Did The Government In California Use The Gas Tax Money For Something Else
Oregon introduced the kickoff gas tax in 1919 and within a decade each state adopted the motor fuel tax equally a method of funding roads. Gas taxes used to fund roads and highways represent the users-pay/users-benefit principle of responsible taxation, whereby those bearing the cost of the taxation—highway users—obtain the benefits of a well-maintained road network.
Many states today, notwithstanding, divert portions of their land gas tax revenue to the state general fund and other non-highway uses, such as these:
- The largest and most mutual diversions, found in 20 states, are those to transit and active transportation (pedestrian and bicycle projects). New York and New Jersey, for instance, classify over a third of their corresponding motor fuel tax (MFT) revenue to transit.
- Ten states divert a portion of their gas taxation revenue to police enforcement and safety services, mark the 2nd near common diversion.
- Though less frequent, diversions to teaching tend to be substantial, accounting for 25.9% and 24.seven% of gas tax revenue in Michigan and Texas respectively.
- Other states divert gas tax revenue to tourism, environmental programs and administrative costs. In total, 22 states divert over ane% of their gas tax revenue.
By violating the users-pay/users-benefit principle, diversion poses both immediate and long-term threats to transportation funding. Diversions can leave roads and highways underfunded.
The 10 states diverting the largest pct of their gas tax money: New York diverts 37.v% of its gas tax revenue, Rhode Island diverts 37.1%, New Jersey and Michigan divert 33.9%, Maryland diverts 32.5%, Connecticut diverts 27%, Texas diverts 24%, Massachusetts diverts 23.9%, Florida diverts 13.half dozen% and Vermont diverts xiii.ii%.
This policy brief catalogs state gas tax diversions of the 25 states that utilize that practice and outlines potential policies that will strengthen the users-pay/users-benefit model of transportation funding.
State Gas Revenue enhancement Diversion Rates
Groundwork
On February 25, 1919, Oregon introduced the outset gas taxation in the United States at a rate of one cent per gallon. The use of gas taxes to adequately fund roads and highways proliferated across the state, equally gas usage correlated with vehicle road usage. Within the following decade, each of the and so-48 states had adopted its own gas revenue enhancement.
In 1932, Congress created the beginning federal gas taxation acquirement source (one cent) intended to decrease the federal deficit; route and highway funding was traditionally under the purview of states and local governments. The federal gas revenue enhancement charge per unit was raised past half-a-cent per gallon during World War II and past another one-half-cent during the Korean War to generate new acquirement for national defense.
With the Federal Aid Highway Act of 1956, unremarkably referred to equally the Interstate Highways Human action, Congress raised the federal gas tax rate from two cents to three cents and dedicated all of the revenue to the newly created Highway Trust Fund (HTF). The HTF was designed to fund the structure of the new Interstate Highway System utilizing the users-pay/users-benefit principle of taxation.
The users-pay/users-benefit principle merely ways that those paying a user tax receive the benefits, connecting a government expenditure with both market demands and a reliable, fair source of revenue. In the case of the gas tax, drivers are proportionally paying for their road and highway utilise, assuming the revenue is allocated for roads and highways. Overall, regime revenue that conforms to the users-pay/users-benefit principle is off-white, proportional, anticipated and self-limiting, while serving equally a signal for investment.
Over the past 100 years, state gas tax rates have increased to accommodate the demand to build (and rebuild) highways and to account for inflation. In July of 2019 alone, for instance, drivers in 14 states saw gas tax rate increases. A few states, such every bit Rhode Island and Georgia, mandate periodic indexing of the gas tax rate to account for inflation. New Bailiwick of jersey, on the other manus, ties its gas tax rate to acquirement goals.
Figure 1 provides a representative sample of state gas tax rates betwixt 2000 and 2019.
Effigy one: State Gas Tax Rates 2000-2019
Source: "State Motor Fuels Tax Rates: 2000 to 2019."
Today, a driver in Oregon, who would have paid one cent per gallon in 1919, pays 36.8 cents per gallon in state gas tax and 18.four cents per gallon in federal gas taxation. A penny in 1919 is equivalent to 15 cents in 2020, for the aforementioned purchasing power. Today's vehicles are roughly 17.6% more fuel-efficient than those in the 1920s, though vehicles today are roughly 66.9% more fuel-efficient compared to vehicles in 1960 (when comparing the average fuel economy of 24.vii miles per gallon today, with the fuel economy of the Ford Model T at 21 miles per gallon and average fuel economy of 14.8 miles per gallon in 1960). Based solely on inflation and increased fuel efficiency, that one-cent tax in 1919 would equal 17.half dozen cents today. Currently, state gas taxes range from xiv.32 cents per gallon in Alaska to 62.05 cents per gallon in California, not including the 18.4 cents per gallon federal gas tax.
Rather than dedicating all gas tax revenue to roads and highways, many states divert portions of the revenue to non-road and not-transportation purposes. While those paying gas taxes may see some benefit in non-route and non-transportation spending, these diversions undermine the users-pay/users-benefit principle and promote irresponsible spending beliefs. When gas tax revenue is treated as an undedicated stream of governmental revenue, roads endure, and tax dollars may be wasted on ineffective or irrelevant programs.
Though this brief focuses specifically on the diversion of state-level gas tax acquirement, it should be noted that each land funds its route organisation with a unique combination of fees and taxes, often including motor vehicle registration fees and various sales taxes. Accordingly, a state may divert its registration fees while using all of its gas revenue enhancement revenue on roads and highways.
A gas taxation diversion rate is merely 1 measure of a country'south fiscal responsibleness. California, as an example, diverts none of its gas tax revenue. Yet, the state collects over $8 billion in revenue per yr from vehicle registration and miscellaneous motor vehicle fees, which is partially allocated to programs such as the California Highway Patrol, the California High-Speed Rail Authority and local public transportation.
Despite the aforementioned limitations, this brief solely examines the diversion of state-level motor fuel tax revenue as a mensurate of financial responsibility for state transportation funding.
Gas Taxation Diversions by State
Gas tax diversions vary by country for the 25 states that employ that practise. Figure 2 lists country gas tax diversion rates, or the percentage of state gas taxation acquirement that is allocated for expenses unrelated to road construction or maintenance. Effigy three provides a regional diversion percentage. The remainder of this section itemizes all diversions of country level gas taxes. Explanations for each state's diversion rate can exist found in this brief'southward appendix.
Figure ii: State Gas Tax Diversion Rates
Source: Land Annual Budget, Transportation Upkeep and Transportation Fund Statements Data; more detail provided in this brief's appendix.
Effigy 3: Average Diversion Rate of Each U.S. Region
Methodology
Although the definition, collection, and allocation of gas tax revenue vary widely in each country, this brief uses the following methodology.
Gas taxes tin can more often than not exist cleaved down into 2 components: a gasoline excise tax and additional fees, both of which are charged at per-gallon rates. Well-nigh often, a vast majority of the gas tax rate is equanimous of a per-gallon excise tax, which is the mutual characterization for a gas tax. Additional per-gallon fees are often used to cover the costs of petroleum-tank inspections or specifically designated funds, be they agricultural, environmental, or transportation-related.
In other states, the characterization of excise tax merely reflects one, a usually older but indistinguishable, component of the gas taxation. In the case of New Jersey, the traditional gasoline excise tax is only $0.105 per gallon, while the other fees total $0.309 per gallon. Yet, both components are collected every bit 1 coherent gas tax.
Other states, such equally Florida, pause down their gas taxes into multiple components. Each component, roughly respective to legislation, increases the overall gas revenue enhancement rate, and is governed by its ain set of revenue allotment formulas.
Also, to exist consequent, this brief uses the term "motor fuel tax" (MFT) revenue to refer to the combination of revenue from per-gallon gasoline taxes, diesel taxes, special fuel taxes, and, in some cases, jet and aviation fuel taxes. Each state reports its MFT revenue differently. Some states collect MFT revenue from road-based and non-road vehicles (boats, trains or planes) separately. In such cases, the exact amount of acquirement associated with each transport fashion is known, and the allocation process occurs separately. Others collect all per-gallon MFT revenue together and distribute non-highway MFT acquirement according to a preapproved formula. In other words, all fuel is subjected to the MFT, and acquirement for each transportation mode is allocated at some proportion.
Generally, this cursory uses road-based MFT revenue unless in that location is no way to separate how much revenue was collected from non-road MFTs. For the latter states, any allocation of non-highway MFT revenue to non-highway uses is not considered a diversion.
To calculate the diversion rate, nosotros first examine which state account or fund MFT revenue is allocated to in each land. States such every bit Georgia and Illinois have dedicated accounts for MFT revenue, which means all expenditures from the government account or fund is from MFT revenue. Other states such equally Alabama or Massachusetts, identify MFT revenue into a special transportation account, or, equally Alaska does, into a full general fund account with various other sources of acquirement.
When MFT revenue is placed into an account with other sources of acquirement, this cursory assumes that MFT acquirement is distributed proportionally among all expenditures from the account, unless those expenditures accept a dedicated source of acquirement or state statute mandates further regulations on MFT revenue within a given business relationship.
Most states allocate small portions of their MFT revenue to embrace the administrative costs of MFT collection or to provide refunds for agricultural or recreation-based fuel employ, neither of which is considered a diversion.
In terms of calculating its gas tax diversion rate, each of the 25 states generally conforms to the outline above while having its ain unique circumstances, be they special expenses due to geography, such equally ferries in Alaska and Washington, or a specially complicated allocation formula such every bit the one used in Florida.
Colorado
| MFT Revenue (FY17-18) | $647,230,168 | |
| Colorado Country Patrol | $71,958,000 | 11.one% |
| Total Diversions | $71,958,000 | 11.1% |
Connecticut
| MFT Revenue (FY19) | $807,800,000 | |
| CDOT Rail Operations | $102,790,177 | 12.vii% |
| CDOT Bus Operations | $91,765,964 | 11.iv% |
| ADA Paratransit | $xx,529,944 | 2.5% |
| Depart. of Energy and Environmental Protection | $ane,374,589 | 0.2% |
| Temporary Assist for Needy Families | $i,164,398 | 0.1% |
| Not-ADA Paratransit | $282,874 | 0.0% |
| Transfer to Port Authorisation | $196,440 | 0.0% |
| Total Diversions | $218,104,386 | 27.0% |
Florida
| MFT Acquirement (FY18-19) | $2,843,316,758 | |
| Dedicated to Mass Transit | $343,917,548 | 12.1% |
| Fish and Wild fauna Conservation Committee | $fifteen,900,000 | 0.6% |
| Agriculture Emergency Eradication Trust Fund | $13,656,350 | 0.5% |
| Aquatic Weed Control | $6,300,000 | 0.2% |
| Refunds, Municipal, Canton and School Districts | $5,477,000 | 0.2% |
| Refunds, Urban center Transit | $677,000 | 0.0% |
| Total Diversions | $385,927,898 | 13.6% |
Kansas
| MFT Revenue (FY19) | $459,158,000 | ||
| Highway Patrol | $10,287,479 | ii.2% | |
| Educational activity | $eight,728,425 | 1.ix% | |
| Transit | $6,730,758 | 1.five% | |
| Debt Services for Statehouse | Renovations | $three,523,022 | 0.8% |
| Mental Health Grants | $one,920,350 | 0.4% | |
| Full Diversions | $31,190,034 | 6.8% | |
Kentucky
| MFT Acquirement (FY18) | $764,900,000 | |
| Land Police Operations | $39,670,400 | 5.2% |
| Sec. of State General Admin. | $37,773,507 | 4.nine% |
| Kentucky Vehicle Enforcement | $5,159,530 | 0.vii% |
| Function of Admin. Serv., Finance Postal Services | $226,739 | 0.0% |
| Kentucky Artisan Heart at Berea | $225,271 | 0.0% |
| Free energy Recovery Route Fund | $154,266 | 0.0% |
| Governor's Office of Homeland Security | $136,822 | 0.0% |
| Total Diversions | $83,346,535 | 10.9% |
Louisiana
| MFT Acquirement (FY18) | $601,840,910 | |
| Mass Transit Program | $3,726,160 | 0.6% |
| Total Diversions | $3,726,160 | 0.half-dozen% |
Maine
| MFT Acquirement (FY18) | $259,278,445 | |
| Department of Public Safety | $16,945,476 | 6.5% |
| Implementation of Real ID | $191,526 | 0.ane% |
| Dept. of Ecology Protection | $18,411 | 0.0% |
| Total Diversions | $17,155,413 | vi.6% |
Maryland
| MFT Revenue (FY18) | $one,126,049,284 | |
| MTA Double-decker Operations | $85,781,687 | 7.6% |
| WMATA Operating | $75,979,270 | 6.7% |
| MTA Rail Operations | $41,752,242 | 3.7% |
| MTA Facilities & Capital Equipment | $35,030,321 | 3.1% |
| WMATA Upper-case letter | $32,431,776 | 2.9% |
| Port Administration | $19,077,968 | 1.7% |
| MTA Transit Administration | $eighteen,150,257 | one.6% |
| MTA Statewide Programs Operations* | $fourteen,183,043 | 1.3% |
| Chesapeake Bay 2010 Trust Fund | $12,936,000 | 1.2% |
| Doctor State Police—Commercial Vehicles | $12,281,687 | 1.i% |
| Function of Transportation Tech Services | $9,516,626 | 0.viii% |
| Medico Land Police—Auto Safety | $three,731,617 | 0.iii% |
| Waterway Improvement Fund | $2,812,000 | 0.2% |
| MTA Major Technology Projects | $753,792 | 0.one% |
| Data Tech Development Projects | $703,505 | 0.i% |
| Dr. Section of Surroundings | $229,990 | 0.0% |
| Total Diversions | $365,351,781 | 32.5% |
Massachusetts
| MFT Revenue (FY20) | $846,700,000 | |
| Not-Road or Highway Transportation | $122,184,800 | 14.4% |
| Massachusetts Bay Transportation Authorisation | $44,958,000 | v.3% |
| Regional Transit Authorities | $32,037,000 | 3.viii% |
| Motor Vehicle Insurance Merit Rating Board | $iii,599,546 | 0.four% |
| Full Diversions | $202,779,346 | 23.9% |
Michigan
| MFT Revenue (FY18) | $two,268,300,000 | |
| School Aid Fund | $587,939,300 | 25.9% |
| Comprehensive Transportation Fund | $167,650,132 | 7.4% |
| MDOT Local Bureau Programs, Rail | $14,860,456 | 0.7% |
| Full Diversions | $770,449,888 | 33.9% |
New Jersey (FY18)
| MFT Revenue (FY18) | $i,062,400,000 | |
| NJ Transit, Rail Infrastructure Needs | $106,731,000 | 10.0% |
| NJ Transit, Bus and Lightrail Investment | $89,208,000 | viii.4% |
| NJ Transit, Track Rolling Stock Improvement | $57,879,000 | 5.5% |
| NJ Transit, Other Expenses | $54,593,000 | 5.1% |
| NJ Transit, Rail Comeback | $24,957,000 | two.3% |
| NJ Transit, Northern Branch Extension | $15,399,000 | 1.5% |
| NJ Transit, Technology Improvements | $4,779,000 | 0.5% |
| NJ Transit, Safety Improvements | $3,186,000 | 0.three% |
| NJ Transit, Additional Lightrail expansions | $2,124,000 | 0.two% |
| Municipal Aid—Transit Village Grants | $531,000 | 0.0% |
| Municipal Help—Bikeway Grants | $531,000 | 0.0% |
| Municipal Help—Rubber Streets to Transit | $531,000 | 0.0% |
| Total Diversions | $360,449,000 | 33.9% |
New York
| MFT Revenue (FY18) | $1,600,000,000 | |
| Dedicated Mass Transit Funds | $600,000,000 | 37.five% |
| (MTA Funding) | ($494,000,000) | (thirty.nine%) |
| Total Diversions | $600,000,000 | 37.5% |
North Carolina
| MFT Revenue (FY18) | $1,993,032,340 | |
| Powell Bill (pedestrian and cycle projects) | $59,792,000 | iii.0% |
| Roadside Environment Projects | $xl,400,000 | 2.0% |
| Durham MPO, Transportation Alternatives (TA) | $3,391,875 | 0.2% |
| Various City-level Bicycle and Pedestrian Projects | $847,500 | 0.0% |
| Greater Hickory MPO, TA | $618,750 | 0.0% |
| Winston-Salem MPO, TA | $513,375 | 0.0% |
| National Recreational Trails | $450,000 | 0.0% |
| Statewide Bicycle & Pedestrian Programs | $375,000 | 0.0% |
| State Track Preliminary Applied science | $375,000 | 0.0% |
| French Broad River MPO, TA | $321,750 | 0.0% |
| Fonta Flora Trail | $234,750 | 0.0% |
| Aptitude Creek Greenway, Multi-Apply Paths | $150,000 | 0.0% |
| Fayetteville MPO, TA | $147,750 | 0.0% |
| Belk Greenway Connector | $51,750 | 0.0% |
| Greensboro MPO, TA | $9,750 | 0.0% |
| Total Diversions | $107,679,250 | five.4% |
Due north Dakota
| MFT Revenue (FY17-xix) | $370,300,000 | |
| Public Transportation | $5,380,344 | 1.5% |
| Highway Patrol | $iv,719,600 | 1.3% |
| Transfer to the Ethanol Subsidy Fund | $3,124,800 | 0.9% |
| Total Diversions | $13,224,744 | 3.6% |
Oklahoma
| MFT Revenue (FY18) | $485,375,960 | |
| ODOT, Public Transit | $977,130 | 0.2% |
| ODOT, Rider Rail | $723,330 | 0.2% |
| Total Diversions | $1,700,460 | 0.4% |
Pennsylvania
| MFT Acquirement (FY18) | $1,855,800,000 | |
| Multimodal Transportation Fund | $35,000,000 | i.9% |
| Boosted Unrestricted Motor License Fund | $22,000,000 | 1.2% |
| Total Diversions | $57,000,000 | 3.i% |
Rhode Island
| MFT Revenue (FY18) | $156,131,387 | |
| Rhode Island Public Transit Agency | $43,560,657 | 27.9% |
| Section of Human Services | $iv,527,810 | 2.ix% |
| Traffic Prophylactic Capital Program | $three,996,200 | two.6% |
| Transportation Alternatives | $2,743,400 | 1.viii% |
| RIDOT, Headquarter Operations | $2,315,650 | 1.v% |
| RIDOT, Transit Operations | $855,500 | 0.5% |
| Total Diversions | $57,999,217 | 37.1% |
S Carolina
| MFT Acquirement (FY18-xix) | $808,000,000 | |
| Intermodal Planning & Mass Transit | $7,289,000 | 0.9% |
| Full Diversions | $7,289,000 | 0.9% |
South Dakota
| MFT Acquirement (FY18) | $208,980,515 | |
| Public Safety | $xiii,574,322 | half dozen.5% |
| Loan to the State Runway Fund | $2,011,057 | i.0% |
| Total Diversions | $15,585,379 | seven.5% |
Texas
| MFT Revenue (FY18) | $3,674,996,627 | |
| Transfer to the Schoolhouse Fund | $899,837,878 | 24.seven% |
| Total Diversions | $899,837,878 | 24.seven% |
Utah
| MFT Revenue (FY18) | $488,893,653 | |
| Public Safety | $5,495,500 | 1.one% |
| Canton and City-Level BRT Road Projects | $2,400,000 | 0.v% |
| Sidewalk Safe | $500,000 | 0.one% |
| Office of Tourism | $118,000 | 0.0% |
| Total Diversions | $8,513,500 | 1.vii% |
Vermont
| MFT Acquirement (FY18) | $108,568,381 | |
| Non-AOT Land Police | $7,026,750 | half-dozen.v% |
| Vermont Runway Transit | $2,840,249 | two.6% |
| Public Transit | $2,760,454 | 2.v% |
| Information Centers | $1,348,522 | i.2% |
| Bike & Pedestrian Programs | $291,429 | 0.2% |
| Park & Ride Facilities | $72,870 | 0.1% |
| Total Diversions | $xiv,340,274 | 13.2% |
Virginia
| MFT Acquirement (FY18) | $898,700,000 | |
| Support to Other Country Agencies | $16,881,195 | 1.9% |
| Dept. of Rail and Public Transportation | $868,626 | 0.1% |
| Total Diversions | $17,749,821 | 2.0% |
Washington
| MFT Revenue (FY17-19) | $3,605,000,000 | |
| Fish Barrier Removal Projects | $37,500,000 | 1.0% |
| Regional Mobility Grants (park+ride, buses) | $25,000,000 | 0.7% |
| Special Needs Transit Grants | $25,000,000 | 0.7% |
| Sidewalk Program | $16,000,000 | 0.4% |
| Consummate Streets Program | $xiv,670,000 | 0.4% |
| Transit Related Grants (park+ride, buses) | $13,880,000 | 0.iv% |
| Rural Mobility Grants | $xiii,750,000 | 0.4% |
| Pedestrian and Bike Projects | $11,130,000 | 0.3% |
| LED Street Low-cal Retrofit Program | $10,000,000 | 0.iii% |
| Pedestrian and Bike Safety Projects | $ix,380,000 | 0.three% |
| Safe Routes to School Grants | $7,000,000 | 0.2% |
| Commute Trip Reduction Programs | $five,130,000 | 0.ane% |
| Vanpool Investments | $iii,880,000 | 0.i% |
| Transfer to Small Urban center Sidewalk Program | $ii,000,000 | 0.0% |
| Total Diversions | $194,320,000 | 5.4% |
Wisconsin
| MFT Revenue (FY17-eighteen) | $1,065,937,000 | |
| Transit Aid | $lx,149,700 | v.6% |
| Aeronautics Aid | $57,891,900 | 5.four% |
| Harbor Aid | $5,777,000 | 0.5% |
| Full Diversions | $123,076,600 | 11.5% |
Earlier analyzing the above listing of diversions, information technology is important to acknowledge some context. Primarily, this list represents conservative estimates of gas revenue enhancement diversions every bit information technology is hard to separate administrative expenses and debt services betwixt roads and transit.
Connecticut, for example, allocates twoscore% of its gas tax revenue, equivalent to $610 million, toward debt services for transportation-related bonds. While this list does non count debt servicing as a diversion, almost a quarter of all transportation bond revenue in FY2019 supported transit. Accordingly, it is possible that Connecticut uses a portion of gas revenue enhancement revenue to fund transit-related bonding that has little to do with roads or highways.
Additionally, some states allow local governments to divert portions of gas tax revenue. Colorado shares gas revenue enhancement revenue with local jurisdictions and allows cities and counties to spend up to xv% of their share on transit and 5% on assistants. Therefore, the diversion charge per unit for Colorado underestimates the bodily amount of gas tax revenue that is diverted.
Finally, each state is unique, and the diversion rate may not necessarily reverberate a state's fiscal responsibility or lack thereof.
California's lack of diversions appears impressive when compared to other large states. All motor fuel taxation revenue in California was placed into the Motor Vehicle Fuel Account of the Transportation Revenue enhancement Fund, which is used solely on roads and highways. However, California diverts revenue from other driver charges, such as registration and license fees, to constabulary enforcement and rail transportation. Therefore, California still spends revenue generated from automobiles on non-roadway purposes.
Analysis
At that place are clear patterns in where diverted gas revenue enhancement revenue is allocated. The most common diversion is for not-route and non-highway transportation, such every bit trains, buses and pedestrian projects. The following 20 states all divert gas tax acquirement to not-roadway transportation projects: Connecticut, Florida, Kansas, Louisiana, Maryland, Massachusetts, Michigan, New Jersey, New York, North Carolina, Due north Dakota, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, Washington and Wisconsin.
The second near common diversion is for law enforcement, mainly country police, which occurs in 9 states: Colorado, Kansas, Kentucky, Maine, Maryland, North Dakota, South Dakota, Utah and Vermont. Similar to the diversions toward transit, the diversions for law enforcement are tangentially related to highways but violate the users-pay/users-benefit principle. Not all drivers use roads that are under the purview of state police, nor do all drivers encounter a proportional benefit to their road utilize because of the state police.
Diversions to state ecology agencies and protection programs are adequately common as well. Florida diverts acquirement toward its Fish and Wild animals Conservation Commission and its aquatic weed control program. Maine diverts acquirement directly to its respective Departments of Environmental Protection. Maryland diverts to its Chesapeake Bay Trust Fund and Washington toward its fish barrier removal program. Michigan and Texas divert big portions of their gas tax revenue to teaching at 25.9% and 24.7% respectively.
Beyond those same diversions, both Utah and Vermont divert pocket-sized portions of their revenue toward tourism promotion, while Rhode Island diverts revenue to its Department of Human Services (DHS), an agency that cares for veterans, the elderly, and those who are unable to have intendance of themselves. Motor fuel tax revenue is supposed to outset some of the transportation costs incurred at DHS, whether information technology'due south refunding whatever gas revenue enhancement paid by its government vehicles or funding paratransit programs. Similarly, Kansas uses MFT acquirement to fund mental health grants for the Department of Aging and Disability Services.
Geographically, the simply major design is that the dense liberal states of the Northeast tend to have high diversion rates. The boilerplate diversion charge per unit in the Northeast is 20.three%, well above the 5.vii%, 5.2%, and 1.4% boilerplate diversion rates in the South, Midwest and West respectively.
New York diverts 37.5% of its gas taxation acquirement, Rhode Island diverts 37.i%, New Jersey diverts 33.ix%, Maryland diverts 32.v%, Connecticut diverts 27.0%, Massachusetts diverts 23.9% and Vermont diverts thirteen.two%. Diversions to mass transit make up virtually all of the diversions in each of the aforementioned states except Vermont. Maine's diversion rate of half dozen.half dozen% may be low compared to its neighbors but is still higher than 34 other states.
Unsurprisingly, New York, Rhode Island, and New Jersey not just have the three highest diversions rates merely as well rank at the bottom (45th, 48th and 50th) respectively on the overall value for money ranking in Reason'southward Annual Highway Report. Large diversions are mutual in northeast states, and drivers suffer where road quality is worse and costs higher than nationwide.
At the same time, Delaware and New Hampshire divert none of their corresponding revenue, and Pennsylvania diverts only 3.one% of its acquirement despite having a adequately robust public transportation system in Philadelphia (although Pennsylvania does divert Turnpike revenue to transit systems).
Of the 10 states with the highest diversion rates, only Michigan at 33.4%, Texas at 24.vii% and Florida at 13.6% are located exterior the Northeast. Michigan and Texas apply gas tax revenue to assistance fund education, while Florida diverts to mass transit and environmental programs.
Ironically, these diversions could actually damage the departments to which they are allocated in the long term. Every bit electrical cars get more common and gasoline-powered vehicles more than efficient, gas taxation revenue is expected to decline. Texas' School Fund received $900 million in funding from gas tax acquirement in the fiscal year 2019 solitary, leaving education in Texas vulnerable to declining revenue.
While high diversion rates are located mainly in the Northeast, low diversion rates are found throughout the country in a corking diverseness of states. Ohio, with its large population, diverts less than 1% of its revenue, every bit practise the less-populated Alaska and Hawaii. Liberal Oregon and conservative Wyoming divert none of their respective gas taxation acquirement, nor exercise snowy Minnesota or sunny New Mexico.
Recommendations
Gas revenue enhancement diversions are a product of public policy, not credo, climate, or demographics. Accordingly, there are steps that any state can have to subtract its diversion charge per unit while acknowledging its own unique public policy needs.
States could enact legislation or constitutional amendments that forbid diversions of gas tax acquirement in the first place. Georgia's constitution, for example, restricts the use of motor fuel tax acquirement to roads and bridges for construction, maintenance, and financing. The near effective route, equally demonstrated by Georgia, is to deposit all gas taxation revenue into its ain business relationship and restrict the utilize of that account to roads and highways. States tin also pursue legislation or a constitutional amendment to designate gas tax revenue equally dedicated revenue regardless of what business relationship the revenue is deposited in.
States should create restrictions on gas tax revenue that run across the needs of their country without allowing for diversions to tangentially related projects. Alaska, Indiana, and Iowa all treat MFT revenue as dedicated and place a brake on its use. South Dakota allocates gas taxation acquirement toward radio communications, but that infrastructure is needed for driver's prophylactic in the rural country. On the other hand, Utah restricts gas tax revenue only diverts revenue to facilitate Autobus Rapid Transit on roads and highways.
Alabama has specially robust laws that outline what gas taxation revenue may exist used at the state, canton, and municipal levels. For case, local governments can apply their share of gas tax revenue to fund plant removal as a part of road maintenance, just they may not use gas tax revenue to purchase herbicide.
States with programs that depend on diverted revenue may find the outright elimination of diversions to be politically infeasible. Such states could mandate a 10% almanac decrease in their diversion charge per unit and crave that roads and highways encounter sure quality thresholds before any revenue is diverted.
New Jersey, which allocates roughly $360 million in MFT revenue to NJ Transit per year, would have the more manageable task of raising $36 million in new transit-related revenue each year, perchance through a value-added revenue enhancement placed on real estate within a mile of an NJ Transit train station or straight on an express bus route. Additionally, NJ Transit could reevaluate the necessity of unprofitable routes.
Similarly, Texas, a state where just under $900 million of MFT revenue is allocated to education, would take to decrease its diversion by $ninety million per yr. Texas would probable have to audit its education spending, a positive process in the long-term while finding more appropriate, reliable sources of revenue.
Over the course of a decade, these states would completely transition abroad from diversions, benefiting roads and highways while preparing transit and schools for the projected decline in MFT revenue.
In the long term, as electric vehicles become the norm and gas tax revenue declines, states could use dedicated mileage-based user fees (MBUFs) to equitably fund highways. MBUFs would supervene upon country gas taxes and distribute the exact costs of highways onto those who utilize highways, eliminating the problem of diverted revenue.
Full Policy Brief: Revealing Land Gas Tax Diversions
Source: https://reason.org/policy-brief/how-much-gas-tax-money-states-divert-away-from-roads/
Posted by: codyaffecen.blogspot.com
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