Is Now the Time for Gas Tax Increases?

Only one state approved a gas tax increase this year. That was Minnesota, where the 35W bridge collapse created a special urgency around infrastructure spending ...
by | December 8, 2008
 

Only one state approved a gas tax increase this year. That was Minnesota, where the 35W bridge collapse created a special urgency around infrastructure spending and where, nonetheless, the gas tax increase only passed after a controversial vote that turned out to be political suicide for several Republican legislators who supported the tax.

In other words, despite all of the infrastructure needs of states, raising gas taxes with gas prices high was pretty much impossible.

Now, with gas prices dropping dramatically, one of the big questions is whether gas tax politics will change as legislative sessions begin in January. In that context, I was interested in this article from the Union Leader about fiscally conservative New Hampshire:

CONCORD - Lawmakers from both parties say the state needs to increase its gasoline tax to keep highways maintained, but Gov. John Lynch is not convinced of that yet.

Lynch said this week he hasn't changed his stance against a gas tax hike, but he left room to be persuaded it is the right move.

He said the state needed to figure out how much highway work needed to be done and how much it would cost before talking about raising revenue. He noted a federal economic stimulus package was expected to send money for highway and bridge construction to all states.

In some ways, this seems like the perfect time for states to raise gas taxes. Besides gas prices being down, state budget problems make the need for more money even more urgent.

And, lots of states are talking about gas increases, including Oregon, Massachusetts and others. I have to wonder, though, if Gov. Lynch is on to something. If, as expected, Congress improves a large infrastructure spending package, states will be able to build without finding more revenue at the state level. Why take the political risk of supporting a gas tax increase, when the feds are handing out money with no (or few) strings attached?

In this way, federal aid to states may, quite ironically, end up preventing states from tackling the structural deficits they face in their infrastructure budgets.

Josh Goodman
Josh Goodman  |  Former Staff Writer
mailbox@governing.com

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