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How Much Gas Tax Money States Do Divert Away From Roads?

fleetnewsdaily | July 9, 2020

Most common diversions are states shifting money to pay for mass transit, pedestrian and bicycle projects, the policy brief shows

A new Reason Foundation report finds 25 of the 50 states divert gas taxes away from the roads and highways they’re designed to fund. New York, Rhode Island, New Jersey, Michigan, and Maryland all divert over 30 percent of their state gas tax revenues away from roads. In terms of total dollars, Texas diverts the most money —$900 million— away from roads, the Reason Foundation study shows. The 10 states diverting the largest percentage of their state gas tax money to non-road projects are:

1. New York diverts 37.5% ($600 million) of its gas tax revenue
2. Rhode Island diverts 37.1% ($58 million)
3. New Jersey 33.9% ($360 million)
3. Michigan 33.9% ($770 million)
5. Maryland 32.5% ($365 million)
6. Connecticut 27% ($218 million)
7. Texas 24% ($900 million)
8. Massachusetts 23.9% ($203 million)
9. Florida diverts 13.6% ($386 million)
10. Vermont diverts 13.2% ($14 million)

The largest and most common diversions are states shifting money to pay for mass transit, pedestrian and bicycle projects, the policy brief shows. Overall, 20 states divert gas tax money for those purposes, including New York and New Jersey, which use over one-third of their gas tax revenues to fund their transit systems.

Ten states transfer a portion of their gas tax revenues to law enforcement and safety services, marking the second most common diversion. And two states shift nearly a quarter of their gas tax revenues to education programs — Michigan (25.9% of its gas tax revenue) and Texas (24.7% of its gas tax revenue).

The policy brief catalogs the state gas tax diversions of the 25 states that employ that practice and outlines potential policies that will strengthen the users-pay/users-benefit model of transportation funding. The full report itemizes all diversions of state-level gas taxes and provides explanations for each state’s diversion rate.