LANSING – Michigan’s gas tax revenues were down more than $120 Million to $820.6 million in fiscal year 2013-14 since their peak more than a decade before, a report by the Department of Treasury shows. During the same time frame, total gasoline usage is down more than 600,000 gallons annually.
What is now the state’s largest transportation-based revenue source, the registration tax, collected $940.6 million. While that figure is $120 million more than the fuel tax raised, it is also just slightly more than the amount the tax raised approximately a decade ago.
The report was issued before the Michigan Legislature last week approved a package that will ultimately increase both the fuel and registration taxes to add $600 million in revenues to road and transportation funding. The package also calls for some $600 million to come from the General Fund for transportation funding. The tax and spending changes in the package would not start until at least 2017.
The report did not have figures for the 2014-15 fiscal year.
But the report did point out that at the current 19 cents a gallon, Michigan’s gasoline tax puts the state at 37th compared to all states for their gasoline taxes. Connecticut has the highest gasoline tax at 46.8 cents. Alaska has the lowest gasoline tax at eight cents a gallon.
Michigan is also one of a number of states that charges a sales tax on gasoline sales. Combined with the gasoline tax, the report said the state would average 37 cents a gallon on gasoline, ranking it as the 10th highest state for total gasoline taxes.
The report also shows that Michigan is the largest state by population to not have any toll roads. In all, 29 states have toll roads.
And of the $3.5 billion in transportation funds raised in the 2013-14 fiscal year (which included bond sales), more than $1.3 billion came from federal funds.
Local governments received $1.4 billion, or 42 percent of the funds raised, in transfers.
In terms of the gas tax, the peak for funds raised came in the 2001-02 fiscal year, when the tax raised $938.9 million. In fact, since the gas tax was last increased in 1997, the report said gas tax revenues have declined by 0.6 percent a year on average.
Sharp increases in the cost of gasoline and oil, brought on by more expensive production and particularly economic competition from other nations – the biggest competitor being China – has helped drive down total fuel consumption.
Gas consumption hit its peak in 2003, with more than 5.049 billion gallons used in Michigan. At the time, the average price per gallon was $1.55, the report said. By 2014, total consumption was 4.43 billion, with an average price of $3.53 a gallon.
In late 2014, oil prices began to slide and for more than a year gasoline has sold for close to an average of $2.50 a gallon. The report had no data, however, on how that may have affected consumption in Michigan.
Reduced fuel consumption is also a product of improved fuel efficiency in cars and light trucks. In 2014, both domestic and imported models of cars averaged more than 36 miles a gallon. A decade ago, both domestic and imported models averaged less than 30 miles a gallon.
In terms of the registration tax, a major shift the state made in 1983 – to base vehicle registration fees on a vehicle’s value instead its weight – played a major role in how the state’s tax has grown in collections. That is particularly true given how vehicles have become lighter to improve mileage.
The report showed that the current registration tax for a Ford Focus SE is $106 and for a Cadillac CTS it is $211. If both vehicles were taxed on their weight, they would be charged $29 and $37 respectively.
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