With more Americans driving EVs and fuel efficiency rising, gas tax revenues aren’t enough to fund state transportation infrastructure.
NCSL
By Lisa Ryckman
September 10, 2024
Fuel efficiency is a two-way street: It reduces fuel consumption—but it also reduces gas tax revenue that states rely on to fund transportation infrastructure.
“We have a problem where we’ve got new technologies coming on board that we really don’t know how to tax,” Kansas Rep. Shannon Francis told a session on the issue at NCSL’s 2024 Legislative Summit. “We have per hour charging taxes. We’ve got road usage charges. Some of us have looked at our annual vehicle registration, vehicle weight fees and again road usage charges. There’s not a one-size-fits-all solution.”
Contrary to what some think, electric vehicles aren’t the main reason for the loss of gas tax revenue, says Baruch Feigenbaum, senior managing director of transportation policy at the Reason Foundation, a libertarian think tank.
“While electric vehicles and hybrids are a growing part of the problem, and we talk about them a lot and we need to solve them, the biggest problem is your traditional internal combustion engine, your Toyota Camry that gets five more gallons per mile than it did 20 years ago,” he says.
Fuel sales have increased slightly in states with the 10 fastest rates of growth and have decreased in states with slow or no growth, he says. The situation is exacerbated by the fact that construction inflation is stretching gas tax dollars. View the full article: NCSL.org
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