States rely on a variety of revenue sources to fund transportation
Fuel taxes: All states
Sales taxes on fuel, or other taxes on distributors or suppliers: 14 states
Motor vehicle or rental car sales taxes: 29 states
Vehicle registration, license or title fees: 48 states
Vehicle or truck weight fees: 37 states
Tolls: 24 states
General funds: 34 states
Interest income: 37 states
House Bill 170
This bill under consideration by the General Assembly would seek to raise about a billion dollars per year for transportation by tapping into several different revenue streams:
- Convert the state's 4 percent sales tax and 7.5 percent per gallon tax on gasoline to a straight 29.2-cents-per-gallon excise tax.
- Tie the new excise tax rate to inflation, specifically the rising cost of highway construction. It would also be adjusted each year to account for the decline in average miles per gallon of new vehicles registered in the state.
- Cities and county governments could no longer collect a sales tax on gasoline as part of a local option sales tax or homestead option sales tax.
- Instead, local governments could vote to raise existing local option and homestead option sales taxes from 1 to 1.25 percent to make up for lost revenue. Local sales taxes on gasoline as part of other special-purpose local-option sales or local option sales taxes for education-related capital projects could continue to be collected, as long as the portion of the tax that comes from gasoline sales is used for transportation purposes.
- The owners of alternative fuel vehicles would have to pay a registration fee: $200 for personal and $300 for commercial vehicles.
- The state would ends its $5,000 a year tax credit for the purchase of an electric vehicle.
Georgia’s desperate to find money to fix a crumbling transportation network. Turns out, so is everyone else.
The Peach State is among a dozen states considering raising its gas tax, various fees and possibly imposing other new taxes to keep laying asphalt on pockmarked roads and propping up bridges long past their prime.
Every state has similar problems, but many are pursuing different solutions.
Gas tax revenue — long the primary source of funding for both state and federal transportation projects — has stagnated across the nation. Electric and hybrid cars, increasing fuel efficiency and efforts by many Americans to drive less are siphoning away what once was a reliable flow of money.
The recent recession didn’t help, either. Dollars dried up for even basic maintenance and stalled projects that would have eased congestion.
It all coincided with the aging of America’s transportation infrastructure, a lot of which was built in the last century and needs an overhaul, said David Goldberg, communications director for Transportation for America. The organization advocates against sprawl in favor of walking, mass transit and denser development.
Meanwhile, in Georgia, the structure and rates of the state’s motor fuel tax have remained unchanged since 1989. About two dozen other states are in a similar quandary, not having increased their gas tax rates in a decade or more.
“It’s not a matter of if a fuel-driven type of tax is going to become problematic — it’s when,” said Lowell Clary, a national funding consultant and former financial officer for the Florida Department of Transportation. At some point for every state, he said, “there will have to be a conversion to different types of revenue sources.”
It also has to be perceived by the public as equitable — something on the minds of Georgia lawmakers as they grapple with how to find at least $1 billion to address the state’s infrastructure backlog. That figure doesn’t include any support for transit expansion, which metro Atlantans believe to be the best long-term solution to traffic woes, according to a recent survey by the Atlanta Regional Commission.
“All of us were looking at how to fund transportation in a more fair way,” observed Paula Hammond, former secretary of Transportation for the State of Washington. “We’re all trying to chase that silver bullet.”
No one thing works for everybody, experts said. But Georgia could draw inspiration from answers found by other states.
Florida
Florida has found a way to unchain itself from reliance on federal dollars, giving it the flexibility to finish projects without clearing federal environmental hurdles that can result in long delays. It has also tried to empower the locals, who have the ability to pursue regional projects through a mix of sources including regional sales taxes.
“In Florida, we looked at who was using the system and what the impacts were,” said Clary, who talks of a “pain index” for commuters and residents where the pain reaches a certain level that spurs support for new taxes or fees if their effect — such as reducing a one-hour commute to 40 minutes — can be clearly spelled out.
New residents attracted by the state’s sunshine and seacoasts are charged a one-time fee for registering their vehicles that generates about $90 million annually. Out-of-town visitors pay a $2-a-day fee on rental cars, raising $100 million to $150 million for the state annually.
Local authorities have options such as local option taxes dedicated to transportation and can also pursue toll lanes to meet specific needs in their region, an easier option with the advent of electronic tolling. Tolls are now the second-largest revenue source for Florida, fueled by both growth and a booming tourist industry.
The state additionally uses a “pay as you grow” funding program for transportation, schools and water, begun in 2005 and fueled in large part by a tax on real estate transactions and other related activity usually associated with development and growth. It raises about $575 million a year for transportation improvements.
Virginia
In 2013, Virginia lawmakers took a bold step that is expected to help the state harness about $3 billion for roads and transit projects over six years.
Prior to that, the state had not raised meaningful amounts of revenue since 1986, said Virginia Deputy Secretary of Transportation Nick Donohue.
“We had done a lot with P3s (public-private partnerships), bonding, special assessments and other local option types of taxes,” said Donohue. “None of that really solved the problem.”
As part of the new legislation, Virginia eliminated a 17.5 cents-per-gallon gas tax, replacing it with a statewide general sales tax hike from 5 to 5.3 percent.
At the same time, the state instituted a new wholesale tax on gasoline (3.5 percent) and diesel (6 percent). The law also imposed for the first time a $64 fee on hybrid vehicles and raised the motor vehicle sales and use tax by 1.15 percent.
Notably, Virginia law does not prevent gas tax revenue from being used to fund transit, as the Georgia Constitution does. So, a little less than half the proceeds of the general sales tax hike now go toward transit and passenger rail projects.
“The funds that provide for transit, but in particular passenger rail, are really going to be helpful to advancing the multimodal system we need for the future,” Donohue said. “Roads and bridges will always remain the core of our system. But we also need these other modes to address congestion in urban areas and to connect cities.”
Oregon
Oregon has pursued a new idea in transportation taxation. That is, taxing drivers based on the number of miles they drive rather than the amount of gasoline they consume.
This concept, state transportation officials contend, is far more fair. Otherwise the owners of electric vehicles, hybrid cars and cars with higher gas mileage pay less than drivers of higher-mileage vehicles, despite causing the same wear and tear on roads.
“Back in the day, all vehicles got about 20 miles per gallon,” said Michelle D. Godfrey, spokeswoman for the Oregon Department of Transportation. “That’s not the case anymore. And it’s becoming less and less true. If we are serious about reducing gas consumption, we’ve got to find some other way.”
Oregon began studying the idea of a per-mile road usage tax in 2001 and the state has since completed two pilot programs.
Last year, lawmakers approved a permanent program that is limited to 5,000 drivers. Participants will volunteer to be taxed at a rate of 1.5 cents per mile driven, starting July 1. The drivers can choose to have their mileage tracked by a private technology provider, either with a GPS device or an odometer for those who want to retain their privacy.
Drivers in the program continue to pay gas taxes at the pump, but the state refunds those payments at the end of the year.
The number of participants in the program is limited because state lawmakers wanted to ease into a road usage fee system and see how it works before expanding it to other drivers, Godfrey said.
Until that day comes, all other drivers will continue to pay a 30-cents-per-gallon gasoline tax that is not tied to inflation.
Another potential transportation revenue generator — a tax on electric vehicles similar to what is currently proposed in Georgia — was tried and failed in Oregon a few years ago. According to Godfrey, the tax proved widely unpopular and was repealed.
About the Author
