Earlier this month, the Commonwealth Transportation Board (CTB) discussed the “Sustainability of Transportation Revenues.” Embedded in a 35-page presentation from the Office of the Secretary of Transportation was a historic observation about fuel taxes.
Fiscal year 2016 to 2018 marked the first time that vehicle miles traveled (VMT) in Virginia increased (+3.2%) but fuel tax collections decreased (-0.4%)—with no rate change.
“We are definitely not headed in the right path in terms of performance of motor fuel taxes,” Virginia Deputy Secretary of Transportation John Lawson said at the Oct. 17 meeting in Richmond.
Fuel taxes are a sizable component of Virginia’s transportation funding. In FY 2018, $3.4 billion in state revenue came from a variety of streams, led by retail sales taxes ($1.044 billion), motor vehicle sales taxes ($943.7 million) and gas/diesel fuel taxes ($855.2 million).
Yet year-over-year growth demonstrates the shift away from the gas pump. Since 2011, motor vehicle sales taxes (+4.4%) and retail sales taxes (+4.3%) outpaced motor fuel taxes (+0.6%).
The falloff is not from a lack of traffic. In 2018, the annual projected VMT in Virginia was 85 billion, and by 2040, that number is set to swell to 100 billion. Those estimates came from a combination of Virginia DMV and U.S. Census Bureau data and a KPMG population regression analysis.
The near-term challenge is increased efficiency. In 2010, federal data from the Energy Information Administration and Bureau of Transportation Statistics showed the average fuel economy was around 18 miles per gallon (MPG) for light trucks and 25 MPG for cars. By 2040, that number is expected to rise to around 30 MPG for light trucks and 45 MPG for cars.
“It’s great for the environment, but from a revenue-producing standpoint, it’s not supporting the needs of transportation,” Lawson said.
For these reasons, our 2019 Q&A with RVA legislative candidates included a question on whether they would consider increasing the gas tax. To build a sustainable future, Virginia must consider that and other solutions. The October presentation before the CTB included two pages of “funding options,” from user charges based on distance traveled, to bicycle purchase or registration fees.
Our roads aren’t going away. We must adopt a different mindset for how we fund them. Whether in a car, on a bus or riding a bicycle, they are the mechanism for moving people from place.