Ohio Governor Proposes Big Gas Tax Hike

Published April 10, 2019

Ohio Governor Mike DeWine is proposing an 18-cent increase in the state’s tax on gasoline and other motor fuels.

Ohio’s gas tax would rise from 28 cents per gallon to 46 cents, in DeWine’s proposed $7.4 billion, two-year transportation budget presented to lawmakers on February 21.

The increase would take effect on July 1 of this year and would be adjusted annually to account for inflation. It would raise an additional $1.2 billion a year to fund road and bridge repair and construction, according to DeWine’s budget.

The Ohio House of Representatives, controlled by Republicans, passed a bill raising the tax on gasoline by 10.7 cents over two years and on diesel fuel by 18 cents over three years, on March 8, and sent the bill for consideration by the state Senate.

‘Reforms First’

Before raising the gas tax, the Ohio Department of Transportation (DOT), should make sure its operations are efficient, as should any state DOT, says Baruch Feigenbaum, assistant director of transportation policy at the Reason Foundation.

“I recommend states take the following five steps,” said Feigenbaum. “Making sure that they prioritize state of good repair over new construction; use a metric-driven decision-making process; examine staffing; work with the private sector; and eliminate diversions.

“After the Ohio DOT has undertaken these five steps, they may still need additional revenue, but they need to implement these reforms first,” Feigenbaum said.

Hiring specialists could create a more efficient and lower-cost DOT team, says Feigenbaum.

“Twenty-first-century DOTs need some high-level officials with technical expertise that are looking out for the interests of taxpayers, but fewer lower-level engineering techs,” said Feigenbaum. “I haven’t analyzed Ohio DOT’s workforce, so I cannot speak to their actual needs, but there may be an opportunity to reduce staff,” Feigenbaum said.

Tax ‘Can’t Be Diverted’

Ohio doesn’t use gas tax money on unrelated spending, says Greg Lawson, a research fellow at The Buckeye Institute.

“In Ohio, I’ll point out, we actually have a state constitutional provision that protects the revenues raised from the gas tax to be spent only on things related to roads,” said Lawson. “It can’t be diverted to public transit. It can’t be diverted into bike paths and other kind of stuff. It has to be used on roads.”

Using the revenue for other spending is not the way to go, says Lawson.

“One thing I’d be very skittish on would be if you’re hiking the gas tax and then a chunk of that increase is being diverted to other types of projects,” said Lawson. “It shouldn’t be done that way.”

Calls for Offsets

The gas tax hike should be offset by reductions in other taxes, says Lawson.

“The first thing to say is we want to make sure that Ohioans are not paying more taxes tomorrow than they are today,” said Lawson. “So, if they’re going to raise the gas tax, if that’s the decision that’s made, there need to be offsets,” Lawson said. “Ohioans should not pay more.”

The infrastructure needs of the state are a priority, says Lawson.

“We do think that when [the government] spends money, it should spend money on roads and highways,” said Lawson. “That’s definitely one of the things it should spend money on.”

“In Ohio we have the fourth-largest number of highways of any state in the country,” Lawson said. “That means we do think the infrastructure and roads and highways [are important] and certainly want them,” said Lawson.

Fairness and Technological Change

Technology is increasing the energy efficiency of cars, and as a result, states must find other ways to fund highways and roads, says Lawson.

“The fuel standards are getting better, hybrids are starting to become part of the vehicle fleet, and electric vehicles are becoming part of the overall fleet that we have,” said Lawson. “That now is creating a wedge between how much you drive and how much gas you might be buying, and that is a problem that has to be addressed in the long run.”

The solution has to be fair to all drivers, says Lawson.

“If you start to just raise the gas tax over and over again, you’re going to start hitting people who are typically less affluent,” Lawson said. “They might not be the ones buying the big Teslas and stuff. So, we are going to have to think about how we fairly pay for this as technology continues to change the game.”

Hayley Sledge ([email protected]) writes from Dayton, Ohio.

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Ohio Governor Mike DeWine (R):