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Staff brief outlines Utah’s transportation funding mix, pressures on gas‑tax revenue
Summary
Legislative staff told the Transportation Interim Committee that Utah funds roads through a mix of gas tax, vehicle registration fees and sales‑tax earmarks and said pressure on gas‑tax purchasing power is driving consideration of supplemental revenue options.
Legislative staff gave the Transportation Interim Committee a high‑level briefing on how Utah pays for roads and some alternatives the state has used or could consider.
Rachel Brooks, policy analyst with Legislative Research and General Counsel, said the state’s core dedicated funding streams for roads are the gas tax, vehicle registration fees and a set percentage of state sales tax directed to transportation accounts. Kurt Gosser and Riley Williams outlined the difference between constitutionally restricted vehicle‑related revenues (gas tax and most registration fees) and sales‑tax earmarks that can fund active transportation and transit projects.
The federal gas tax remains 18.4¢ per gallon. Staff explained the long‑term problem: vehicle fuel efficiency has risen while the federal gas tax has stayed flat, and construction costs have increased. That combination reduces purchasing power for road maintenance and construction.
Brooks reviewed registration fees and noted that only certain line items on a DMV renewal notice are constitutionally restricted for transportation; the age‑based, “property” component is a county charge and not transportation revenue. She also described a supplemental registration line added in recent years ($7.25, indexed), and that specialized plate fees can be earmarked (for example, the majority of a $25 “black plate” fee now flows to the Transportation Investment Fund per recent statute).
Riley Williams summarized key transportation funds: the state Transportation Fund (used for construction and maintenance), the county‑road B&C fund (UDOT distributes to local governments), the Transportation Investment Fund of 2005 (TIF) for prioritized highway projects, the Transit Transportation Investment Fund (TTF) for transit projects, and the Active Transportation Investment Fund (ATIF) for walking and bicycling projects. Several sales‑tax earmarks and plate fees flow into those accounts in different combinations.
Staff also reviewed alternative or supplemental revenue options used in other states or adopted in Utah. Examples included the commercial EV charging tax created in 2023 (a 12.5% tax on commercial charger transactions that took effect Jan. 1, 2024, and has generated roughly $1.5 million in revenue so far), a retail delivery fee used in Colorado (27¢ per delivery that raised about $75.9 million in its first year) and Minnesota (50¢ on certain deliveries), and transportation network company fees (flat fees or percentage fees on rideshare trips adopted in multiple states and the subject of varied local/state structures).
Committee members asked for comparative data on Utah’s gas tax versus other states; Brooks said staff would circulate a Western‑states comparison and could produce a 50‑state table. Members also asked for a concise policy summary explaining indexing, caps and the current statutory mechanics for the variable fuel‑tax adjustments.
Why it matters: Staff laid out the structural funding pressures—flat federal gas tax, more efficient vehicles and higher construction costs—that motivate the state’s reliance on a mix of dedicated vehicle fees and sales‑tax earmarks, and they previewed alternative revenue tools used elsewhere.
What’s next: Staff committed to providing comparative tables, an explanation of statutory indexing and a spreadsheet tying specific sales‑tax earmarks to funds for committee members.
