Officials in states from Wyoming to West Virginia look at fuel tax changes
January 30, 2020
During the past seven years more than 30 states have raised or reformed their fuel tax rate. Despite the progress toward addressing transportation funding needs legislators in more and more states continue to pursue additional revenue enhancements.
The Owner-Operator Independent Drivers Association believes increasing the fuel tax is the most equitable way for states to generate additional revenue.
Below is a list of states so far this year to have legislation introduced to adjust fuel tax rates.
A renewed effort underway in the Wyoming Legislature would raise fuel taxes.
The state’s current tax rate of 24 cents per gallon is unchanged since 2014.
Introduced by the Joint Revenue Interim Committee, the bill would adjust the taxes on gas, diesel and alternative fuels based on the consumer price index. The changes would be implemented on July 1, 2020.
The Wyoming Department of Transportation reports that more than $135 million in unfunded operating expenses. The amount includes $73 million in construction and maintenance.
The bill, HB63, would raise the tax rates by 3 cents to 27 cents per gallon.
The change is estimated to raise $20 million annually for state and local roads, according to a fiscal note attached to the bill.
State highway funds would receive 57.5% of additional revenue from gas tax collections and 75% from diesel. Counties would collect 27.5% and 20%. Cities and towns would get 15% and 5%.
Advocates acknowledge the additional fuel tax collection would not satisfy the shortfall, but they say it is a step in the right direction.
The interim panel offered a similar bill one year ago. The bill sought to index the tax rates based on the consumer price index.
Critics did not like the 2019 version permitting regular increases without a legislative vote. The 2020 version does not include the provision.
One bill moving forward at the Missouri statehouse would raise the state’s 17-cent fuel tax rate. The tax has remained unchanged since 1994.
The state’s Department of Transportation has said there is an $825 million gap in annual road and bridge funding. Transportation officials say a dire situation to fund road and bridge work will only worsen until legislators get a deal done.
The Senate Transportation, Infrastructure and Public Safety Committee voted 5-2 to advance a bill to initially raise nearly $130 million annually for state and local roads. The bill awaits further consideration in the Senate.
Missouri raised $717 million in fuel tax revenue during fiscal year 2019 – about $13 million less than the previous year.
Sponsored by Sen. Doug Libla, R-Popular Bluff, SB539 would increase the gas tax 2 cents from 17 cents to 19 cents. The diesel rate would be increased six cents from 17 cents to 23 cents.
The tax rates would also be adjusted annually for inflation via the consumer price index. According to a fiscal note attached to the bill, fuel tax revenues would top $180 million per year by 2024.
The state would continue to collect 73% of fuel revenue. Cities receive 15% and counties collect 12%.
Virginia Gov. Ralph Northam recently unveiled his proposed two-year budget. The Democratic governor’s plan includes an overhaul for transportation revenue collection, including additional fuel tax revenue.
“We rely on motor fuels taxes for many of our transportation dollars,” Northam said during his recent budget address. “But modern vehicles use less fuel, which means that revenue isn’t keeping pace with the continuing need.”
His solution is to restructure the state’s funding model.
“It’s no secret that the current way we fund transportation is simply not sustainable,” he said during his recent State of the State address. “… We need to reform transportation funding this session.”
Leading Democrats at the Virginia statehouse have introduced legislation that focuses on achieving plans outlined by the governor.
House Speaker Eileen Filler-Corn of Fairfax and Senate Minority Leader Richard Saslaw of Fairfax have bills that include raising fuel tax rates and lowering vehicle registration fees.
Virginia collects a 16.1-cent excise tax on gas and a 20.2-cent rate on diesel.
The governor wants to raise fuel excise rates by 12 cents for gas and 6.8 cents for diesel. The increases would be phased-in over three years for gas and over two years for diesel.
Once fully implemented, the rate increases would add nearly $500 million in additional revenue for state projects.
The tax rates would also be tied to inflation allowing for regular increases.
The legislation also includes the implementation of a new fee on alternative fuel and fuel-efficient vehicles.
Northam said he supports Virginians making “environmentally friendly vehicle choices.” He adds that those drivers continue to use the state’s system of roads, while the system sees “fewer and fewer dollars.”
In addition, transportation bonds would be authorized for improvements in the Interstate 81 and Interstate 66 corridors.
A bill in the West Virginia Senate would boost fuel tax collections.
The state’s fuel tax rate is 35.7 cents. The tax is a combination of a flat rate of 20.5 cents and a 15.2-cent variable rate on the wholesale price.
Sponsored by Sen. Charles Clements, R-Wetzel, SB619 would create an annual adjustment to the tax rates. Rate increases would be based on the consumer price index.
The bill awaits consideration in the Senate Transportation and Infrastructure Committee.
More state trends
Keith Goble, state legislative editor for Land Line Media, keeps track of many trends among statehouses across the U.S. Here are some other articles by him.