Gas Taxes & Road Spending

Tax Foundation says transportation funding should be coming from user taxes, fees

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WASHINGTON -- Revenue from gasoline taxes and tolls pays for about a third of state and local spending on roads, according to a new analysis by the Tax Foundation. Wyoming and Alaska come last in transportation funding derived from gasoline taxes and tolls, while Delaware and Florida rank the highest.

The Tax Foundation has posted two new charts for 2013, State Gasoline Tax Rates and State Diesel Tax Rates.

Transportation funding is a top issue for many state legislatures this year. Maryland Governor Martin O'Malley (D) and Virginia Gov. Bob McDonnell (R) have proposed sales tax increases for transportation, Wyoming Gov. Matt Mead (R) has proposed raising his state's second-lowest-in-the-nation gasoline tax, and others have proposed new toll roads or the adoption of a "vehicle mileage tax" (VMT) system.

State and local governments raised $37 billion in motor fuel taxes and $12 billion in tolls and nonfuel taxes in 2010, but spent $155 billion on highways. Highway user taxes and fees made up 32% of state and local expenses on roads. The rest was financed out of general revenues, including federal aid.

In 2010, state and local governments spent $60 billion on mass transit, $23 billion on air transportation facilities, $1.6 billion on parking facilities and $5.3 billion in ports and water transportation, in turn raising $13 billion in mass transit fares, $3.2 billion in parking fees and fines, $18 billion in air transportation fees and $3.8 billion in water transportation taxes and fees. Altogether, states raised about 36% of their transportation spending from user taxes, fees and other charges.

"The lion's share of transportation funding should be coming from user taxes and fees, such as tolls, gasoline taxes and other user-related charges," said Tax Foundation vice president of local and state projects Joseph Henchman in an opinion piece accompanying the charts. "When road funding comes mostly from tolls and gas taxes, the cost is borne directly by the people who benefit from the state's spending. By contrast, funding transportation out of general revenue makes roads 'free,' and consequently, overused or congested--often the precise problem transportation spending programs are meant to solve."

The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937.