Higher fuel taxes up for consideration in 16 states

By Keith Goble, Land Line state legislative editor

State officials around the country continue to discuss efforts pushing for higher fuel tax rates to get needed road work done.

OOIDA believes that when there is a valid need to generate additional revenue increasing fuel tax rates is the most equitable way to accomplish that goal. Mike Matousek, OOIDA director of state legislative affairs, points out that any increase should be applied equally to both gasoline and diesel. He adds that safeguards are also necessary to keep the additional revenue for roads and bridges.

In California, a transportation funding plan nearing passage would raise $5.2 billion annually over the next decade for state and local roads, trade corridors, and public transit.

The state’s excise rate on gas would be increased by 12 cents to raise $24.4 billion.

The increase would be phased in over three years.

Not to be outdone, the excise rate on diesel would be increased by

20 cents to raise $7.3 billion.

In exchange for collecting more in excise taxes, California’s current collection method for fuel taxes would be abandoned. No longer would the state Board of Equalization annually adjust the fuel tax rates. Instead, price-based tax rates would be restored.

In addition, the 1.75 percent sales tax applied to diesel purchases would be increased by 4 percent to 5.75 percent. The increase is estimated to raise $3.5 billion.

Additional components in the funding plan would increase annual vehicle registration fees up to $175 and apply an annual $100 fee for zero-emission vehicles. The fees would raise $1.3 billion.

All tax and fee rates would be indexed to inflation to allow for increases in future years.

Another provision in the bill, SB1, would exempt certain trucks from the recent Air Resources Board decision to strengthen rules on indirect emission sources.

At press time a bill in Indiana that is touted to help the state address the $1.2 billion annually needed for roads over the next 20 years is on the verge of heading to the governor’s desk.

One component of the bill to raise about $670 million by the end of the second year would remove from statute a requirement for the General Assembly to approve tolling certain portions of interstates.

HB1002 would also require the Indiana DOT to study tolling and submit a waiver to the Federal Highway Administration to allow tolling on existing interstates.

Also included in the bill is a plan to raise the state’s 18-cent-per-gallon gas tax by 10 cents. The 16-cent diesel rate would be increased by

6 cents. In addition, the state’s 11-cent surcharge tax on diesel would nearly double to 21 cents.

All tax rates would be indexed on an annual basis through 2024. Annual adjustments would be capped at one penny.

A $5 tire fee and $100 commercial license plate fee would also be collected.

Utah Gov. Gary Herbert has signed into law a road funding bill that imposes automatic increases in the state’s 29.4-cent-per-gallon fuel tax. A built-in ceiling caps fuel tax rates at about 40 cents. Taxes are estimated to increase about 0.6 cents per gallon in 2019 and 1.2 cents in 2020.

Other states with legislation to increase fuel tax rates are as follows:

  • Alaska - 16 cents
  • Illinois - 10 cents
  • Kansas - up to 11 cents
  • Louisiana - up to 17 cents
  • Maine - 7 cents
  • Minnesota - 10 cents
  • Montana - 8 cents for gas and 7.25 cents for diesel
  • Oklahoma - 7 cents for gas and 10 cents for diesel
  • Oregon - 5 cents with additional nickel increases every five years
  • South Carolina - up to 12 cents
  • Tennessee - 6 cents for gas and 10 cents for diesel
  • Texas - 2 cents
  • West Virginia - 8 cents