Only Half of State Road Spending Is Covered by Gas Taxes and User Fees

January 10, 2014

The majority of transportation funding should come from user fees and taxes, says Joseph Henchman, vice president of legal and state projects at the Tax Foundation.

Many state legislators are trying to figure out how to pay for transportation expenses. Oregon has started using a "vehicle mileage tax," while Virginia and Massachusetts raised several taxes, all for the purposes of funding transportation.

Most funding should come from user fees (such as tolls) and user taxes (such as a gasoline or vehicle license tax), so as to ensure that those who are using the roads are bearing the largest part of the cost. If funding is taken out of general revenue funds the roads appear to be free, which can lead to overuse or congestion.

  • In 2011, highway user fees and taxes made up only 50.4 percent of state and local expenses on roads.
  • State and local governments spent $153.0 billion on highway, road and street expenses, but raised only $77.1 billion in user fees and user taxes ($12.7 billion in tolls and user fees, $41.2 billion in fuel taxes, and $23.2 billion in vehicle license taxes).
  • The rest of the funding came from general state and local revenues as well as $46 billion in federal aid.

Delaware, Hawaii, Florida and California raise at least two-thirds of their transportation spending from user fees and taxes, while in Alaska, South Dakota, Wyoming and Louisiana, most spending comes from general revenue funds.

Increasing tolls and gas taxes may not be popular, but pulling transportation funding from general revenue funds is unfair to non-users and creates pressure to increase income and sales taxes.

Source: Joseph Henchman, "Gasoline Taxes and User Fees Pay for Only Half of State & Local Road Spending," Tax Foundation, January 3, 2014.

 

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