Reluctant States Raise Gas Taxes to Repair Roads

Stateline Legislative Review 2017

Editor’s Note: This story was updated on July 26, 2017 to correct the number of states that raised both gas taxes and other fees.

Motorists don’t like to pay more at the pump, and lawmakers worry that if they raise taxes on gasoline, they’ll be voted out of office. But states rely on those taxes to build and maintain roads and bridges. With revenue lagging, those structures have been falling into disrepair in many places.

Despite the tough politics, 26 states have raised taxes on motor fuels in the past four years. The eight states that raised taxes this year include Tennessee and South Carolina, deep-red states dominated by fiscal conservatives.

“We’ve seen more bipartisan agreement on raising gas taxes than almost any other tax out there,” said Jared Walczak, senior policy analyst at the Tax Foundation, a right-leaning think tank in Washington, D.C.

Lawmakers say the sorry condition of their state’s roads and bridges compelled them to act.

“The deterioration of the infrastructure, particularly the highways, in South Carolina was the impetus,” House Majority Leader Gary Simrill, a Republican, said of the law he shepherded through the Legislature. Over half the roads in South Carolina are in poor condition, according to the state Transportation Department.

Gas tax deals are often crafted to reassure voters that their money will be spent wisely. South Carolina and Oregon’s latest laws changed some of the rules governing their transportation commissions. California referred a constitutional amendment to the ballot that would guarantee new revenue raised by certain taxes on fuel and vehicle license fees will be spent on transportation.

And in South Carolina, Tennessee, and New Jersey — which raised gas taxes last year — getting conservative lawmakers to vote for raising the gas tax required simultaneously cutting other taxes that fund general operations.

The gas tax increases typically involve a few more cents a gallon over several years. That’s enough to raise some of the funding needed to take on each state’s backlog of maintenance and expansion projects, but not enough to eliminate them entirely.

South Carolina’s law is projected to raise about $180 million in its first year, with annual revenue increasing to over $700 million by 2024, for instance, while the Transportation Department says it would need $11 billion to repair every substandard road in the state.

The federal government helps states pay for some highway projects and other transportation costs. But the federal gas tax hasn’t been raised in over 20 years. And while President Donald Trump has talked about investing $1 trillion in infrastructure, states are unlikely to get an influx of new cash anytime soon. Trump’s proposed budget would cut funding for the U.S. Department of Transportation — including to some programs that make grants to states — and an infrastructure bill is currently low on Congress’ list of priorities.

States are also grappling with the fact that today’s cars and trucks can drive for longer distances on less fuel, and a small but growing number of vehicles don’t run on gasoline at all. Six of the eight states that raised the gas tax this year also raised some other vehicle fees and imposed others, including new – registration fees for electric vehicles.

Facing an Infrastructure Crisis

Spending on highways and transit has fallen over the past 15 years across all levels of government, according to The Pew Charitable Trusts (Pew also funds Stateline). State funding fell by 15 percent between 2002 and 2012 as more fuel-efficient cars hit the road and gas taxes in many states failed to keep pace with inflation. Meanwhile, transportation construction costs rose.

The result: a more than $800 billion backlog of highway and bridge projects across the country, according to the American Society for Civil Engineers. One in 5 miles of highway is in poor condition, according to the professional association’s latest report.

Over the past few years, advocacy coalitions comprised of state Chambers of Commerce, regional automobile clubs, construction companies and unions have mobilized in several states to convince lawmakers that failing to adequately fund transportation is hurting people and the economy.

“The road conditions every year are getting worse,” Michelin North America President Pete Selleck told The Greenville News during a lobbying trip to the South Carolina capitol earlier this year. Lawmakers, the tire manufacturer said, have to do “the right thing for the long term.”

But some legislators and governors have pushed back, arguing that their states are spending enough and just need to spend it differently.

New Jersey Gov. Chris Christie, a Republican, told radio listeners last summer that the state’s Transportation Trust Fund was not in crisis — although at the time it was practically insolvent — and that New Jersey was spending plenty on infrastructure.

“We’ve spent $16 billion in five years. But it’s never enough for the liberals in this state,” Christie said. He made it clear that he wouldn’t approve a gas tax increase unless it was part of an overall tax cut.

In vetoing the South Carolina Legislature’s gas tax deal, Republican Gov. Henry McMaster said, “If we were to simply reform how DOT spends your tax dollars to be responsible and accountable, we’d have plenty of money, and this gas tax hike would be totally unnecessary.” The Legislature overrode his veto.