Illinois continues to struggle with its budget. The state’s most recent stopgap budget expired on December 31, 2016. To perhaps break up the political logjam, Illinois senators of both political parties have begun...
- How Is Your State’s Road Spending Funded?
How Is Your State’s Road Spending Funded?
The share of infrastructure expenditures funded by tolls, user fees, and user taxes ranges from 14.2 percent in Alaska to 86.4 percent in Hawaii. Within the continental United States, Florida relies the most on dedicated transportation revenues (71.7 percent), while Wyoming (21.0 percent) relies on them the least. States that substantially export their taxes (like Alaska and Wyoming, where severance taxes account for a considerable share of state revenue) keep transportation taxes low in the same way they keep all taxes on state residents low, by—in significant part—generating revenue through the states’ extractive industries. Beyond that, however, states run the gamut. As Joe Henchman has written previously,
The lion’s share of transportation funding should come from user fees (amounts a user pays directly for a service the user receives, such as tolls) and user taxes (amounts a user pays, based on usage, for transportation, such as fuel and motor vehicle license taxes). When road funding comes from a mix of tolls and gasoline taxes, the people that use the roads bear a sizeable portion of the cost. By contrast, funding transportation out of general revenue makes roads “free,” and consequently, overused or congested—often the precise problem transportation spending programs are meant to solve.
Nationwide in 2012, tolls, user fees, and user taxes accounted for just 49.9 percent of all state and local expenses on highways, roads, and bridges. Motor fuel taxes are often politically unpopular, but actually pass the benefits test quite well compared to most taxes. States should seek to fund infrastructure from user taxes and fees to the greatest degree possible, internalizing the costs associated with the utilization of states’ transportation grids.
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