A variety of other taxes or fees can be used to enhance transportation revenue. Many may not generate sufficient money to cover emerging transportation needs or could be unpopular with constituents. All the options are listed, however, give an idea of the scope of taxes and fees levied in the states.
• Battery Tax-States could consider an excise tax on the sale of car batteries either as a flat fee or as a percentage of the sales price. A few states charge taxes or fees on battery sales; but in almost every example, the tax is imposed to help fund battery disposal, not transportation projects.
• Bicycle Fees-This option creates an excise tax on bicycle sales or bicycle registrations. Such a tax would likely meet resistance from environmental groups and bicycle advocacy organizations. Only a handful of states and some localities currently tax or impose fees on bicycle sales or registrations.
• Driver's License Fee Increases-All states charge fees to issue and renew driver's licenses. Fee amounts can differ according to the type or class of license issued, the age of the driver, and other variables. License renewal periods range from four years to 10 years, depending on the jurisdiction. One transportation funding option for states is to increase driver's license fees-application fees, issuance fees or renewal fees. States also may increase fees for particular drivers or require drivers to pay for driver's licenses more frequently by shortening renewal periods.
License fee increases have some potential for raising money. States collectively license nearly 200 million drivers. However, license fee increases usually are unpopular. New federal licensing rules contained in the REAL ID Act also could have significant fiscal implications for the states that will already require them to raise current rates.
• Drive-Through Service Fee-This option envisions a transaction fee on drive-up service at any retail establishment. The revenue potential of this approach is unknown and could be politically unpopular. It also is an imprecise user fee that simply targets people who like drive-through food, not necessarily people who use the transportation system.
• Electricity Generated by Vehicle Tax-This option envisions a charge on wattage generated by an electric or hybrid electric vehicle. The tax would recognize that motorists who use electric and hybrid vehicles benefit from roads but contribute less in gas taxes than other drivers. However, because the hybrid and electric vehicle fleet is still small, such a tax would generate limited revenue. It also is likely to be unpopular with environmental groups, and conflict with the public policy goal of cleaner air.
• Emissions Fees-This option envisions a fee on motorists for the amount of pollution their vehicles emit. Because it is a user fee and taxes motorists for pollution, the fee would be appealing. However, collection would likely be imprecise.
• New Vehicles Tax-Most states impose a sales tax option on new vehicles purchased in the state or taxing vehicles imported into the state. Although it taxes vehicles, it does not necessarily target those people who use their vehicles the most.
• Parking Fees-This option envisions placing fees on parking spaces. Parking fees typically are viewed as a behavior modification device rather than a fund raiser. More significantly it is an option for local government and is not used by state governments.
• Property Taxes, Vehicle Ownership Tax, or Use Fees-This option envisions state taxes or use fees on personal or real property dedicated to transportation purposes. At least 16 states impose some type of tax or use fees on motor vehicles in their state. Taxes rates usually are determined as a percentage of the assessed value or purchase price of the vehicle or are based on the age of the vehicle. In some examples, states levy taxes on certain types of vehicles such as motor homes.
Property taxes on motor vehicles can generate significant revenue for transportation. However, property taxes are not strict user fees because they tax only ownership rather than use of the transportation system. In several examples, property taxes on vehicles have proven to be politically unpopular. In 1999, Washington voters eliminated a statewide motor vehicle excise tax, causing severe reductions in the state transportation budget. In 2003, Arnold Schwarzenegger ran a successful recall campaign against California Governor Gray Davis in part by challenging the state tax on motor vehicles.
• Registration Fees-Registration fees are flat or variable fees a vehicle owner pays for the privilege of driving a particular vehicle within a state. State registration renewal periods vary from as little as six months to up to seven years for certain types of vehicles, and registration are fees usually differ depending on the vehicle type. States can increase revenue from registration renewals by increasing registration fees for all or some vehicles or by shortening the renewal period. Registration fee increases generally are not politically popular.
• Rental Car Tax-Thirty states levy taxes on motor vehicle rentals. States have taxed rental cars as a percentage of the total rental fee, as a flat amount levied per day of rental, or as a combination of percentage and flat rate. A few states assess car rental taxes in lieu of a sales tax on the rental transaction. Most states, however, combine rental taxes or fees with sales taxes. Rental car taxes are a user fee, however, they do not necessarily target the people who use the transportation system most.
• Road Utility Fees-This option, which is more likely to be employed by a local government, adds an access charge to a utility bill for property that provides access to the trunk highway system. Key to these fees is the basis upon which the fee is charged. Possibilities include motor vehicle trip generation estimates, the number of parking spaces, the number of employees, front footage or a flat fee. Road utility fees are mainly a local option for transportation revenue.
• Safety Violation Fee-All states fine drivers who are convicted of traffic safety offenses. One option to increase funding for transportation is to enhance fines for violations. Greater penalties target the drivers who are the greatest safety threat on the road. Larger fines for traffic safety violations also can be politically unpopular, but states as diverse as Hawaii and Texas have increased fines and generated significant new transportation income.
• Sales Tax on Transportation-Related Goods-Battery and tire fees are discussed elsewhere, but sales taxes or charges on transportation-related goods such as auto parts and auto repairs are a possible source of transportation funding.
• Special License Plate Fees-In addition to regular registration fees, states charge fees for special license plates, including personalized plates or organizational plates. States could enhance transportation funding by increasing fees for special plates.
• Studded Tire Fee-This option envisions charging purchasers of studded tires for each tire sold at retail in the state. The advantage of a studded tire fee is that it taxes users who potentially could cause more damage to roads. However, a studded tire fee would generate little revenue in states with mild winter weather, and may generate limited revenue in other states if few drivers use studded tires.
• System Development Charges or Impact Fees-These charges are paid by a developer for placing a new burden on a specific part of the road system that will require road improvements to accommodate the increased traffic flow related to the development or a combination of developments. Development charges usually are imposed by local governments, but can be imposed at the state level. They would likely produce only an incremental amount of transportation funding.
• Temporary Visitor Access Fee-This option envisions a fee charged to tourists for temporary access to the state's road system. A temporary visitor access fee seems appealing because it would not directly impose new funding requirements on state residents. Such a fee might not generate much income for transportation needs, however. More significantly, it could be an unconstitutional burden on interstate commerce.
• Tire Tax-Some states impose an excise tax on the sale of tires in the state. The tax can be a percentage of the sales price or a flat fee. Such a tax seems appealing because it directly correlates with highway and road use. The more often motorists use a road, the more frequent they will need to buy tires.
• Title Fees-Most states charge a transaction fee to process a certificate of title for motor vehicles. Fees range from as little as $2 to as high as $33 per transaction. States could increase titling fees to raise money for transportation projects.
• Transportation Impact Fee-These fees are imposed on new development to pay for the transportation improvements required to support the development. Impact fees are determined based on the number of vehicle trips each class of property generates. Impact fees usually are a local funding mechanism but also can be used for state transportation projects. Washington has considered a state-level impact fee for new roads that benefit new developments.
• Use Fuels Tax Increase-This option envisions charging a tax for the use of electricity, natural gas, hydrogen and similar fuels in a vehicle in a manner similar to the gas tax. The advantage of a use fuels tax increase is that it would reflect use of the highway system by motorists who pay little through gas taxes. However, such a tax would provide a disincentive to use alternative fuels that can provide environmental and economic benefits. As a consequence, they would likely be unpopular with environmental groups.
• Vehicle Impact Fee (Transportation Access Fee)-This option is a one-time charge placed on a vehicle when the vehicle is titled or registered in the state for the first time. A vehicle impact or transportation access fee is not a user fee because it is imposed only on vehicle ownership, not on actual vehicle use.
• Weight Mile Truck Tax-This option is a user fee that allows the state to charge trucks that exceed 26,000 pounds by their weight and distance traveled in the state. The advantage of a weight-mile truck tax is that it precisely targets heavy vehicles that are likely to cause more damage to roads than regular passenger vehicles. It also seems fair because it taxes vehicles according to miles traveled. Opponents have argued that weight-distance taxes unfairly burden the trucking industry and, ultimately, hurt consumers by raising the costs for shipping goods.