Cars are getting more fuel efficient. That’s good news for reducing carbon emissions, but bad news for raising money for Wichita’s roads.
Takeaways:
- State motor fuel tax revenue has dropped by 27% in Kansas since 2002 because of increasing fuel efficiency of cars, giving the state less money for street repairs.
- States are experimenting with different ways of collecting taxes from fuel-efficient cars and electric vehicles, such as road-usage charges and extra registration fees.
- Wichita is gaining more lane miles of roads and highways, funded by the federal government. That makes it more expensive for the state and local governments to repair roads and potholes.
The signs of springtime are among us: The smell of new flowers, the sight of children playing at the park and the sound of metal scraping against asphalt as cars kerplunk into potholes.
It’s a perpetual complaint in Wichita, particularly this time of year, as we emerge from street-destroying winter weather.
But for all of the racket these potholes cause every spring — and all the money that City Hall dumps into road work every year — Wichita’s streets may only become more of a problem in the future.
The increasing fuel efficiency of cars, while great news for our carbon emissions, cuts into gas tax revenue and makes it harder to pay for road work.
Kansas can’t shake its pothole problem. And now fuel-efficient cars — and the slow, steady invasion of electric vehicles — makes the problem more daunting.
Stagnating gas tax revenue
Money for road work comes from a variety of sources, but a significant chunk comes from gas taxes. For every gallon of gas they buy, Kansans pay 24 cents to the Kansas Department of Transportation and 18.3 cents to the federal government.
The Kansas gas tax, plus user fees, makes up roughly one third of the State Highway Fund’s revenue. The fund is what pays for most of KDOT’s budget.
From there, a small portion of the money goes to local governments like Wichita or Johnson County, and most of the rest pays for interstates, state highways and bridges.
In 2022, Wichita got about $15 million from gas taxes — the same amount the city received 15 years ago.
Statewide, gas tax revenue has held steady for about two decades, hovering around $450 million every year in Kansas.
But the problem is that, when adjusting for inflation, revenue went down by 27% between 2002 and 2022.
A handful of factors drive the trend.
For one, the gas tax is a fixed rate per gallon (as opposed to a percentage of sales). That stays the same whether you’re paying $2 a gallon at the pump or $5. The Kansas gas tax has not changed since 2003.
Think about if you needed to pay today’s rent or grocery prices with a salary that hadn’t increased since 2003.
Meanwhile, Kansas roads saw a steady increase in traffic — and more wear and tear on the pavement.
The problem with greener vehicles
At the same time as gas tax rates have stagnated, automotive engineers have squeezed more and more miles out of a gallon of gas. In 2002, the average car got about 30 miles per gallon, compared to roughly 40 miles per gallon in 2019.
That’s tempered demand for gasoline despite rising numbers of drivers on the road, said Rick Mattoon, vice president and regional executive of the Chicago Federal Reserve’s Detroit branch.
Meanwhile, the rise of electric vehicles that don’t require their drivers to pay taxes has put transportation and public works departments funding street repairs and road work on shrinking budgets.
Mattoon, along with policy advisor Kristin Dziczek and research assistant Emma LaGuardia, studied the effect of greener cars on street repair funding. They found that by 2030, the average driver will only pay 1.4 cents per mile in gas taxes. In 1994, they paid 3.2 cents per mile.
Several states, including Missouri, have raised their gas taxes in recent years to compensate for the decline. Others have indexed their rates to inflation or to the cost of construction materials. But that doesn’t quite solve the problem.
“This is a way to just catch up,” Mattoon said. “I don’t think many states have actually tried to calibrate it to what an optimal budget would be.”
Kansas legislators have tried to increase the state gas tax rate in recent years, but they were unsuccessful.
Federal, state and local governments have pushed to replace internal combustion engines with electric motors that don’t result in as much greenhouse gas production. That will mean that fewer drivers buy gas. But EVs wear down streets at least as quickly.
Different states are experimenting with ways to get back lost gas tax money in other ways.
Most states also charge fees on electric vehicles and fuel-efficient cars that can compensate the state for the lost motor fuel tax revenue. But charge too much, and the state discourages taxpayers from replacing their gas engines with hybrids and EVs.
“There’s not a really good way to equalize this,” Dziczek said, “if one set of vehicles is being taxed on their fuel, while the other set is just being taxed for existence.”
Some states, like Oregon, have created a “road-usage charge” for fuel efficient cars and EVs, where the state charges drivers a tax rate per mile. If you drive less, you pay less.
Kansas is experimenting with that kind of program, although the KDOT won’t be able to actually collect any money until the program is approved by the Legislature.
The system has the benefit of charging drivers according to how much they’re wearing down the roads. But Dziczek said that, like the gas tax, it places a higher burden on rural drivers, who might have no choice but to drive 40 miles to the nearest grocery store.
More and more expensive road work
Finding new ways to address drops in revenue won’t fix the other half of the problem: streets and highways are demanding more and more money every year.
That’s partly temporary, Mattoon said. State transportation departments deal with a maintenance backlog.
“There was a long period of time in which there wasn’t enough revenue to do proper maintenance on highways,” he said. “So some of that is catch-up in terms of recognizing that road conditions have deteriorated in a lot of places.”
On a local level, federal transportation spending is causing local and state expenses to increase.
Much of the federal transportation money — using the federal gas tax revenue — goes toward creating new lane miles of highways, but it doesn’t pay for upkeep.
That leaves KDOT and local governments like Wichita repairing an increasing number of roads without support from the federal government.
In Wichita, federal grants are currently paying for construction on 17th Street North and 21st Street North around Interstate 135. Combined, these projects cost nearly $5 million.
This article was republished here with the permission of: The Beacon