Poorly funded highways can mean more traffic congestion
Very few states are raising enough taxes from drivers for their highways, putting the tax burden on people who don't drive and poorly funding roads, which causes problems liketraffic congestion.
Only three states Delaware, Montana and New Jersey raise enough revenue to fully cover their spending on highways, including new construction and maintenance, according to an analysis from nonprofit Tax Foundation, which reviewed the latest 2022 data from the Federal Highway Administration and state and local finances from the U.S. Census Bureau.
The other 47 states, plus Washington D.C., make up the needed highway fundingwith taxes from other sources.
A mix of taxes on fuel, fees on vehicles andtolls provide the bulk of funding for roads at the state and local level.
Generally, road spending is funded more by drivers and businesses using them.
California and Hawaii were the only two states that boosted their spending on highways funded by road users in the most recent data.
On the other hand, six states Indiana, Kentucky, New Hampshire, New York, North Carolina and Ohio decreased the share coming from road users.
But road taxes and fees are far from perfect after inflation, electric vehiclesand fuel-efficiency gains continue to erode gas tax revenues per mile of road driven, Tax Foundation said.
Fuel taxes, which are raising less because cars increasingly need less gas per mile, also often aren't indexed to inflation.
As a result, Tax Foundation said states and local governments have to divert taxes from other sources for highways, putting the burden of paying for highways on people who drive very little or not at all.
What is the solution to the lack of taxes for highways?
To address the shortage in tax revenues, the federal government is considering a large one-time fee on EVs.
Some states have already added the fee: California charges$100 on EVs to offset the loss in gas tax revenue.
But the Tax Foundation said a better long-term fix is a vehicle miles traveled tax (VMT), which charges a direct user fee for each mile driven.
"While states may find it difficult to shift to such a system without the federal government as first mover, state policymakers might nonetheless want to push and prepare for such a system," Tax Foundation said."With all but three states unable fund their roadways using existing user fees, road funding is in dire need of a better system."
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Posted: 2025-03-25 19:03:18
