States React to Tax Impacts of Dropping Gas Prices
Daniel C. Vock reports on the "handful of states that tax gasoline based on its price -- rather than the volume of gas sold," which were making raking in the revenue back when the price of gas was astronomical. "But now that the national average is $2.01 per gallon," writes Vock, "states like Kentucky, North Carolina and Virginia are in a financial bind."
Vock takes Virginia as his first example, which recently estimated that "low gas prices could deplete the state's $5.4 billion transportation funding package by $530 million through 2019." The state reacted by setting a new minimum for how low its gas taxes can go. According to Vock, "No matter how cheap gas gets, it will be taxed as if the price is $3.11 a gallon."
The article includes more detail, including examples from Kentucky and North Carolina, about the impact of volatile gas prices on the fiscal health of states.