Six states raise, reform gasoline tax, 8 others consider similar move

Six states have raised their gasoline taxes this year in order to fund road, bridge and mass transit projects due to the fear of lack of funding from the U.S. Department of Transportation, according to a tax policy group.

Carl Davis, a senior policy analyst with the Institute on Taxation and Economic Policy, said the tax increases could translate into tens of millions of dollars and in some cases, hundreds of millions.

“It’s an issue that has been building for years,” Davis said in an interview with TI Daily News. “When Iowa raised taxes, it was the result of a four-year debate.”

Iowa raised its gasoline and diesel taxes 10 cents per gallon on March 1 and South Dakota increased taxes by 6 cents on Wednesday. Utah approved a variable-tax that adjusts for inflation, with the new tax set to take effect in January 2016. Georgia will raise its tax by 6.7 cents a gallon, effective July 1. Kentucky also adjusted its tax by raising the state’s minimum gas tax level from 22.5 cents to 26 cents per gallon.

In addition, North Carolina adjusted its tax. Under a bill signed by Gov. Pat McCrory, rates fell by 1.5 cents on Wednesday and will drop by an additional penny on Jan. 1 and again on July 1, 2016. The gradual reduction is less than half the full 7.9 cent cut that otherwise would have taken effect this summer.

These six states aren’t alone. Eight states enacted gas tax increases or reform in 2013 and 2014.

Davis said the increased revenues can allow states to more aggressively tackle preventative maintenance. 

“It’s cheaper to maintain a road in good condition rather than rebuild it due to poor maintenance,” Davis said.

About half the states in the nation haven’t raised gas taxes in 10 years. 

“That means you can’t buy what you need due to increased costs," Davis said. "In a lot of cases, this is a game of catch up."

In a few encouraging cases, some states are looking ahead. Tennessee Gov. Bill Haslam has said he’s going to look at this issue next year, Davis noted.

Idaho, Missouri, Nebraska, New Jersey, South Carolina, Vermont and Washington State also are taking a serious look at raising the gasoline tax.

Michigan has a referendum on the ballot to raise taxes with a vote scheduled for May 5.

Davis said this taxing is unusual in the area of tax policy. 

“There’s so much agreement on both sides of the aisle, I would definitely calls this a bipartisan issue," he said.