Tuesday, January 29, 2013

Highway Funding

Infrastructure Watch previously posted about the dwindling Highway Trust Fund.  One of the reasons this fund has shrunk is that it is supported by taxes on gasoline.  Improvements in fuel efficiency and changes in driving habits have reduced revenues from gas taxes.

This is issue for states as well as the federal government.  Like the Highway Trust Fund, most state highway revenues come from gas taxes.  At all levels of government, people are looking for alternative sources of revenue.  Some of the proposals include increasing gas taxes, sales taxes, miles-traveled taxes, increasing fees, and new or increased tolls.

Increased Gas Tax

One approach is to simply increase the tax on gas.  In 13 states, it has been 20 years or more since the gas tax has changed.

Sales Tax

Some states are looking at supplementing highway funding with a sales tax.  Virginia Governor Bob McDonnell has gone so far as to propose eliminating his states gas tax and replacing it with a sales tax to support transportation.  Though no other state has considered going so far, many have looked at increased or new sales taxes to supplement funds for highways.

Miles-Traveled Tax

The gas tax has some relation to road use because the more you drive the more gas you use.  Several states have looked at the possibility of directly taxing for roads based on use.  The difficulty of such a tax is that there needs to be a mechanism of tracking and reporting miles traveled.


Most states have fees for motor vehicle registration.  Some are considering increasing these fees and dedicating them completely to transportation.  It seems unlikely that these fees alone could replace losses in gas tax revenue.


Tolls are a longstanding method of road funding.  One suggestion for raising road revenues is to increase toll and institute tolls on free roads.

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