AASHTO Journal, 03 July 2015
Six states hiked their excise fees on gasoline as of July 1, while another hiked its diesel fee, under laws designed to boost investment in the transportation infrastructure that motor vehicles use.
The Tax Justice Blog – produced by Citizens for Tax Justice and the Institute on Taxation and Economic Policy – tallied the increases. It said gasoline taxes were rising in Idaho, Georgia, Maryland, Rhode Island, Nebraska and Vermont, while diesel fees were rising in all those except Vermont but also rising in California.
“Most of these ‘increases’ are simply playing catch-up with inflation after years (or even decades) without an update to the gas tax rate,” wrote Carl Davis, research director at ITEP.
He added that the state actions also contrast with congressional inaction on a long-term fix to the Highway Trust Fund’s revenue shortfalls. “These increases will fund infrastructure improvements that directly benefit drivers and other travelers – an especially important step at a time when Congress’ commitment to adequately funding infrastructure remains highly uncertain,” Davis said.
The changes also come at a time when fuel prices have flattened after a spring rise, and begun to ebb as the big July 4 driving holiday approached.
The AAA motor club, which tracks fuel prices daily, said gasoline’s June 29 national average pump price was $2.77 a gallon, down 2 cents in the latest week. The U.S. Energy Information Administration says gasoline is about 90 cents below where it was one year ago, while the diesel retail price is down by $1.08 a gallon.
The tax blog notes that Nebraska’s 0.5 cent July 1 increase and Vermont’s 0.35 cent hike “are automatic changes resulting from these states’ variable-rate gas tax structures.”
The largest July 1 increases were in Idaho at 7 cents a gallon, and Georgia with a hike of 6.7 cents for gasoline and 7.7 cents for diesel. Both of them resulted from legislation passed earlier this year as lawmakers tried to shore up their highway funding to keep up with demand and rising costs.
Two others are from past actions. “Maryland’s increase of 1.8 cents is a result of legislation signed by former governor (and current presidential candidate) Martin O’Malley in 2013,” the blog said. “Rhode Island’s 1 cent increase is the first automatic update for inflation to take place under a law signed by former Gov. Lincoln Chafee in 2014 (Chafee is now a presidential candidate as well).
With fuel taxes linked to the underlying price, Connecticut’s gas tax was falling 4.2 cents and California’s by 6 cents on July 1. California’s diesel fee rose 2 cents to 13 cents a gallon.
However, the California Legislature is in a special session this summer trying to find ways to boost transportation funding, and Connecticut cut a budget deal that included $2.8 billion in new transportation bonding authority with payments covered by a portion of sales taxes.
Separately, Washington state’s motor fuel taxes are slated to rise 7 cents as of Aug. 1, under a new transportation funding package coming out of its Legislature. (See story in this week’s States section.)
The blog also notes that legislatures in both Kentucky and North Carolina took action this year to limit declines in their motor fuel user fees, when both had price-based tax structures and faced plunging projected revenues that undermined their infrastructure investment programs.