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June 2012
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Many states see increase in taxes put on gasoline

By DAVID A. LIEB Associated Press

For the first time in nearly 30 years, Tennessee will soon tax motorists more to fill their tanks. So will California, Indiana and Montana.

Lawmakers across the U.S. have approved new proposals this year to pay for transportation improvements, including tax hikes, vehicle fee increases and bond packages. Those measures extended an existing trend to a new milestone: Two-thirds of all states have stepped up highway funding over the past five years.

It's happening in both Democratic- and Republican-led states as their transportation departments strain to overcome backlogs deepened by the last recession. And lawmakers are acting regardless of promises from President Donald Trump for a $1 trillion national infrastructure program that his administration has yet to detail.

Some state officials doubt that Trump's plan will make much of a difference when it comes to repairing and replacing thousands of old bridges or repaving and widening countless miles of congested roads.

"We really don't know what's in it. We haven't seen anything," said Tennessee state Rep. Eddie Smith, a Republican from Knoxville. But "it sounded like there wasn't going to be a lot that we would directly benefit from."

Trump has said his plan will depend partly on spurring private investment in infrastructure. That could include tax incentives for those who subsidize big-ticket projects, with an expectation that investors could recoup costs through tolls or fares on roads, bridges, rail systems or airports. Tennessee currently uses neither tolls nor bonds for its highway system.

At least two dozen states adopted higher fuel or sales taxes to pay for transportation improvements.

"That's highly unusual for that many states to be in agreement about raising taxes, and these are oftentimes fairly conservative states as well," said Carl Davis, research director at the Institute on Taxation and Economic Policy, a Washington-based nonprofit think tank.

The U.S. has an $836 billion backlog of needed repairs and improvements to roads and bridges, plus an additional $90 billion backlog for public transit systems, according to the Federal Highway Administration.

A 2015 federal law increases Highway Trust Fund money for states by $20 billion over five years through traditional matching funds and new competitive grants.

But some financial analysts project that will merely hold funding flat when accounting for inflation.

States are "bellying up to the bar and actually increasing their own gas taxes to make up for the lack of an increase of federal spending," said Julius Vizner, an assistant vice president at Moody's Investors Service.

Republican-led South Carolina, which has long resisted tax increases, is among those seriously considering a gas tax hike this year. Separate tax proposals have passed the House and Senate, even though Republican Gov. Henry McMaster has threatened a veto and wrote a letter to Trump in February asking for $5 billion in federal funding for infrastructure.

South Carolina House Majority Leader Gary Simrill said the federal money would be welcome but doesn't provide a long-term solution. The state's Department of Transportation wants an additional $1.1 billion annually over the next 25 years to improve roads.

"People who are waiting on the federal government usually just get old and tired," said Simrill, a Republican who has led the House's road-funding efforts for several years. "South Carolina cannot wait on the federal government to take care of our problem."

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