February 11, 2013 by Brian
The Denver Post recently advocated that Colorado increase its 22 cents per gallon fuel tax. But why tax drivers even more when much of what they are taxed does not support roads (or even mass-trensit) in Colorado? I’m talking about the 18.4 cents-per-gallon federal fuel tax. How about fighting to let Colorado keep federal fuel tax revenue, instead of sending it to D.C.? After all, as I show below, Colorado sends more than it receives.
The Federal Fuel Tax is 18.4 cents per gallon. The Federal Highway Administration publishes state-by-state data on tax receipts and apportionments for the Highway Trust Fund. Here’s data from 2010 for Colorado:
Colorado, paid into fund: $461,516,000 (not including general fund taxes*)
Colorado, apportionments & allocations from fund: $598,641,000
The data table says: “The $14,700,000,000 transfer from the General Fund to the Highway Trust Fund is not included in the data.”
From the above, you cannot tell how much Colorado gets back compared to how much it pays in to the Highway Trust Fund. We need to know how much of the $14.7 billion in general fund money came from Colorado. The most recent data I could find on this is from the Tax Foundation‘s report: Federal Taxes Paid vs. Federal Spending Received by State, 1981-2005. More recent data would be nice, but it’s what I found. (Please link more recent data in comments if you find it.)
The Excel spreadsheet in the link above includes a worksheet that breaks down the federal tax revenue by state. So it’s easy to compute what percentage Colorado contributed. In 2005, it was 1.69%. This percentage (1.69%) of $14.7 billion is $0.284 billion, or $248.4 million. Add this amount to the amount Colorado drivers paid into the Highway Trust fund ($461.5 million), and you get a total of $709.5 million.
Ah, but Colorado only gets back 598.6 million. That’s a shortfall of $110.9 million, or 84% of the tax dollars taken by the federal government. By comparison, Colorado governments collected $1.56 billion in “state and local fuel and vehicle taxes” in 2010. If Colorado could keep the $110.9 million it loses to the federal Highway Trust Fund, it would have 7% more revenue (100*110.9/1560).
This is one reason the Ronald Utt, when he was with the Heritage Foundation, published this memo: Federal Highway Program: How Opting Out Would Help States. In this proposal, Colorado would retain all the tax revenue – from both the federal fuel tax and the general fund – that would otherwise be placed in the Highway Trust Fund.