A combination of increasingly efficient vehicles and a fuel tax that has not increased since 1990 has gradually depleted a key fund Louisiana uses to pay for its transportation projects. Plus, paying off debt from previous road and infrastructure work will mean less money from the Transportation Trust Fund will be available for projects over the next decade, according to a legislative audit released Monday.
The auditors said the average fuel efficiency of light-duty passenger cars in the United States has increased from 18.8 miles per gallon in 1990 to 22.9 mpg as of 2020. Because better mileage vehicles need fuel less often, Louisiana has seen its motor fuel tax revenue decrease as a result.
The audit expects the trend of lower fuel tax revenue to continue as vehicles become more efficient. Louisiana’s 20-cent per gallon tax has stood unchanged longer than every other state’s except for Mississippi and Alaska. If it would have increased according to consumer price and highway construction cost indices, the tax would currently be 49 cents.
The state has already accounted for the impact of electric and hybrid vehicles on its future fuel tax take. Starting Jan. 1, owners of electric vehicles and hybrid vehicles will be assessed annual fees of $100 and $60, respectively, to account for their road use and offset what they don’t pay in fuel taxes.
The audit projects $563 million in fuel tax revenue will be lost over the next 10 years as more consumers buy electric vehicles, but it calls for the new EV and hybrid fees to make up the difference.
“We projected these fees will be sufficient to offset the impact of external electric charging vehicles on motor fuel tax collections, but not the impact of more fuel-efficient vehicles. As a result, the state still could lose $322.9 million from calendar years 2023 to 2032,” Legislative Auditor Mike Waguespack said in a letter to legislative leaders.
The audit presumes electric vehicles will account for 30% of all auto sales by 2032.
GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
The Transportation Trust Fund is also used to pay off Transportation Infrastructure Model for Economic Development (TIMED) projects through a 4-cent tax voters approved in 1989. The $5 billion-plus program of major construction projects was supposed to conclude in 2004 but has been consistently behind schedule, with major hurricanes adding to the delays.
Debt service toward TIMED projects and approved local infrastructure work totaled almost $310 million from the Transportation Trust Fund (TTF) from 2015 through 2021, the audit calculated.
“Furthermore, we estimated that $902.6 million of projected TTF-Regular funds over the next 24 years will be needed to supplement the TIMED debt, which also would reduce the amount of TTF funding available for the backlog of transportation projects,” Waguespack wrote.
State lawmakers requested the audit after the state Department of Transportation and Development identified $14.87 billion in unmet highway and infrastructure needs.
The legislative auditor recommends lawmakers consider linking increases in the fuel tax to changes in inflation, population or fuel efficiency. Its report also suggests Louisiana pursue alternatives to provide “diversified, dedicated, predictable, and sustainable revenue” for road and bridge construction.
As examples, it cites approval from Texas voters in 2014 to put oil and gas production revenues into its highway construction fund. The following year, Texas dedicated a portion of its state sales tax, vehicle sales tax and vehicle rental tax to infrastructure.
In 2008, Florida put a portion of its document tax toward transportation projects. Georgia placed a fee, ranging from $50 to $100, on trucks based on their weight to raise more money for roadwork, and it added a $5 nightly fee to hotel and short-term rental stays.
In Colorado, fees were approved last year for ride-share services such as Uber and Lyft as well as app-based delivery services.
SUPPORT NEWS YOU TRUST.
Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.