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: 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. A gas tax diversion rate is only one measure of a state’s fiscal responsibility. California, as an example, diverts none of its gas tax revenue. Yet, the state collects over $8 billion in revenue per year from vehicle registration and miscellaneous motor vehicle fees, which is partially allocated to programs such as the California Highway Patrol, the California High-Speed Rail Authority and local public transportation. Despite the aforementioned limitations, this brief solely examines the diversion of state-level motor fuel tax revenue as a measure of fiscal responsibility for state transportation funding. Gas Tax Diversions by State
Gas tax diversions vary by state for the 25 states that employ that practice.