Title: State Gasoline Taxes: Built to Fail, But Fixable – ITEP
Headings: State Gasoline Taxes: Built to Fail, But Fixable
State Gasoline Taxes: Built to Fail, But Fixable
How Gas Taxes Work
A Vital Transportation Revenue Source
Challenges Confronting State Gas Taxes
Consequences of Inaction
Recommendations for Reform
Recent Progress
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Content: The decline of the gas tax is costing states significant revenue. If every state had reformed its gas tax to grow alongside construction costs the last time lawmakers raised the tax, the states as a whole would be bringing in more than $10 billion in additional gas tax revenue every year. Some states, such as New Jersey and Tennessee, would each be bringing in more than $500 million in additional annual revenue. These revenue losses have been a major factor in the worsening condition of the nation’s infrastructure. According to the American Society of Civil Engineers (ASCE), a quarter of America’s bridges are structurally deficient or obsolete, one-third of the nation’s major roads are in poor or mediocre condition, almost half of all major urban highways are congested, and nearly half of all Americans lack access to bus or rail transit. As a result of these deficiencies, the ASCE estimates that Americans waste the monetary equivalent of $32 billion in travel time delays each year, and another $97 billion on vehicle operating costs. Given all these problems, it should come as little surprise that even business leaders—a group hardly enamored with taxes—often come down on the side of raising state gas taxes in order to fund a more efficient transportation system. When gas taxes are allowed to stagnate, the consequences are not always limited to state transportation systems. Recently, a number of states have enacted long-term raids on their general funds, where a certain percentage of tax revenue usually reserved for education, human services, and other public priorities is siphoned off to make up for lagging gas tax revenues. Some lawmakers have pointed out the problems with this approach, but far too many view a general fund Band-Aid as an easy way to delay politically difficult, but long-overdue reforms to the gas tax.