Questions and Answers

Q: What states have increased highway revenues in the last couple years?

A: According to a January 2007 report from the American Road and Transportation Builders Association, since 1997, 14 state legislatures—Arkansas, Indiana, Kansas (2), Maine (2), Michigan, North Dakota, Ohio, Pennsylvania, Rhode Island, South Dakota (2), Utah, Vermont, Washington and Wyoming—voted to raise their state gas tax for transportation-investment purposes.

The legislature in West Virginia voted to extend the current gas tax for six more years, and the Massachusetts General Court froze the state gas tax rate at 21 cents per gallon.

The gas tax rate increases ranged from 1 cent per gallon (North Dakota) to 6 cents per gallon (Ohio). The average of all of the state highway user fee hikes was 4 cents per gallon.

Connecticut lowered their gas tax by 7 cents from 32 to 25 cents a gallon, effective July 1, 2000.

The Maine legislature not only raised and indexed their annual motor fuels excise to the annual Consumer Price Index (CPI), they also increased the state’s car registration fee to raise additional revenue for transportation investment.

One state increase was phased in over three years (Utah) and one was put in place for only 17 months, then increased again two years later (South Dakota).

It should also be noted that over the same time frame, motor fuels excise taxes were also increased in several states without legislative action. These states have variable rate gas taxes. This means that the tax rate is adjusted at a specified interval on the basis of an index or formula. In Florida and New York there are laws that automatically index the excise tax to some measure of annual inflation to help maintain the design and construction purchasing power of their state highway user fee.

There are seven states that currently have a variable rate gas tax. The rates in Florida, Iowa, Maine, and Wisconsin are adjusted annually. (The gas tax in Iowa is based on the sale of ethanol-blended gasoline.) The rates in Kentucky, Nebraska and New York are adjusted quarterly. The rate in North Carolina is adjusted semi-annually. The legislature in each state passes enabling legislation, but does not need to approve each subsequent change in the variable rate. Maine was the most recent state to adopt a variable gas tax rate, based on inflation, which came into effect in 2003.

Thus, in total, between legislative actions and indexing, the motor fuels excise taxes were increased in 26 states over the past 10 years.

Click on the following link to view a copy of ARBTA’s complete report that provides the details of the fuel tax changes in each state. State Gas Tax Report