Mississippi is neither alone in the policy dilemma nor alone in the decision to kick the can down the political road for another year. But nationally, a number of states are beginning to be forced to deal with the issue – even if those states have to entertain tax increases.
Arkansas left their gas tax alone, but put on a half-cent sales tax for a decade to fund unmet needs in highway and bridge construction and maintenance.
Six states and the District of Columbia have raised gasoline taxes recently to address the same problem in their states. Delaware is the latest state to examine a gasoline tax hike. At least 11 states are partnering with private firms to build highways and bridges that will essentially become tolls roads.
Some states are implementing complex variable gas tax rates that are tied to market prices. It’s been a mixed bag, but the overall themes in these states have been remarkably like Mississippi’s woes.
Mississippi has about 4,700 miles of highways in dire need of repair at an estimated current cost of nearly $1 billion, according to Central District Transportation Commissioner Dick Hall. One of the biggest public policy and economic misconceptions in Mississippi is the notion that as gas prices have skyrocketed, state gas tax revenues have risen along with them. Nothing could be farther from the truth.
Mississippi's 18.4 cents per gallon gas tax (CPG) is a flat tax. When we paid $1 a gallon for gas, the tax was 18.4 CPG. When we pay $3.60 per gallon at the pump, the state tax is still 18.4 CPG. The only way the state takes in more revenue in gas taxes is for the volume of gas consumed to increase.
The state's 18.4 CPG gas tax was last raised in 1987. According to a report by the American Society of Civil Engineers, Mississippi’s flat gas tax isn't keeping pace with the inflation of rising highway construction and maintenance costs and with the modern fuel economy improvements in today's vehicles. Nationally, state gasoline taxes average 23.5 CPG but vary substantially.
In 2012, a national report found that Mississippi has an estimated $30 billion in highway and bridge needs between 2008 and 2035 but that the state's current gas tax structure would only generate $15.3 billion to meet those expenses in a "best-case" scenario.
The U.S. Energy Information Administration reported that the national average federal/state tax on gasoline is 48.8 CPG. The federal tax on gasoline is 18.4 CPG. The national average state gasoline excise tax is 23.5 CPG. In Mississippi, drivers pay total federal and state taxes of 37.2 cents per gallon of gasoline and 43.2 cents per gallon of diesel. Mississippi's excise tax totals 18.4 CPG on gasoline and diesel, with 0.4 cents going to an environmental protection fee. In coastal Hancock, Harrison and Jackson counties, there is an additional 3 CPG seawall tax.
Mississippi’s gas tax is lower than Alabama (19 cents per gallon, but the state allows local option taxes in addition), Arkansas (21.80 CPG), Louisiana (20 CPG), or Tennessee (21.40 CPG). The question should be whether Mississippi roads and bridges are in better shape that the transportation infrastructure in those surrounding states?
But just getting a Mississippi Department of Transportation budget approved was tough this session as the Senate and House skirmished until after the regular session adjourned before the Senate prevailed in getting a $927 million MDOT budget adopted in a special session.
Look for the gas tax hike push to languish for some time. After all, 2015 is a statewide election year.