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Gasoline taxes are no longer enough to finance roads, but Amazon deliveries are • Stateline

Gasoline taxes are no longer enough to finance roads, but Amazon deliveries are • Stateline
Gasoline taxes are no longer enough to finance roads, but Amazon deliveries are • Stateline

For decades, states have raised much of the money for road and bridge maintenance through gasoline taxes. But as cars become more fuel-efficient and some Americans switch to electric vehicles, state leaders say the gasoline tax won’t be able to pay the bills much longer.

At the same time, the streets of many cities are filled with delivery trucks from Amazon and other companies as consumers increasingly choose to have their products delivered to their homes. In some states, lawmakers are thinking that charging for these deliveries could be part of their solution to road funding.

“If you’re going to cause wear and tear on our roads, you should also help maintain them,” said Cathy Kipp, a Colorado state representative who chairs the Energy and Environment Committee.

In July 2022, Colorado became the first state to impose a delivery fee on all vehicle deliveries to consumers within the state. The fee, currently set at 29 cents per delivery, is used to fund highways, bridges, tunnels, electric vehicle charging stations, and projects to reduce air pollution and electrify vehicle fleets and transportation systems, and has raised more than $160 million.

If you contribute to the wear and tear of our roads, you should also contribute to their maintenance.

– Cathy Kipp, Democratic Representative from Colorado

Colorado politicians had to simplify the law to make it easier for businesses to comply, but they say it’s largely been a success story. Minnesota has implemented its own retail delivery fee in 2023, and lawmakers in New York and Illinois have proposed similar measures. Meanwhile, lawmakers and transportation officials in several other states have commissioned studies to examine the concept.

Some retailers and Republican lawmakers argue that the fee hurts consumers and that many Colorado businesses initially had trouble complying with the law.

“The 27-cent delivery fee is not insignificant, its impact is not imperceptible, and it greatly affects our citizens – especially those who are already struggling to pay their bills and provide for their families,” Republican Rep. Rose Pugliese, the House minority leader, wrote in an op-ed in the Colorado Springs Gazette several months after the law passed.

But supporters of the fee say they are seeing growing interest across the country, especially as more delivery trucks are on the road in many neighborhoods.

Making transport financing future-proof

Colorado state law limits lawmakers’ ability to raise taxes. With gasoline tax revenues dwindling, lawmakers had no obvious solution to fund the roads. They eventually settled on the retail delivery fee, which is not considered a tax.

Initially, the program was challenging for many companies because they had to list the fee separately on each receipt.

“For our medium and small companies, it was a really complicated and very stressful thing to have to re-program their software with a whole additional position,” Kipp said.

Last year, Kipp joined a bipartisan group of lawmakers seeking to change the program. They removed the requirement that businesses itemize the fee on each receipt and allowed businesses to cover the fee themselves rather than itemizing it on each order. They also exempted retailers with sales of less than $500,000 from the rule.

Since the solution was implemented, Kipp said she has not heard any complaints about the program. Chris Howes, president of the Colorado Retail Council, said he also has not heard any complaints recently.

“We have now sorted it out,” he said. “People have accepted it and moved on.”

As electric vehicles shrink gasoline tax revenues, more states may tax mileage

Amazon did not respond to a Stateline interview request, and the National Retail Federation referred questions to state associations. Chamber of Progress, a technology industry advocacy group, did not schedule an interview by press time.

Last year, Minnesota lawmakers passed their own retail delivery fee, a 50-cent charge on purchases over $100. Lawmakers heard from local governments that they were struggling to maintain their roads and desperately needed federal aid to fill the gap.

“This is an attempt to future-proof our transportation funding,” said Democratic Rep. Erin Koegel, who introduced the bill. “We keep getting performance grades from civil engineers saying our infrastructure is a C- or D. We need to think about how we can bring more revenue into the system.”

Koegel said the measure was a compromise. Her original draft, which did not include a $100 limit on purchases, was intended to have a deterrent effect, similar to the cigarette tax. She said delivery trucks would increase congestion in many cities and damage roads that are not built for large vehicles. But lawmakers ultimately decided to limit the fee to more expensive purchases to protect lower-income consumers.

The Minnesota fee is expected to raise $59 million in its first fiscal year. The funds will be distributed to cities, counties and municipalities to meet their road funding needs.

Traffic all day

Cities and counties in Washington state have also asked for help, and some local politicians have asked state lawmakers to consider a retail delivery fee — or authorize cities to impose such a fee. State lawmakers commissioned an analysis, released last month, examining the potential of such a program. The report concluded that a fee could generate between $45 million and $112 million in revenue in 2026, depending on which businesses and orders are covered.

“We’re now seeing that our system is heavily used throughout the day, and the growth of these delivery services is part of that,” said Democratic Senator Marko Liias, chairman of the Transportation Committee. “We’ve always had user-based fees in transportation. This seems like a mechanism that could help in that regard.”

The humor on the highway goes over the heads of some drivers

Liias stressed that fees in some form are likely to be a major topic of discussion in the next legislative session. He said he has already heard compelling arguments from both sides.

In some areas, the increase in retail shipments is putting a major strain on the infrastructure surrounding shipping facilities. Illinois’ CenterPoint Intermodal Center, the nation’s largest inland port, connects interstate truck traffic, rail lines and barges on the Mississippi River.

“There really needs to be a change in the tax structure because a lot of these facilities are not generating the local sales tax that you would pay at a brick-and-mortar store,” said Democratic Sen. Rachel Ventura, in whose district the CenterPoint facility is located. “We have a lot of traffic, and the pollution, the road repairs and the tax burden are all local.”

Ventura has drafted a bill that would allow municipalities to charge fees at intermodal facilities — places where products are transferred from one mode of transportation to another. Local governments that choose to do so could spend the funds on roads within five miles of the facilities. The fee, which is based on the weight of each shipment, is estimated to generate $33 million to $68 million a year.

The bill has not yet passed committee, and Ventura said lawmakers are still debating how to proceed despite opposition from the transportation industry.

In New York, a Democratic bill has been introduced to impose a 25-cent fee on deliveries within New York City, but it is still in committee. Meanwhile, state agencies in Nevada and Ohio have commissioned studies examining the feasibility of retail delivery fees. Those reports have so far not led to legislative action.

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