Gasoline prices cost state tax revenue

Motorists cut back to save money, and that means less for road projects

By Adam Wilson | The Olympian • Published July 15, 2008

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Record fuel costs are forcing people to drive less, and that is cutting into tax collections that pay for road construction statewide.

Facts about the gasoline tax

• Traffic was down 1.4 percent in May and 2 percent in March compared with 2007.

• The gasoline tax is 37.5 cents per gallon.

• Income from the tax is expected to be down $95 million through next June.

• Lawmakers approved a 5 cent increase in 2003 and another 9.5 cent increase in 2005.

• Those increases were supposed to pay for 391 transportation improvement projects through 2012.

• Less money will be collected in this biennium than in 1998-99, despite the addition of 14.5 cents per gallon to the gasoline tax and increases in car tab fees, when adjusted for inflation.
Gasoline tax local projects

The basic, 23 cents per gallon gasoline tax pays for state highway projects and is shared with cities and counties to help pay for local road improvements. When the last 9.5 cents were added to the tax in 2005, however, it was tied to specific projects throughout the state.

In South Sound those projects included:

•$160 million to widen Interstate 5 from Mellen Street in Centralia to Grand Mound in south Thurston County.

•$33 million to buy land for a state Route 510 bypass of Yelm.

•$500,000 to study possible changes to the interchange between U.S. Highway 101 and Black Lake Boulevard in west Olympia.

The 5-cent gasoline tax increase approved in 2003 included:

•$84 million to widen I-5 from Grand Mound to Maytown south of Tumwater. That project began this year.

It's a cycle that might prompt state leaders to seek more money through tolls, shifting funds from health or environmental projects, or a new version of the tax on car values that voters rejected years ago.

"There are a lot of things going on in the world that affect our ability to put those projects out there. When we're getting a reduction in consumption, and this increase in prices, it's going to be a tough one for us," state budget director Victor Moore advised state Department of Transportation Secretary Paula Hammond recently.

Overall traffic was down 2 percent in March and 1.4 percent in May compared with 2007, according to vehicle counts from the DOT.

Less travel appears to be cutting into fuel tax collections. The state's biggest source of money to pay for road improvements is the 37.5 cent per gallon gasoline tax, and expectations for income have been cut by $95 million through next June.

"This is our stress. This is what's keeping me awake," Hammond said. "We are struggling now to deliver the projects we're supposed to deliver."

Lawmakers approved a 5 cent gasoline tax increase in 2003 and a 9.5 cent increase in 2005. Those increases were supposed to pay for 391 transportation improvement projects through 2012.

But construction costs increased by 60 percent in five years, as demand in India and China drove up prices for steel and concrete, and the cost of diesel fuel for construction equipment soared.

To avoid canceling any projects, lawmakers spent $3.8 billion in the past four years, said Rep. Judy Clibborn, D-Mercer Island.

Now, with people buying less gasoline, calling off some projects again is a possibility, said Clibborn, who also is chairwoman of the House Transportation Committee.

"I think we're done with the belt-tightening, and we've got to reprioritize our projects," Clibborn said.

The public approved the 2005 gasoline tax increase, voting down an attempt to stop it through initiative.

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