Washington State lawmakers are continuing to debate raising the state’s gasoline tax by 10 cents per gallon, as they have for much of this year, but with perhaps a renewed sense of urgency following the collapse of the Skagit River Bridge. But while a 10 cent increase would provide a needed boost in transportation revenues today, such an increase would do little to reform the state’s broken gas tax structure for the long-term.
Washington is like a majority of states in levying its gas tax as a flat number of cents per gallon—37.5 cents, to be specific. But flat-rate gas taxes inevitably fall short when construction costs rise and gas tax rates don’t. Because of this, states like Maryland and Virginia both redesigned their gas taxes this year to rise alongside gas prices, and Massachusetts and the District of Columbia are contemplating similar reforms. Washington State would be wise to follow their lead.
According to a new analysis (see chart below) by the Institute on Taxation and Economic Policy (ITEP), Washington State’s gas tax rate (adjusted for inflation) would remain low relative to prior years even if it were increased by 10 cents per gallon. More importantly, by retaining the state’s simplistic flat-rate gas tax structure, such a reform would leave the state unprepared to deal with increases in the cost of infrastructure construction in the future.
By 2023, we project that the state’s inflation-adjusted gas tax rate will slip back down to the same, inadequate level it is today. This unsatisfactory outcome could be avoided by tying the tax rate to rise with either inflation or gas prices after the 10 cent increase is implemented.