OAKBROOK TERRACE, Ill. – Several states are tinkering with their gasoline tax in 2015 to preserve funding for transportation infrastructure, against a backdrop of falling fuel prices.
- South Dakota. The state gasoline tax rose by six cents per gallon (CPG) to reach 28 CPG on April 1 in South Dakota. This past March, Governor Dennis Daugaard signed a bill increasing the tax to raise an additional $40.5 million for transportation funding, KTIV.com reported. The same legislation increasing the gas tax also bumps up the excise tax on car purchases by 1% and license plate fees by 20%.
- North Carolina. The state General Assembly approved and Gov. Pat McCrory signed legislation this week that introduces a new formula for calculating the state gas tax that adjusts it annually based on the consumer price index and population. Through this new formula, the tax falls 1.5 CPG on April 1 to 36 CPG, and then will fall another 2 CPG to 34 CPG in second-half 2016, according to The Fayetteville Observer. Under the old setup, the tax would have fallen nearly 8 CPG on July 1 because it was tied to wholesale gasoline prices, which have been falling. This drop would have resulted in a $400 million shortfall in annual funding for North Carolina road construction and repairs.
- Utah. Gov. Gary Herbert signed a bill this week that will increase Utah's state gasoline tax from 24.5 to 29.5 CPG on July 1. From there, a 12% sales tax will be levied whenever wholesale gas prices hit $2.45 per gallon, according to The Salt Lake Tribune. (Wholesale prices are currently at $1.73 per gallon.) The tax, which will be capped at 40 CPG, is expected to raise nearly $76 million for transportation infrastructure improvements.
The same bill increase the state excise tax on natural gas fuel from 8.5 cents per gallon equivalent by two cents per gallon equivalent each year for the next four years. And it creates a new, 10.5-cent-per-gallon-equivalent tax on hydrogen fuel, which will also grow by two cents per year, NGT News reports.
- Kentucky. The Kentucky state General Assembly voted earlier this week to set a floor on the state gas tax, which was set to fall from 27.6 to 22 CPG on April 1, according to The Cincinnati Enquirer. The legislature wanted to avoid a potential $292 million drop in revenue for transportation, which was set to hit because the state gas tax is tied to wholesale gas prices. The floor mandates that the gas tax can only drop 10% from its previous level.
- Georgia. State lawmakers passed a bill on March 31 that replaces Georgia's 4% sales tax on gasoline and 7.5-CPG excise tax on motor fuels with an excise tax of 26 CPG for gasoline and 29 CPG for diesel, according to the Atlanta Business Chronicle. Gov. Nathan Deal is expected to sign the bill, which aims to raise $900 million for infrastructure funding. The bill was passed only a couple days from the end of the 2015 legislative session, after furious negotiations among lawmakers.
Also approved: a new, annual $200 fee on electric vehicles (EV) used as private vehicles, a $300 annual fee on EVs used for commercial purposes, and the elimination of a $5,000 tax credit on new purchases or leases of EVs. Georgia currently ranks as the second-largest EV market in the United States.
- Idaho. The state Senate killed a House bill this week that would have increased the 32-CPG state fuel tax by 7 CPG to pay for infrastructure repairs, according to The Idaho Statesman. Portions of the dead bill, however, might be added to two other transportation proposals currently under consideration.
- Nebraska. A bill to increase the 25.6-CPG state gas tax by 6 CPG over four years to generate an extra $75 million annually in infrastructure funding is being considered in the state legislature, according to The Lincoln Journal Star. But Gov. Pete Ricketts has already announced his opposition to the proposal, and it is not clear if its supporters have a veto-proof majority.
- Arizona. The Arizona state legislature looks likely to pass a bill that maintains a 1-CPG tax on gasoline for the next eight years, according to AZCentral. The tax, which was due to expire, will support a program that funds the cleanup of leaking underground storage tanks (UST). Smaller operators would get priority for the funding; those UST owners without conventional insurance would have to provide $50,000 toward cleanup before becoming eligible for aid, the report said.
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