CHICAGO – Forward, reverse or stuck in neutral: The latest news on state gas-tax changes show local governments juggling the need to raise funding for road repairs with political realities.
Here are three states that have recently decided how to adjust their gasoline and diesel taxes as fuel consumption declines ...
On Sept. 1, the first step of Alabama’s 10-cent-per-gallon (CPG) gas-tax increase went into effect with a 6-CPG increase, AL.com reported. This brings the state’s gas tax to 24 CPG on gasoline and 25 CPG on diesel. The next steps of the increase will happen with a 2 CPG increase on gas and diesel on Oct. 1, 2020, and another 2-CPG increase on Oct. 1, 2021. Then on Oct. 1, 2023, and every July 1 from 2024 onward, the gas and diesel tax will adjust based on construction costs, with the change limited to 1 CPG.
Democratic legislators in Michigan have put the kibosh on Gov. Gretchen Whitmer’s (D) proposed 45-CPG increase to the state gas tax, MLive.com reported.
Rep. Christine Grieg, the Democratic House leader, told reporters that the tax increase was “starting on the edge,” and that lawmakers from both parties and the governor need to find a compromise. “I’m not going to do a hypothetical on 45 cents,” she told reporters. “We’ve had a lot of conversation that that’s probably the extreme that won’t happen.”
In June, House Democrats proposed a corporate income tax increase and new taxes and tolls on heavy trucks to help come up with the estimated $2.5 billion that Michigan would need each year to repair roads. Republicans also rejected the 45-CPG increase and instead have proposed a series of fixes, including replacing the state’s current gasoline sales tax with an additional fuel tax.
New Jersey’s gas and diesel taxes will not change in 2019 from their current 41.4 and 48.4-CPG levels, according to the New Jersey Department of the Treasury.
As part of a change signed into state law in 2016, the state’s Transportation Trust Fund must supply $16 billion over eight years for infrastructure improvements to roads and bridges. To do so, the state treasurer must adjust the petroleum products gross receipt tax rate each year as needed to meet the approximately $2 billion annual goal.
Gasoline consumption in New Jersey has fallen for the past few years, but a 4.3-CPG increase that the state implemented in October 2018 has helped increase revenues for fiscal-year 2019. New Jersey missed its highway fuels revenue target for fiscal-year 2019 a much smaller amount that than the previous two-year shortfall.
This latest update to the gas tax comes two years after former Gov. Chris Christie (R) signed into law a 23-CPG increase in the fuel tax to fund infrastructure.