with Tyler Kane, Transportation Investment Advocacy Center
Two states are seeing the benefits of additional transportation revenue following the successful passage of gas tax increases in 2015.
Georgia’s passage of House Bill (HB) 170 in March 2015 raised their state motor fuel taxes to 26 cents-per-gallon on gasoline and 29 cents-per-gallon on diesel, replacing their 4 percent gasoline sales tax with a variable-rate formula indexed to the Corporate Average Fuel Economy and the Consumer Price Index (the latter of which will sunset in 2018). An additional component of the bill increased hotel taxes for transportation funding. Revenue generated from the measure was projected to raise an additional $900 million to be used exclusively for road and bridge projects statewide.
May 2016 tax collection figures reflect the significant impact the 2015 legislation had, with 40 percent of tax revenue growth this year attributed to the new gas and hotel taxes approved in HB 170. With the fiscal year ending on June 30, The Atlanta Journal-Constitution mentioned the possibility the state would see double-digit growth, allowing Georgia to shore up its state reserves after nearly depleting them during the Great Recession. On June 8 Gov. Nathan Deal (R) announced that the state had earned a credit rating of AAA, which only 11 states currently meet.
Additionally last year, Iowa lawmakers raised their state gas tax by 10 cents-per-gallon to its current level of 30.8 cents-per-gallon. The measure, Senate File 257, is expected to raise $213 million during the current fiscal year. The revenue will be divided in half, with one half funding Iowa Department of Transportation projects and the other dispersed among counties and municipalities to be used for various transportation needs.
Iowans are applauding the funding provided to local transportation authorities, which is already being utilized on local road and bridge projects. The Ames Tribune reported that local civil engineers are crediting the state gas tax increase for the ability to accelerate current projects and expand their scope, as well as enable cities to make “more fiscally sound” choices when compared to utilizing general obligation bonds. Story County Engineer Darren Moon stated, “We have been underfunded for so long it is helping us catch up a bit.”
For more information on the passage of HB 170 and Senate File 257, read the TIAC Case Studies that highlighted the efforts of legislators to pass these important revenue generation bills.