moving products through Illinois. And if transportation costs more, so does everything else.
“It ends up being on the consumer,” said Steve DeFoe operations manager at BP Transportation in Peru. “They’re the person who buys what we haul.”
Jaegle, who does local water hauling along with interstate trucking, said he had to increase prices a little in anticipation of the increase. He’s expecting to pay about a nickel more per mile when the diesel tax goes up.
“I had increased my rates at the beginning of the year to compensate the difference,” Jaegle said. “You have to make up for it somehow.”
And Fleishli said consumers may see similar increased across the board.
“From garbage collection to beer delivery — everything is going to have to be adjusted,” he said.
So, many in the diesel business are making a final run to the pumps before the increase goes into effect in July.
“My supplier has put the notice out that they might not be able to top off our tanks before the increase,” Jaegle said.
This tax increase only applies to road-use vehicles. Jaegle, who also farms in the area, said the diesel tax would not affect equipment used in the field for farming.
Where is the new revenue going?
Local communities struggling to keep up with road projects may be getting more funding through the new tax, but the details have not quite been worked out yet.
“IDOT is still reviewing the legislation, its obligations and implications for individual projects like this and others as part of our multiyear planning process. We anticipate being able to share more details in the next couple of weeks,” said Guy Tridgell, director of communications with the Illinois Department of Transportation.
Departments are still waiting on Gov. J.B. Pritzker’s signature to make the bill official. But the current language in the Horizontal Capital Bill states a new fund, the Transportation Renewal Fund, will be created to divvy up the new revenue generated.
The current bill reads 80% of new revenue will be dedicated to road and bridge maintenance. Of that 80%, 60% percent will go to the state and 40% will go to local roads. The remaining 20 percent would be dedicated to mass transit. The way the motor fuel tax was portioned before the increase was 45.6% went to IDOT and 54.4% was dispersed amongst local governments.
Either way, the bill is earmarking funding for transportation, which is where it will have to stay. In November 2016, Illinois voters passed a “lockbox amendment,” which stipulated that legislators could not take transportation revenue and use it on anything other than transportation projects.
And state Rep. Lance Yednock (D-Ottawa) has previously announced a round of grants coming to local communities through the gas tax increase. For example, Utica will see up to $150,000 to re-water the canal and Spring Valley will see up to $150,000 to make upgrades to downtown bumpouts.