Viewpoint: US state fuel tax hikes surge in 2017

California will raise its excise taxes on gasoline and on-road diesel by 12¢/USG and 20¢/USG in November, capping off a year in which 11 states increased their fuel tax rates amid low retail fuel prices.

The November increase will be California's second this year, bringing its gasoline tax to 41.7¢/USG, the third-highest in the nation behind Pennsylvania (58.2¢/USG) and Washington (49.4¢/USG).

At 36¢/USG, California's on-road diesel tax will be the nation's fourth-highest behind Pennsylvania (74.7¢/USG), Connecticut (41.7¢/USG) and Washington (49.4¢/USG).

Lower retail gasoline prices and growing public concern over neglected roadways have made these increases possible.

California's upcoming increases were passed by the state legislature in early April through Senate Bill 1 (SB1), which aims to set aside $200mn annually from the higher fuel taxes to fund road maintenance and rehabilitation.

SB1 passed with a vote of 27-11 with two abstaining in the California Senate and a vote of 54-26 on the assembly floor, barely garnering the required two-thirds vote in both houses.

Road maintenance and rehabilitation programs were also cited as a reason for higher fuel taxes in Indiana, South Carolina and Tennessee.

Of the many states to lift their fuel tax rates, Indiana's was the steepest, climbing by 10¢/USG in July to 28¢/USG for gasoline and 26¢/USG for on-road diesel. The increases were tied to the state's highway improvement bill, House Bill 1002, which easily passed in the state Senate with a vote of 34-13 in April.

Both South Carolina and Tennessee raised taxes this year and have plans for incremental increases over the next three years.

South Carolina excise fuel taxes were raised by 2¢/USG this year, and the state plans to increase them by the same amount every year through 2022, eventually amounting to 28¢/USG for both gasoline and diesel.

South Carolina governor Henry McMaster (R) vetoed the fuel tax increase on 10 May, but legislators overrode the veto the next day. According to the SC Infrastructure and Economic Development Reform Act, the fuel tax will increase funding for state roads by $600mn annually.

Tennessee raised its excise fuel taxes by 4¢/USG in 2017. By 2020 the state plans to raise its gasoline and diesel taxes by another 6¢/USG and 10¢/USG, respectively, bring the state's gasoline tax to 30¢/USG and its diesel tax to 31¢/USG.

Excise fuel taxes were raised as part of Tennessee's IMPROVE Act, which aims to undertake 962 road and bridge projects across the state. The legislation passed by a 60-37 vote in the House and a 25-6 vote in the state Senate.

Five states lowered their excise fuel taxes in the first half of 2017, and none of the cuts were for more than half a cent. Florida cut its fuel tax by .10¢/USG while Hawaii, Illinois, New York and Nebraska decreased their fuel taxes by between 0.17¢/USG and 0.48¢/USG.