SID SALTER: States explore options over road and bridge repair funding

While there were a number of legislative victories during the 2014 session of the Mississippi Legislature, lawmakers could not reach agreement on a long term fix for an old problem – the fact that the revenue structure for funding road and bridge construction and repair in Mississippi isn’t keeping pace with the projected costs of the state’s needs.

Mississippi is neither alone in the policy dilemma nor alone in the decision to kick the can down the political road for another year. But nationally, a number of states are beginning to be forced to deal with the issue – even if those states have to entertain tax increases.

Arkansas left their gas tax alone, but put on a half-cent sales tax for a decade to fund unmet needs in highway and bridge construction and maintenance.

Six states and the District of Columbia have raised gasoline taxes recently to address the same problem in their states.

Some states are implementing complex variable gas tax rates that are tied to market prices. It’s been a mixed bag, but the overall themes in these states have been remarkably like Mississippi’s woes.

Mississippi has about 4,700 miles of highways in dire need of repair at an estimated current cost of nearly $1 billion, according to Central District Transportation Commissioner Dick Hall. One of the biggest public policy and economic misconceptions in Mississippi is the notion that as gas prices have skyrocketed, state gas tax revenues have risen along with them. Nothing could be farther from the truth.

Mississippi’s 18.4 cents-per-gallon gas tax (CPG) is a flat tax. When we paid $1 a gallon for gas, the tax was 18.4 CPG. When we pay $3.60 per gallon at the pump, the state tax is still 18.4 CPG. The only way the state takes in more revenue in gas taxes is for the volume of gas consumed to increase.

The state’s 18.4 CPG gas tax was last raised in 1987. According to a report by the American Society of Civil Engineers, Mississippi’s flat gas tax isn’t keeping pace with the inflation of rising highway construction and maintenance costs and with the modern fuel economy improvements in today’s vehicles. Nationally, state gasoline taxes average 23.5 CPG but vary substantially.

Daily Journal
4/10/14