USA Today: Shrinking Revenue Spurs Gas Tax Alternative

By Elaine S. Povich

It was the potholes that convinced real estate broker Lester Friedman that there’s got to be a better way to pay for road construction and repairs.

Friedman, who lives in Bend, Oregon, drives about 8,000 miles a year in his 1999 Chevrolet Suburban, ferrying clients throughout central Oregon. He sees roads in various states of disrepair and he can tell you first-hand that the current arrangement just isn’t working.

That’s why he volunteered to test a new program in his home state that would levy a tax on miles driven, rather than on each gallon of fuel purchased. In every other state, and at the federal level, gasoline taxes are levied on a per-gallon basis.

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Only a few states index gas taxes for inflation: Florida, Maryland and Massachusetts. According to a study by the conservative Institute on Taxation and Economic Policy, most state gas taxes, especially those not indexed, are “built to fail.”

After adjusting to account for growth in construction costs, the average state’s gas tax rate has effectively fallen by 20 percent, or 6.8 cents per gallon, since the last time it was increased. Among the 36 states levying only a fixed-rate tax, effective gas tax rates have plummeted by 29 percent, or 9.5 cents per gallon since they were last increased, according to the 2011 study.

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