State Fuel-Tax Proceeds Climb to Quarterly & Yearly Records

AASHTO Journal, 18 November 2011

Quarterly state tax collections on motor-fuel sales topped $10 billion for the first time during the second quarter of this year and annual collections for the state fiscal year that ended in June set a new high as well, according to data reported by the U.S. Census Bureau.Motor-fuel tax revenue generated $10.442 billion for the states during Second Quarter 2011, topping the previous quarterly record of $9.986 billion that was set in Third Quarter 2010.

For all four quarters of state Fiscal Year 2011 — which ran from July 1, 2010, to June 30, 2011 — state taxes on motor fuels generated a record $39.632 billion. That beat the previous annual record by 5% ($37.642 billion collected during state FY 2008).

State FY 2011 taxes on gasoline, diesel, and other motor fuels were up 9% compared to state FY 2010, when $36.407 billion was collected. Adjusted for inflation, that represents real year-over-year growth of 7%, according to Ken Simonson, chief economist for the Associated General Contractors of America.

“That is a positive sign for state funding for highway construction,” Simonson wrote in a recent report.

Fuel-tax collections soared to record levels during state FY 2011 even though Americans drove about the same number of miles during state FY 2011 as they did during state FY 2010. Federal Highway Administration data estimates vehicle miles traveled at 2.981 trillion miles for state FY 2010, increasing 0.1% to 2.985 trillion miles for state FY 2011.

While most states impose a fixed per-gallon excise-tax rate on motor-fuel sales, 15 states also charge a sales tax based on a percentage of the retail price, according to a report released earlier this year by the Center for Excellence in Project Finance at AASHTO in partnership with the National Conference of State Legislatures. That report contains an authoritative review of transportation governance and finance for all 50 states, the District of Columbia, and Puerto Rico. (The 230-page report is available at bit.ly/AASHTONCSL; see the “State-by-State Revenue Sources for Roads, Bridges, Rail, and Transit” table on Pages 24-28.)

There are also 10 states that adjust their per-gallon tax rates at specified intervals based on the current average price, according to FHWA. Those adjustments generate more revenue when gas prices rise.

State gasoline excise taxes range from 7.5 cents per gallon in Georgia to 37.5 cents per gallon in Washington state. The average state gas tax is 21.3 cents per gallon. (The federal government also collects a gas tax of 18.4 cents per gallon, which is not reflected in the state figures.)

The Census Bureau report on national totals of state tax revenue is available at 1.usa.gov/USCB2Q11 and FHWA’s monthly report on motor fuel sales by states is available at 1.usa.gov/FHWAfueldata.

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