Sustainable Road Funding in Ohio
Sustainable Road Funding in Ohio
Ohio’s transportation system provides essential connections for Ohioans as they travel to the people, places, and businesses that matter most. Funding this system is no easy feat. With nearly 50,000 lane miles and more than 27,000 bridges, there is a vast network to maintain.
Today, Ohio uses the motor fuel tax and vehicle registration fees to provide the bulk of funding for local, regional, and statewide transportation projects. However, the state’s largest source of funding – the state motor fuel tax – is forecast to generate less revenue as vehicles become more fuel efficient, and more electric vehicles are purchased – even as they continue to drive the same number of miles.
In 2019, Ohio raised the state motor fuel tax and imposed additional annual registration fees for electric and hybrid vehicles. These actions stabilized revenue and provided a mechanism to supplant motor fuel tax revenue lost to electric vehicle purchases. Over the long term, however, improved fuel efficiency will erode Ohio transportation program revenue.
To better understand how to meet this long-term challenge, the Ohio Department of Transportation (ODOT) applied for and received a federal grant to study potential funding alternatives to the motor fuel tax. Funded by the U.S. Department of Transportation’s Surface Transportation System Funding Alternatives program, the grant provided funding to help states explore more sustainable alternative transportation revenue mechanisms. The process and results of the study, called the Ohio Revenue Alternatives Study, are the focus of a report issued in early November.
The Ohio Revenue Alternatives Study resulted in the following key findings:
- The Revenue Alternative Study forecasts a decline in state motor fuel tax revenue due to electric vehicle adoption and improved fuel efficiency for cars and trucks.
- By 2040, the state MFT will generate $877 million less than it otherwise would, due to EVs and fuel efficiency measures.
- While the forecasted revenue decline is concerning, viable alternatives exist to counter future shortfalls.
- By 2040, Ohio’s electric and hybrid vehicle registration fees are forecast to generate just over $1 billion, which will address any shortfall in motor fuel tax revenue.
Read the full report below.