OAKBROOK TERRACE, Ill. -- Many states short on funds for roads because of declining tax revenues are examining their fuel taxes to make up the difference. The following are some of the latest efforts.
Arkansas. A group of Republican senators are proposing a motor-fuel tax increase to raise up to $160 million each year by 2019 to fund state highway repair, according to Arkansas Online. Sponsor Sen. Jimmy Hickey (R) said the proposed legislation should serve as the starting point for discussions.
Drivers in Arkansas currently pay a 21.5-cent-per-gallon (CPG) tax on gasoline and 22.5-CPG tax on diesel. Hickey’s proposal would boost the gas and diesel taxes each by 5 CPG. Then over the following three years, the taxes would rise an additional 3 CPG, until 2021. This is when the state legislature would work on a long-term funding plan.
"We've said you don't need a consultant to go out and know we have a problem with these highways. That's been hashed out," Hickey said. "What we're saying is we do have a solution for the midterm, the problem that exists there, we've got [a solution] in writing."
But Gov. Asa Hutchinson (R) is against raising fuel taxes and instead would like to call a special legislative session for the week of May 19 to address highway funding. He proposes using a combination of surplus state funds while reallocating other funds to boost Arkansas’ match to federal highway dollars, which will be available later this year.
Louisiana. Gov. John Bel Edwards (D) has proposed raising the state’s gasoline tax as Louisiana faces perhaps its greatest budget shortfall in history because of declining revenues from oil activities in the state, according to The New Orleans Advocate. Louisiana has one of the lowest gas taxes in the nation at 20 CPG. Current law exempts motor and special fuels upon which an excise tax has been levied from state and local sales taxes. Gasoline purchases are only currently subject to a 1% state sales tax.
A state House legislative committee passed a bill back in February that (pending voter approval) would remove the exemption and levy a 4% state sales tax on gasoline. The tax would be fixed at the start of each year based on the NYMEX average oil price for the last quarter of the previous year. The full House, however, has not yet had a chance to vote on the bill.
Oklahoma. Legislators are considering a proposal that would make the state’s current 17-CPG gasoline tax and 14-CPG diesel tax rise as fuel prices fall. Each 1-CPG increase in the taxes could raise about $28 million for roads, according to Rep. Earl Sears (R), chairman of the House Appropriations and Budget committee. However, the Associated Press reports, both the entire legislature would have to pass it by a three-quarters vote, or voters would have to approve the tax increase. House Democrats have rejected the idea of raising taxes until Republicans discuss rescinding a cut of the income tax that was enacted at the start of the year.
Missouri. The state House is set to vote on a proposal that would have voters decide whether to raise Missouri’s 17-CPG fuel tax by 5.9 CPG, according to the news site Missouri Net. Two recent provisions added to the bill would raise the tax on natural gas for transportation fueling and any future fuels. Should those provisions stay in place, the bill would head back to the state Senate for consideration. However, Republican leaders of the House majority caucus do not support a tax increase for funding transportation.
Rep. Joe Adams (D) considers the proposal a “Band-Aid” but was pleased to see it move forward.
“I hope that this is a step forward,” said Adams, “that we will start doing more to rebuild our infrastructure in this state so Missouri can be the economic engine it should be, that we are denying it its opportunity to be.”
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