July 3, 2013

MSN Money: 8 states where the gas tax just went up

media mention

(Original Post)

From Connecticut to Wyoming, lawmakers are turning to these hikes to fund long overdue road and infrastructure projects.

By Bruce Kennedy

It’s the summer driving season, and while gas prices traditionally rise this time of year, they’ve been falling of late. But July 1 was the start of a new fiscal year for many states, and on Monday eight states increased their gasoline tax rates.

According to new analysis from the Institute on Taxation and Economic Policy (ITEP), a total of 10 states will be raising either gas or diesel taxes in the next two weeks. 

ITEP says 16 states now have gas taxes that are “designed to rise alongside either increases in the price of gas or the general inflation rate.” Massachusetts, Pennsylvania and the District of Columbia are also considering similar legislation aimed at raising revenue for infrastructure and transportation issues.

“The bottom line is, these increases are really just long overdue,” Carl Davis, ITEP senior analyst and the study’s author tells MSN moneyNOW. “We’re coming up on the 20-year anniversary of the last time the federal gas tax went up.”

“And some people might say, great, we don’t need to raise taxes,” he continued. “But the way the gas tax is designed, it’s designed in a way that it has to be raised from time to time. Just imagine if we still had the 1 and 2-cent gas taxes that the state and federal governments had back in the 1930s. We wouldn’t be able to pay for anything close to the infrastructure we have today.”

Wyoming residents will notice the biggest increase at the pump, at 10 cents a gallon, while fuel taxes also crept up in Connecticut (3.84 cents), California (3.5 cents), Maryland (3.5 cents), Kentucky (2.4 cents), Nebraska (1.7 cents), Georgia (0.6 cent) and North Carolina (0.1 cent).

Davis noted that current gas taxes are paying only about one-third of the funds needed for roads and other transportation projects. And according to an ITEP analysis done in late 2011, which looked at state gas taxes relative to construction costs and the rate of inflation, gas taxes in almost 20 states were actually down 40% or more from their last round of increases. 

“There are definitely states that have decided to pay for roads and bridges by taking money away from education, and taking money away from other public services,” he said. 

“We’ve seen that happen this year, we’ve seen it happen in years past, but you can only do that for so long,” he added. “And eventually you need to address the root problem — which is that the revenue sources states are trying to use to pay for roads are badly designed and not keeping pace. And that’s why we’re finally seeing some of these taxes raised.”

From Connecticut to Wyoming, lawmakers are turning to these hikes to fund long overdue road and infrastructure projects.
By Bruce Kennedy
It’s the summer driving season, and while gas prices traditionally rise this time of year, they’ve been falling of late. But July 1 was the start of a new fiscal year for many states, and on Monday eight states increased their gasoline tax rates.
According to new analysis from the Institute on Taxation and Economic Policy (ITEP), a total of 10 states will be raising either gas or diesel taxes in the next two weeks. 
ITEP says 16 states now have gas taxes that are “designed to rise alongside either increases in the price of gas or the general inflation rate.” Massachusetts, Pennsylvania and the District of Columbia are also considering similar legislation aimed at raising revenue for infrastructure and transportation issues.
“The bottom line is, these increases are really just long overdue,” Carl Davis, ITEP senior analyst and the study’s author tells MSN moneyNOW. “We’re coming up on the 20-year anniversary of the last time the federal gas tax went up.”
“And some people might say, great, we don’t need to raise taxes,” he continued. “But the way the gas tax is designed, it’s designed in a way that it has to be raised from time to time. Just imagine if we still had the 1 and 2-cent gas taxes that the state and federal governments had back in the 1930s. We wouldn’t be able to pay for anything close to the infrastructure we have today.”
Wyoming residents will notice the biggest increase at the pump, at 10 cents a gallon, while fuel taxes also crept up in Connecticut (3.84 cents), California (3.5 cents), Maryland (3.5 cents), Kentucky (2.4 cents), Nebraska (1.7 cents), Georgia (0.6 cent) and North Carolina (0.1 cent).
Davis noted that current gas taxes are paying only about one-third of the funds needed for roads and other transportation projects. And according to an ITEP analysis done in late 2011, which looked at state gas taxes relative to construction costs and the rate of inflation, gas taxes in almost 20 states were actually down 40% or more from their last round of increases. 
“There are definitely states that have decided to pay for roads and bridges by taking money away from education, and taking money away from other public services,” he said. 
“We’ve seen that happen this year, we’ve seen it happen in years past, but you can only do that for so long,” he added. “And eventually you need to address the root problem — which is that the revenue sources states are trying to use to pay for roads are badly designed and not keeping pace. And that’s why we’re finally seeing some of these taxes raised.”

 

 

 


Share