4 More States Consider Gas-Tax Changes
CHICAGO — Another round of states is considering changes to their gasoline and diesel taxes as well as increased electric vehicle (EV) fees and others to help raise money for infrastructure repairs.
They follow Michigan, Ohio, Alabama and Wisconsin, which all tackled gas-tax changes in the first few months of the year. Most recently, Alabama passed a 10-cent-per-gallon (CPG) increase to the state gas tax, which hadn’t been raised since 1992. The tax would rise to 28 CPG over three years and then get tied to the National Highway Construction Cost Index and get adjusted automatically every couple of years, the Montgomery Advertiser reported.
Here are the next four states to reconsider their fuel tax ...
A bill would raise Illinois’ gas tax by 19 CPG and increase vehicle registration, EV and driver’s license fees to supply an additional $2 billion per year for infrastructure repairs, the Chicago Tribune reported.
In March, Sen. Martin Sandoval introduced Senate Bill 103, which would raise Illinois’ gas tax to 38 CPG. The tax has not increased since 1990. The bill would also increase the EV fee from $17.50 to $148.
In December 2018, outgoing Chicago Mayor Rahm Emanuel proposed a 20- to 30-CPG increase to Illinois’ gas tax.
In Virginia, Gov. Ralph Northam is proposing raising the state’s diesel tax and increasing the wholesale motor fuels tax by 2.1% for communities along the I-81 corridor to bring those fees in line with other states along the 855-mile stretch of road. Northam included the fee changes in amendments, which also increase truck registration fees and road taxes, to Senate Bill 1716 and House Bill 2718, which provide funding to the Interstate 81 Corridor Improvement Plan.
One proponent of infrastructure funding doubts the amendments will pass, however.
“I don’t expect the speaker will allow a vote on it,” Sen. Emmett Hanger told the Richmond Times-Dispatch. Hanger, a proponent of raising fuel taxes for the improvement plan, believes that Northam’s amendments are too complex; however, the plan has the support of the Virginia Trucking Association, which opposes a separate proposal that would have increased tolls for heavy trucks.
New Jersey’s gas tax may see its third increase since 2016 later this year as declining demand erodes road and infrastructure revenue.
State law requires the state treasurer to adjust the gas tax rate each year to maintain sufficient revenue for road and rail upkeep. In fall 2018, the gas tax increased 4.3 CPG to 41.4 CPG, two years after a 23-CPG increase was signed into law. In an initial budget analysis from New Jersey’s Office of Legislative Service, experts found that the gas tax may have to increase again if fuel consumption doesn’t pick up in the next few months, NJ.com reported.
State Treasurer Elizabeth Muoio downplayed the chances of an increase.
“While consumption is likely to decline somewhat further, with the 4.3-cent rate increase in effect for an entire 12-month cycle, we are cautiously optimistic that total revenues will remain stable," she said. While under state law, the treasurer is required to make a final assessment in August, “no rate change is assumed in the current projection,” she said.
Rep. Steve Carter has introduced a bill that would raise Louisiana’s gasoline and diesel taxes, add fees to EVs and hybrid vehicles and shift revenue from a half-cent sales tax to infrastructure projects, according to the Greater Baton Rouge Business Report.
House Bill 542 would increase Louisiana’s 20-CPG gas tax to 38 CPG over six years. The tax would increase 6 CPG in the first year and continue to rise in steps until 2031. It would also raise the diesel tax by 12 CPG by 2031, starting with a 4-CPG increase in the first year. The bill would also introduce a $300 annual fee on EVs and $200 fee on hybrid vehicles.
Carter sponsored a bill in 2017 to raise the gas tax that failed, but House Bill 542 includes sweeteners to help its passage. This includes dedicating all new revenues to the state’s Transportation Trust Fund.