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Gas Tax Hikes Getting Attention at State Level

NATIONAL REPORT — State legislators across the United States are considering raising fuel taxes to fund road and bridge repairs as gas prices fall to their lowest level in years, according to a USA Today report. Certain Republican leaders are prioritizing the issue in 2015 despite Americans expressing opposition to higher taxes in polls.

"The states have shown that they are more likely to act on the gas tax than the federal government is," Carl Davis, a senior policy analyst at the Institute on Taxation and Economic Policy, told the news outlet. "The states have to balance their budgets. If they see their roads are in bad shape or their bridges are literally falling down — in some cases — they need to come up with a way to pay to improve that. And there's a limited number of things you can do at the state level."

South Dakota Gov. Dennis Daugaard noted in his Jan. 13 State of the State speech that when the state last raised its fuel tax 16 years ago, the average gas price was around $1 per gallon, while it is now $2.08.

"Our state highway system is the state's most valuable physical asset and if we want to maintain it, we must act now," Daugaard said. He proposed raising the fuel tax by 2 cents per gallon this year and another 2 cents annually in the future.

Elsewhere, Iowa Gov. Terry Branstad and other legislators have discussed increasing the state's 22 cents-per-gallon fuel tax, which was last changed in 1989, or letting voters in each county vote on a 1-percent sales tax. "I think Iowans like the idea of having some say on this," Branstad said.

Utah legislators are also taking a new look at the state's gas tax, last raised in 1998, while Louisiana's Transportation Funding Task Force has sent lawmakers multiple ideas, including replacing the state gas tax with a sales tax on all fuels, directing more money in the construction budget to road work, and providing money to highways that would otherwise end up in the state's "rainy day" fund, according to the report.

In New Jersey, the trust fund that funds road and bridge repair is nearly bankrupt, and some legislators support an increase in the state gas tax to renew it. However, Gov. Chris Christie did not discuss transportation funding or the gas tax in his most recent State of the State address.

Other state responses to plunging gas prices include:

  • Georgia: A study committee recently reported that the state must raise at least $1 billion more a year to repair bridges and roads.
  • Michigan: In December, the legislature approved a plan for a ballot initiative to raise the sales tax to pay for road repairs. Earlier this month, Gov. Rick Snyder signed legislation to spend $1.3 billion a year on roads and transportation infrastructure, but it is contingent on voters approving a sales tax increase from 6 percent to 7 percent in May.
  • Tennessee: Gov. Bill Haslam warned that lawmakers must deal with the state's crumbling infrastructure soon. The gas tax in Tennessee was last raised nearly 26 years ago.
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