SPECIAL REPORT: State road funding - Where will it come from?

| 6/25/2004

State lawmakers wrestle with quest for road dollars as fuel costs continue to pummel consumers, aka voters

With the price of fuel setting records, it didn't take long for the burden of higher consumer costs to become a political issue. As a result, some legislatures have abandoned the usual revenue stream and sacrificed dollars in an effort to appease potential voters. Some states, however, are hiking fuel taxes.

Here's who's doing what.

Ten Democratic governors representing Arizona, Delaware, Indiana, Iowa, Kansas, Michigan, Missouri, New Mexico, Washington and Wisconsin wrote President Bush in May demanding the federal government investigate why fuel price increases have risen so rapidly.

Consumer groups are pushing for action on fuel prices, too. According to Stateline.org, the American Legislative Exchange Council, a group that promotes limited government and devises model legislation, wants states to repeal their fuel taxes temporarily.

Land Line recently took a look at various kinds of state legislative action prompted by the fuel price explosion. Here's what we found:

In Florida, Gov. Jeb Bush signed legislation knocking 8 cents per gallon off the state's gasoline tax through August. The break, billed as a gas-tax holiday, will cut the money coming into the state's road-building fund by an estimated $60 million, but the new law requires that money to be replaced by shifting dollars from the state's general revenue fund.

Legislation under review in North Carolina would give all drivers a price break at the pump. Two bills, H1661 and S1278, would cap a portion of the state's fuel tax that rises with wholesale prices. The variable rate is a small portion of the state's 24-cent-a-gallon fuel tax. It is adjusted twice yearly.

Republicans in the New York Assembly are pushing to suspend the state's 32-cent-a-gallon tax on fuel through the summer. The proposal includes authorization for local government to eliminate sales tax as well.

Two lawmakers in Pennsylvania proposed reducing the fuel tax by 12 cents a gallon for as long as six months. The reduction would be suspended after three months if the average price of gasoline dropped to less than $1.80 a gallon.

A bill before an Ohio House panel would postpone for a year a 2-cent increase in the state's 24 cent-per-gallon fuel tax. HB458 would also permit county auditors to test the quality of fuel sold in their counties, a power they do not have.

Rising fuel prices were likely a factor in the failure of measures in other states that sought to increase fuel taxes.

Blaming escalating prices at the pump, Oklahoma state Sen. Robert Milacek, R-Enid, abandoned efforts to call for a statewide vote on raising the diesel fuel tax 8 cents a gallon and the gasoline tax 5 cents a gallon. The measure would have raised $145 million more a year for roads and bridges.

The Nebraska Unicameral Legislature rejected a bill that would have charged drivers in the state an extra 2 cents per gallon of fuel. The tax increase would likely have generated an additional $24 million a year for roadwork.

A Virginia House panel rejected a measure that would have raised the diesel fuel tax from 16 cents a gallon to 22.5 cents. The gas tax would have increased from 17.5 cents a gallon to 24 cents. The proposal sought to raise about $312 million annually for transportation projects.

Not all states want to give consumers a break

Two bills to raise fuel taxes, however, remain active in California. SB1614 would increase the tax by 10 cents a gallon while AB2847 would increase the tax 5 cents. Both measures require the funds to be used for highways, streets and environmental programs.

A handful of states - Florida, New York, North Carolina, Pennsylvania and Wisconsin - have seen fuel tax rates go up since last summer.

Kentucky's tax on motor fuels increased a penny July 1 because the average wholesale price per gallon exceeded a $1.11 price trigger. That trigger occurred in April, when the state average reached $1.27 a gallon.

Maine's tax on fuel will rise from 24.6 cents a gallon to 25.2 cents in July to pay for highway and bridgework. A state law indexes the fuel tax to inflation.

In Utah and Massachusetts officials want to boost fuel taxes. Utah House Speaker Marty Stephens, R-Farr West, told The Salt Lake Tribune he favors raising the state's 24.5-cent-a-gallon fuel tax to pay for roadwork. Massachusetts Transportation Chairman Joseph Wagner, D-Chicopee, told the Stamford Advocate new tolls and a fuel tax hike should be considered as a way of combating the state's backlog of road and bridge repairs.

As of June 21, the Oil Price Information Service reports the national average price for a gallon of diesel is $1.786, compared to a national average of $1.523 a year ago. The highest prices nationally are found in Hawaii, at $2.405, California at $2.189, Washington at $2.147, Oregon at $2.124 and Idaho at $2.040. The lowest prices are in Oklahoma, at $1.616, Mississippi at $1.627, Georgia at $1.629, Missouri at $1.634 and Kentucky at $1.643.

--by Keith Goble, state legislative editor

Keith Goble can be reached at keith_goble@landlinemag.com.