States weigh motor-fuel indexing, EV fees and road‑usage charges to shore up transportation funds

Carolyn Simmons, identified in the hearing as a transportation funding researcher, outlined how states are adjusting taxes and fees to keep pace with rising fuel efficiency, higher construction costs and changing driving patterns.

Simmons told the Committee on Transportation that “the worst case scenario for us is that we do all of this research and then it just dies on our website,” and said she was presenting options other states are using to maintain transportation revenue. She said the biggest revenue challenge is increasing fuel efficiency across the passenger vehicle fleet: average real‑world fuel economy for cars rose from about 29 mpg in 2017 to roughly 35 mpg in 2023, reducing per‑vehicle gasoline tax receipts.

Why it matters: Kansas’s state motor‑fuel tax has remained a flat cents‑per‑gallon rate since February 2003, Simmons noted, and that flat amount buys less than it did in 2003. At the same time, highway construction costs have risen, putting pressure on maintenance and capital budgets.

Simmons summarized state responses now in use or under consideration: indexing motor‑fuel taxes to an external measure (common indices include the consumer price index, wholesale fuel price or highway construction cost indices); variable formulas that adjust automatically; electric‑vehicle (EV) registration fees or sliding scales by vehicle type; road‑usage charge (RUC) programs that tax miles driven; and a variety of other recurring sources such as transportation‑network‑company fees, retail delivery fees and sales tax dedicates.

She highlighted several examples. New Jersey adjusts its gas tax to meet the revenue requirements of a five‑year transportation plan and recalculates annually. Georgia includes a corporate average fuel economy factor in its formula. Three states index their gas tax to the National Highway Construction Cost Index. Simmons noted 39 states now impose an EV registration fee, with amounts ranging from about $50 on the low end to $290 on the high end in recent examples; several states are revisiting or indexing those fees.

Simmons described Virginia’s multi‑part approach in detail as an example lawmakers have used elsewhere: an indexed gas tax (to CPI), a voluntary road‑usage charge program and a highway‑use fee applied at registration to vehicles with combined fuel economy of about 25 mpg or better. Virginia uses a statewide average of 11,600 miles per year in calculating the highway‑use fee; Simmons said the fee is intended to capture some of the fuel‑tax revenue the state would otherwise lose as vehicles become more fuel efficient. She said Virginia’s fiscal‑year 2024 estimate for those combined measures was about $61.8 million in revenue, with projections above $70 million by fiscal 2030 as fleet efficiency increases.

Committee members asked about consumer incentives, equity and rural impacts. Representative Vaughn asked whether fees such as the highway‑use fee create a disincentive to buy fuel‑efficient vehicles; Simmons replied that the pump savings remain substantial and that the fee aims to recapture only a relatively small portion of the lost gas‑tax revenue. Representative Jenny Wilborn raised concerns about rural drivers and fixed‑income seniors; Simmons summarized research showing rural drivers often drive longer distances but urban drivers take more frequent trips, and said those patterns can balance out in RUC‑pilot findings. Several members raised the 11,600 statewide average mileage figure and its applicability in rural Kansas; Simmons confirmed Virginia used an in‑state average and said RUC programs can include caps or other protections.

Simmons also reviewed administrative and implementation issues: some charging‑station fees are straightforward on paper but hard to implement in practice, and RUCs require systems for collection and options for drivers. She recommended a multi‑pronged approach—short‑term changes to address current shortfalls, mid‑term bridging policies and long‑term programs to align revenue with projected vehicle and travel trends.

Ending: Simmons offered to provide follow‑up materials and data the Committee requested, including state‑specific fiscal comparisons and further detail on Virginia’s program design and enrollment metrics.