When transportation spending was last reauthorized, rather than hike the gas tax to maintain current spending, Congress diverted general fund revenue. A program to study alternative revenue options was created so states could launch pilot projects.
Assembly and Senate Republicans agree that the best way to fill the transportation funding gap is to add tolls to existing highways and bridges, yet they won't add toll infrastructure funding to the budget. A gas tax could be implemented immediately.
One of the criticisms of gas taxes is that it is regressive, i.e., everyone pays the same per-gallon price. A Mississippi legislator has a solution: Eliminate the income tax on the lowest income bracket in exchange for hiking the gas tax 12-cents.
Two bills target hybrid and electric vehicles and even fuel efficient vehicles with new registration fees to increase road funding, as nine states did last year. However, many of those states also hiked gas taxes in the same legislation.
California legislators have it easy compared to their counterparts in Oklahoma and Arkansas who seek to increase revenue through tax increases. A bill to hike gasoline and cigarette taxes and revise alcohol taxes faces a high hurdle.
The package, which doesn't tax walking and running shoes, went to the legislature on June 30. It includes a ten cents per gallon gas tax, a 0.10 percent payroll tax, a $15 tax on new bikes costing at least $200, and a potential toll on I–205.
Democratic Gov. Jim Justice signed legislation to increase its 32.2 cent state gas tax by about 3.5 cents per gallon and add substantial hybrid and EV fees. He also signed legislation to increase and expand road and bridge tolling.
Already California, Indiana, Montana, South Carolina (overriding a governor's veto), Tennessee, and Utah* have raised gas taxes this year, while last year was a drought—only New Jersey increased its gas tax.
The Democratic-controlled New Mexico legislature passed a 5-cents per gallon fuel tax increase and the Republican-controlled Assembly in Wisconsin backed a plan to apply sales tax to fuel, but their Republican governors oppose any tax hikes.
Just past midnight on Saturday morning, the Indiana State Senate passed the transportation plan after the Housed approved it Friday. It also passed a $32 billion, two-year state budget bill, then adjourned for the year, one week ahead of schedule.
Now that voters have decisively rejected a sales tax measure that would have also hiked the gas tax, House representatives have proposed eliminating the state's Earned Income Tax Credit that benefits the working poor to help pay for roads.