We retired Tax Justice Blog in April 2017. For new content on issues related to tax justice, go to www.justtaxesblog.org
This is the final installment of our three part series on 2015 state tax trends. The first article focused on tax shifts and tax cuts. The second article discussed tax credits for working families and revenue raising initiatives.
July 1st marked the end of most states’ fiscal years, the traditional deadline for states to enact new spending plans and revenue changes. The 2015 legislative sessions delivered lots of tax policy changes, both big and small. Some states finished early or on time, while others straggled across the finish line after knockdown budget battles. Still others are not yet done racing, operating on continuing resolutions until an agreement is reached. As of now, four states still do not have spending plans in place for the fiscal year that started July 1st (Illinois, New Hampshire, North Carolina, and Pennsylvania. Alabama has until October to reach a budget agreement).
Perhaps the most active area of state tax policy this year was the debate over how to fund the nation’s deteriorating infrastructure. As Congress continues to drag its feet on a solution to our current revenue shortfall, lawmakers in many states took action by enacting gas tax changes that will fund meaningful improvements to their transportation networks. A total of 17 states have enacted gas tax increases since 2013—including 9 this year alone.
Check out the detailed list after the jump to see which states increased their gas tax to support transportation funding.
Georgia: A 6.7 cent gas tax increase took effect July 1, 2015 as a result of a law signed earlier this year. That law also positions Georgia for the long-term by allowing future increases to occur alongside growth in inflation and vehicle fuel-efficiency.
Idaho: A 7 cent gas tax increase took effect July 1, 2015—the state’s first gas tax increase in over 19 years.
Kentucky: Falling gas prices nearly resulted in a 5.1 cent gas tax cut this year, but lawmakers scaled that cut down to just 1.6 cents. The net result was a 3.5 cent increase relative to previous law.
Nebraska: A 6 cent increase was enacted over Gov. Pete Ricketts’ veto. The gas tax rate will rise in 1.5 cent increments over four years, starting on January 1, 2016.
North Carolina: Falling gas prices were scheduled to result in a 7.9 cent gas tax cut in the years ahead, but lawmakers scaled that cut down to just 3.5 cents. The eventual net result will be a 4.4 cent increase relative to previous law (though now there is talk of allowing further cuts to take place and hiking drivers’ license fees to make up some of the lost gas tax revenue). Additionally, a reformed gas tax formula that takes population and energy prices into account will result in further gas tax increases in the years ahead.
South Dakota: A 6 cent increase took effect April 1, 2015.
Utah: A 4.9 cent increase will take effect January 1, 2016, and future increases will occur as a result of a new formula that considers both fuel prices and inflation. This reform makes Utah the nineteenth state to adopt a variable-rate gas tax.
Washington: Gov. Inslee signed a recent compromise package approved by the legislature. Washington State’s gas tax will rise by 11.9 cents in two increments: 7 cents on August 1 and an additional 4.9 cents on July 1, 2016.