One of our least favorite ways to spend money on is filling up the gas tank. With the painstaking ebb and flow of gas prices, it’s very difficult to budget monthly expenses.
However, not every driver has to deal with this annoyance. For the first time ever, drivers in Virginia have been able to spend less while traveling more.
Good for Consumers, Bad for the State
According to the Commonwealth Transportation Board, drivers in Virginia have traveled approximately 3% more miles between 2016 and 2018, yet gas tax revenue fell nearly half a percent. Experts explain that the lower gas tax revenue comes from the better fuel efficiency rate of modern vehicles.
Director of Economic Policy Studies at UVA’s Weldon Cooper Center, Bill Shobe said “We actually are making a little less money on the gas tax than we were in 1977. Even though the vehicle miles traveled have gone up about 70% since then.”
In fact, the state of Virginia has lost nearly $30 million in tax revenue because of the increased fuel efficiency of vehicles such as the 2019 Toyota Camry.
The 2000 model, which got 23 miles per gallon, generated $85 in tax revenue. However, the 2019 model only created $55 of revenue while performing at a rate of 34 miles per gallon.
Alternate Way to Fund Highways
Although Shobe is “very happy that they’re [vehicles] much more efficient,” he has some thoughts about how to continue investing in highways.
“In terms of gas tax revenue, of course, it’s a problem,” Shobe said. “These cars aren’t paying the same amount per mile as other cars are, and so it means we’re going to have to figure out some other mechanism for funding highways.”
Currently, the Transportation Board is researching the idea of taxing drivers based on mileage driven per year. The board is also exploring the possibility of increasing the number of toll roads.
Shobe said that “[o]ne of the approaches could be annual reporting of mileage traveled. That could be done in conjunction with inspections.” He also admits that this would be very difficult to enforce.
Decision Needs to Happen Sooner Rather Than Later
The gas tax revenue is used to for construction and upkeep of Virginia’s state highway system. Since taking care of the roads is something that occurs on a daily basis, analysts stress that a solution to the revenue shortage needs to happen sooner rather than later.
“There’s little doubt that a decision has to be made fairly soon,” Shobe said concerning the loss of revenue. “Otherwise some other adjustment will have to be made just to make sure that we keep our current road infrastructure in good operating condition.”