States Forfeit $10 Billion Annually Thanks to Outdated Gas Taxes

The gas tax: It’s the holy grail of our screwed up transportation system. We can’t have good infrastructure because no one has the political cojones to raise it. No one has the cojones to raise it because the economy is awful. But anemic investment in our country’s infrastructure isn’t exactly good for the economy.

States left $10 billion in potential gas tax revenue on the table last year. Photo: ##http://money.cnn.com/2011/05/18/news/economy/gas_tax_drivers/index.htm## CNN##

It’s not just the federal government that is playing this game of chicken with roads, bridges and transit. A majority of states are equally egregious offenders. According to a new report from the Institute on Taxation and Economic Policy, US states leave a combined total of $10 billion on the table every year that could be used for infrastructure.

Thirty-six states have gas taxes that aren’t indexed for inflation. For the average state, that tax has declined in real value by 20 percent since the last time it was raised. That amounts to $300 million in losses each for the states of Iowa and Oklahoma, or $500 million a piece for Maryland and New Jersey.

Of course, many states would likely just blow the additional revenues on unneeded highways.

But still, desperate states like Wisconsin, Utah and Nebraska are dipping into general fund revenues to offset the decline in gas tax receipts, according to TEP. That means education, healthcare, social services, economic development and other important government concerns are suffering because states are afraid to challenge the almighty driver.

Furthermore, that means those who choose to get around in single occupancy vehicles are enjoying an additional subsidy of their harmful activity.

You can see what your state has lost in forfeited transportation revenues in the appendix of the ITEP report [PDF].

  • Irvin Dawid

    Increasing the gas tax is an ‘absolute’, i.e. it must be raised in the near term to pay for transportation projects – roads and their alternatives, if constitutionally permitted (some states, such as CA, make it all but impossible to use state gas taxes to pay for non-road possible).  However, the Streetsblog articles on the I-70 widening project in MO show that even doubling the gas tax won’t be enough to meet the auto’s unceasingly expanding desires.  I was struck by the closing line in “The Amazing Disappearing State Gas Tax”:  “We just can’t afford to keep building highways where motorists drive for free. Maybe the right move for Missouri is to raise the gas tax and forget about this project.”

    I interpret that line to mean that ‘gas taxes alone’ won’t solve the problem – it’s time to toll, or implement some type of road usage fee.  See Mileage-Based User Fees Could Work, Says Study