The Decline of Motor Fuel Tax Revenue in Illinois

Despite GDP Growth, Motor Fuel Tax Revenue Declines in Illinois

Despite modest economic growth, motor fuel tax revenue has fallen significantly in Illinois. The Illinois economy has grown by 31.2% since 2005, not adjusted for inflation. Meanwhile, an analysis of Illinois’ Comprehensive Annual Financial Reports finds that nominal motor fuel tax revenue collected has fallen by 9.4% since 2005.

Illinois Gas Tax Revenue 00-15

If 2000 is chosen as the starting point instead, then motor fuel tax revenue has declined by 3.8% while the state’s economy has expanded by 58.1%. In either case, the data is clear that fuel tax revenue has not kept pace with rising usage of Illinois’ highways, roads, and bridges.

A growing economy has led to increased usage on Illinois roads. Motorists are traveling more miles and businesses are transporting additional goods and services throughout the state. However, due to improvements in fuel efficiency, the average driver uses fewer gallons of gasoline or diesel than he or she did just 15 years ago – resulting in declining motor fuel tax revenue overall.

The motor fuel tax has also gotten relatively less expensive over time because it is not pegged to inflation. If the motor fuel tax had kept up with inflation, the 19-cents-per-gallon gasoline tax rate established in the early 1990s would be 31 cents per gallon in Illinois today. By not adjusting the motor fuel tax for inflation, Illinois has lost $10 billion in transportation funding.

Finally, Illinois lawmakers have not allocated transportation revenues wisely in the past. Since 2002, nearly $3 billion has been diverted away from Illinois’ Road Fund to pay for other items. Less than 75% of the revenue paid by Illinois’ drivers in motor fuel taxes, licenses, and vehicle registration fees was actually spent on direct transportation expenditures from 2002 to 2012; the remainder was diverted away to pay for other government services. Additionally, Illinois’ lawmakers swept another $250 million from the Road Fund to temporarily close the budget deficit in 2015.

Illinois politicians cannot be trusted to use transportation revenues to invest in roads, highways, bridges, and public transit systems. Motor fuel tax revenues are already falling short of where they need to be in order for Illinois to have a world-class transportation network. Still, politicians continue to create new potholes in the roads so they can plug unnecessary budget holes in other areas.

Fortunately, a constitutional amendment that would prevent politicians from raiding transportation funds to address other budget shortfalls will be voted on by the people of Illinois in November. The “Illinois Transportation Funds Amendment” would constitutionally protect (or lockbox) all revenue contributed through motor fuel taxes, tollways, licenses, and registration fees and ensure that the money is used solely for transportation purposes.

The proposed amendment passed the Illinois General Assembly with nearly unanimous bipartisan support, including a vote of 98-4 in the House and a 55-0 vote in the Senate. The proposed constitutional amendment also mirrors a similar ballot measure that passed north of the border in Wisconsin with 80% of that state’s citizens voting Yes in 2014.

Motor fuel tax revenue is declining significantly in Illinois while roads in the state are deteriorating. Illinois cannot afford to allow shortsighted politicians to continue to take money paid at the pump and use it on other items. The people of Illinois deserve better.

The Illinois Economic Policy Institute urges the public to vote YES on the Illinois lock box amendment.

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