Over the last 35 years, revenues from both the gas tax and the motor vehicle excise tax (MVET), the two major sources of state transportation revenues, have steadily increased (See chart #1). However, as cars have become more fuel efficient, revenues from the gas tax, which is a flat 23 cents/gallon, have increased more slowly. But people have been buying more vehicles and more expensive vehicles, so MVET revenues have increased at a faster rate. The MVET, which once produced half the revenue of the gas tax, now generates almost the same amount of revenue. This trend is expected to continue, with the MVET becoming the largest transportation tax.
Chart #1
Transportation revenues have kept up with inflation, population growth, and the growth of personal income, which is a good measure of the public's ability to pay taxes. See chart #2. Per capita expenditures on state highways, ferries, and local roads have been fairly constant over the last two decades, averaging about $450 annually when expressed in constant (1995) dollars. Expenditures relative to personal income have actually shown a steady increase over the same period. Public transportation obviously has been taking an increasing bite out of family budgets.
Chart #2
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