Several states projecting gas tax revenue decline, delaying projects

May 15, 2020

Stay at home orders mean fewer people are driving and refueling vehicles

Several state DOTs are anticipating a steep decline in gas tax revenue over the next several months as a result of reduced travel during the coronavirus (COVID-19) public health emergency

The lack of revenue, for many of these states, means some state DOTs will be delaying highway, road, and bridge construction projects.

According to The Spokesman-Review, the pandemic led to a pause on all but the most essential maintenance work for the Washington State DOT (WSDOT). As the state's "Stay Home, Stay Healthy" order was put into place, WSDOT has seen a decline in the number of vehicles traveling on highways and roadways. While less travel in the state has brought a reduction in traffic accidents and injuries, it has also decreased revenue from the state's gas tax. The department reportedly has not measured the full impact, but WSDOT officials have estimated the agency will lose $100 million in gas tax revenue per month—which officials say approaches 40% of WSDOT's total revenue.

In Maine, state DOT is preparing for a revenue drop of $125 million—or 24%—over the next 18 months for the state’s Highway Fund, which is derived largely from per-gallon fuel sales and motor vehicles fees, according to a report from the Portland Press-Herald. The report says that loss comes at a time when Maine’s $675 million annual highway budget is already roughly $232 million lower than it should be to meet the backlog of maintenance, repair, and replacement projects.

In Oregon, Gov. Kate Brown is asking agencies to plan for a 17% budget cut for the next fiscal year to make up for $3 billion in potential revenue losses due to COVID-19, according to KATU-TV. This week, Oregon was one of five states in the Western States Pact—which also includes Washington, California, Colorado, and Nevada—to jointly call on the federal government to supply $1 trillion in federal aid. 

The Pennsylvania DOT (PennDOT) is delaying new construction and downgrading resurfacing to patching and sealing, according to a report from Trib Live. PennDOT is saying the loss of revenue includes an estimated $800 million loss for construction and maintenance, a $100 million reduction in funds for multimodal projects, and a $90 million reduction in liquid fuels revenue for local governments. The state initially paused all road and bridge construction on March 17 when many states were implementing stay-at-home orders. PennDOT resumed construction projects on May 1.

Finally, Iowa has seen the peak drop for Iowa highway traffic during the week of April 9, at 44%. It has been slowly growing, but still was down 33% for the week of May 7, compared with the same week in 2019, according to a report from Iowa Capital Dispatch. The reduced travel and decline in gas tax revenue is causing the Iowa DOT to consider delaying road projects over the next five years. The department this week just unveiled a five-year draft transportation improvement program, which includes approximately $3.6 billion for highway right of way and construction. 

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