Title: How Much Gas Tax Money States Divert Away From Roads - Reason Foundation
Headings: How Much Gas Tax Money States Divert Away From Roads
Policy Brief
How Much Gas Tax Money States Divert Away From Roads
Examining the percentage of state gas tax revenue that is allocated for expenses unrelated to roads, including money shifted to law enforcement, education, tourism, environmental programs and more.
State Gas Tax Diversion Rates
Background
Figure 1: State Gas Tax Rates 2000-2019
Gas Tax Diversions by State
Figure 2: State Gas Tax Diversion Rates
Figure 3: Average Diversion Rate of Each U.S. Region
Methodology
Colorado
Connecticut
Florida
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
New Jersey (FY18)
New York
North Carolina
North Dakota
Oklahoma
Pennsylvania
Rhode Island
South Carolina
South Dakota
Texas
Utah
Vermont
Virginia
Washington
Wisconsin
Analysis
Recommendations

Content: Today, a driver in Oregon, who would have paid one cent per gallon in 1919, pays 36.8 cents per gallon in state gas tax and 18.4 cents per gallon in federal gas tax. A penny in 1919 is equivalent to 15 cents in 2020, for the same purchasing power. Today’s vehicles are roughly 17.6% more fuel-efficient than those in the 1920s, though vehicles today are roughly 66.9% more fuel-efficient compared to vehicles in 1960 (when comparing the average fuel economy of 24.7 miles per gallon today, with the fuel economy of the Ford Model T at 21 miles per gallon and average fuel economy of 14.8 miles per gallon in 1960). Based solely on inflation and increased fuel efficiency, that one-cent tax in 1919 would equal 17.6 cents today. Currently, state gas taxes range from 14.32 cents per gallon in Alaska to 62.05 cents per gallon in California, not including the 18.4 cents per gallon federal gas tax. Rather than dedicating all gas tax revenue to roads and highways, many states divert portions of the revenue to non-road and non-transportation purposes. While those paying gas taxes may see some benefit in non-road and non-transportation spending, these diversions undermine the users-pay/users-benefit principle and promote irresponsible spending behavior. When gas tax revenue is treated as an undedicated stream of governmental revenue, roads suffer, and tax dollars may be wasted on ineffective or irrelevant programs. Though this brief focuses specifically on the diversion of state-level gas tax revenue, it should be noted that each state funds its road system with a unique combination of fees and taxes, often including motor vehicle registration fees and various sales taxes. Accordingly, a state may divert its registration fees while using all of its gas tax revenue on roads and highways.