States Siphon Gas Tax for Other Uses: Makes Them More Reliant on Federal Assistance

Wall Street Journal ^ | July 16, 2014 | DAMIAN PALETTA

[reaganaut1]

States are allotting a growing share of the funds they raise from gas taxes to debt service and spending unrelated to roads and bridges, making them more reliant on federal assistance to pay for new infrastructure.

The shrinking pot of state cash is one reason why governors increasingly are in a panic over a congressional impasse about replenishing the federal Highway Trust Fund. The federal fund, too, is running out of money and will cut disbursements to states in August if Congress doesn't intervene.

Texas spends 25% of its fuel-tax revenue on education programs. Kansas has allocated some of its gas-tax revenue to pay for Medicaid and schools. Nationwide, making interest payments on debt used to fund existing infrastructure projects is one of the biggest state expenditures.

Allen Biehler, who ran Pennsylvania's transportation department for eight years before joining Carnegie Mellon University in 2011, said many states pursued bond financing to accelerate projects only to get caught short when the payments came due.

Debt payments "produce a real albatross around the neck of the states," forcing many to seek federal assistance, he said.

New Jersey is projected to collect $541 million in state gas-tax revenue this year, of which $516 million has been set aside to pay for about $1 billion in debt interest. New York last year collected about $2 billion in fuel, auto-rental and related taxes and fees. Those dollars went into a fund that paid $1.4 billion on debt interest payments, up from $870 million in 2008.

Washington state estimates it will spend 70% of the fuel-tax revenue it brings in during the next decade on paying off debt for past projects.

Compounding the problem, gas-tax revenue has come in below targets in many states

[reaganaut1]

The governors want the revenue from an increased federal gas tax. They don't want to pay the political price of raising gas taxes at the state level.

[Buckeye McFrog]

They don't want to pay the political price of raising gas taxes at the state level.

Unless your name is Tom Corbett.

[logi_cal869]

Paywall...

[q_an_a]

texas does this too. AND shame on Perry Dewhurst etc. for not trying to fix this - especially with all the extra oil revenue. Changing the portion of gas tax money devoted just to roads would have been easy.