13 States Explore New Revenue Sources as Fuel-Efficient Vehicles Reduce Gas Tax Revenue

As fuel-efficient vehicles become more prevalent on U.S. roads, 13 states are considering alternative revenue sources to fund critical highway and infrastructure maintenance. Traditional funding through gas taxes has declined as vehicles consume less fuel per mile traveled, leaving states struggling with budget shortfalls for road repairs and improvements.

Proposals under consideration include raising gas taxes, implementing mileage-based user fees, and increasing sales taxes. Virginia, for example, is proposing to replace its gas tax entirely with a higher sales tax. "The gas tax revenue has not kept up with the increasing costs of materials and labor, leaving states with a maintenance backlog," according to the summaries.

States like Oregon are asking voters to renew gas taxes to fund specific projects. Portland officials are seeking a 10-cent-per-gallon gas tax renewal, expected to generate $17.6 million annually for road repairs, pothole filling, and safety improvements. However, the transition to electric and more fuel-efficient vehicles has impeded the expected revenue growth from the gas tax.

To address budget gaps, states are exploring various options. Some are considering increasing parking enforcement and charging for parking in neighborhoods. Others, like Washington State, are developing long-term transportation plans that move away from reliance on fossil fuels and transition to road usage charge systems. Tolls and ferry fare increases are also being examined to cover costs.

Why this matters: The decline in gas tax revenue due to fuel-efficient vehicles is forcing states to reassess their infrastructure funding models. The proposals under consideration could have significant implications for drivers and state budgets, potentially reshaping how highway and infrastructure maintenance is funded in the future.

As states navigate this challenging terrain, finding sustainable revenue sources to maintain critical infrastructure will be a top priority. Lawmakers will need to balance the needs of drivers, the impact on state budgets, and the long-term viability of funding mechanisms to ensure the safety and reliability of the nation's roads and bridges.

Key Takeaways

• 13 states consider alternative revenue sources as fuel-efficient vehicles reduce gas tax revenue
• Proposals include raising gas taxes, mileage-based fees, and increasing sales taxes
• Oregon seeks voter approval to renew gas tax for road repairs, but revenue growth is impeded
• States explore options like parking enforcement, tolls, and ferry fare increases to cover costs
• Declining gas tax revenue forces states to reassess infrastructure funding models for the future