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Funding Transportation: What are other states up to?

Since 2012, 21 states have increased transportation revenues by a variety of means, while many others have been unsuccessful.  Examining the effective approaches of states that were able to increase revenues for transportation improvements may provide a road-map for other states to follow to increase their own transportation funding.

Successful Insights:

  • All increases were by legislative enactments
  • 12 used a combination of sources
  • 16 either increased the fuel tax directly or created mechanisms to effectively increase revenue from the tax
  • 8 either directly or indirectly indexed the fuel tax
  • 8 increased or added motor vehicle/drive license fees

Other successful revenue enhancement campaigns share the following factors:

  • strong gubernatorial support
  • effective marking based on data‐driven research substantiating the need and potential benefits
  • involving a broad coalition of interests (traditional and non‐traditional) to both develop and market the revenue package
  • policies and investment principles, not project listings, seem to be most effective

States are using a variety of measures to fund projects – SIB, TIFIA, Public Private Partnerships, etc. – these are largely financing mechanisms, not revenue generators, and they tend to be more applicable to project‐level funding than addressing system-wide needs.  Perhaps the most innovative and promising evolving revenue sources is a Road User Charge or a per mile fee.

Oregon conducted two pilot programs and just instituted a voluntary program:

  • began July 1, 2015
  • 5,000 volunteers
  • 1.5 cent per mile charge
  • credit provided to offset fuel tax paid
  • ultimately looking to expand program and replace fuel tax


Several states were able to raise revenue for multi-modal improvements and funding.

States that improved Multi-Modal:


  • Fuel tax increase of 3 cents and indexed
  • Redirects other state funds, including all vehicle sales tax
  • Tolls, fees, and fares indexed
  • Savings from efficiencies


  • Fuel tax indexed
  • 3% tax introduced, increasing to 4‐5%
  • Transit fares indexed


  • Retail tax eliminated
  • Tax at wholesale increased and uncapped
  • Vehicle registration, licensing & truck weight fees increased and indexed
  • Some motor license funds and turnpike obligation to state redirected to transit spending
  • Traffic fines increased


  • Fuel tax eliminated
  • Fuel sales tax of 3.5% wholesale gas tax & 6% wholesale diesel tax
  • Fuel sales tax may increase by additional 1.6%
  • Fee on hybrid vehicles added
  • 0.3% increase sales tax
  • Vehicle Sales tax increase of 1.15%
  • Redirect small percentage of existing sales taxes
  • Mandatory local transportation taxes imposed in two regions Multi‐Modal


What are Missouri’s neighbors doing?  Iowa, Kentucky, and Nebraska have all increased their transportation revenues, specifically for roads.  Here is the breakdown:

Neighboring States:

 Iowa – Budget: $ 12,723,031

  • Increased fuel tax of 10 cents
  • Increased vehicle permit fee
  •  Allocates an amount equal to 4% of the vehicle “registration fee” to public transit
  •  Additional amount appropriated from state tax on gambling casinos for public transit improvements

 Kentucky – Budget: $ 1,867,907

  • Fuel tax based on a percent of wholesale fuel prices; set a min. tax on the wholesale price
  •  The state uses general funds to match up to one-half of the local shares (10%) of capital projects for public transit

 Nebraska – Budget: $ 4,872,884

  • Fuel tax increase of 6 cents
  •  Appropriated general funds passed by the legislature and governor for public transit


Information in this article was provided by East-West Gateway Council of Governments.

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