UPDATED: Out-of-State-Trucker Revenue and the Effect of Tolls

Yesterday, Kathryn Gregg reported in the Providence Journal that the Rhode Island Trucking Association expressed a willingness to shoulder more of the burden of the state’s infrastructure costs in order to avoid tolls:

“We have always stated we want to be part of the solution, but tolls are not the answer,” said Christopher Maxwell, president of the Rhode Island Trucking Association. “Our plan creates a revenue stream over the next four years totaling just over $220 million dollars which happens to be the exact number being floated in RhodeWorks to repair 453 bridges outside of the 6/10 connector.

Included on the list are increases in the state’s diesel tax, which is lower than in nearby Connecticut and New York, although higher than all but 10 other states across the country, according to the American Petroleum Institute, and the state’s truck registration fee, which the RI Trucking Association says is the lowest in New England.

This would seem to put the burden on in-state truckers, in keeping with Governor Gina Raimondo’s assertion that tolls are meant to shift the burden toward out-of-state trucks “who currently use our infrastructure but pay next to nothing to maintain it.”  Based on some research that Andrew Morse initiated (although he’s apparently been too busy to post on it), the governor’s assertion may not be true.

When it comes to taxes, Rhode Island is a party to the International Fuel Tax Agreement (IFTA), which requires commercial truckers to track their mileage in each state and pay a “fuel use tax” to those through which they travel.  Similarly, when it comes to registrations, Rhode Island is part of the International Registration Plan which requires truckers’ tracked mileage to be applied to each state’s registration fees, which are based on weight and are much higher than passenger car registration fees.  Andrew also found requirements for additional permits for overwide and/or overweight loads and additional fees for certain bridges.

To ascertain whether these revenue sources amount to “next to nothing,” I emailed the head of revenue analysis for the state, Paul Dion, who for years has responded very promptly and specifically to any emails I’ve sent him concerning state revenue.  This time, however, he told me that all questions related to Governor Raimondo’s RhodeWorks proposal must be directed to her communications team.  So, I emailed Marie Aberger, the governor’s press secretary, on Monday and have not heard back.

One number that was readily available, however, was the motor carrier fuel use tax, which is a line item on the state’s monthly revenue reports.  Revenue from this source is on the decrease, which comes to an interesting point on the subject of tolls:

  • FY 2011: $1,054,939
  • FY 2012: $732,672
  • FY 2013: $438,255
  • FY 2014: $523,920
  • FY 2015: -$124,650

So far in FY 2016, the state is at -$103,185, which creates a quarter-million-dollar deficit versus the projected +$146,526.  The year-end cash collections report for FY 2015 explains the negative number [see important update below]:

Motor carriers that operate in more than one jurisdiction report fuel usage according to the International Fuel Tax Agreement (IFTA). In FY 2015, gallons of fuel purchased in Rhode Island have exceeded gallons of fuel consumed in the state, translating into negative receipts year-to-date.

There are probably technical subtleties to these numbers known only to subject-matter experts (like the one in state government who isn’t allowed to answer questions on this subject), but it appears to be the case that Rhode Island’s tax structure and economy are creating a detrimental cycle for state revenue.  A stagnant economy and horrid business environment are giving truckers little reason to come to and drive around Rhode Island, but relatively low fuel taxes and registration fees may be giving truckers incentive to drive through Rhode Island and buy gas here.

At least when it comes to fuel, therefore, truckers are wearing down our infrastructure so we have the privilege of collecting taxes on behalf of states in which they actually do their driving and make their pickups and deliveries.

The effect of a new set of tolls, meant to extract more money from out-of-state truckers, isn’t difficult to predict.  The massively increased cost of moving through the state, without a corresponding increase in the reasons for doing business here, will give truckers reason to avoid the state.  Not only will the tolls therefore come in below projections, but the state will lose a corresponding amount of registration payments.

The silver lining is that Rhode Island won’t be collecting as much fuel tax on behalf of other states, but that’ll only be the case because our gas stations will be selling less fuel.

UPDATE (10/29/15 4:21 p.m.):

Apparently, during fiscal year 2015, the Division of Taxation refunded all balances that truckers had accumulated over time (perhaps simply leaving them on the books to cover future tax liabilities), as part of a change in how the motor carrier fuel use tax is processed.  A source tells The Current that this accounted for an approximate $750,000 drop in revenue, so the negative would actually have been an increase from the prior year but for this change.  This would explain why the the General Assembly’s “enacted” estimate of $500,000 before the year turned into a -$200,000 “enacted” amount by the final revenue report for the year.

The monthly reports, however, don’t make the effects of this change visible.  An unexpected outward flow of revenue of $282,404 in March 2015, for example, was more than counterbalanced by an unexpected inward flow of $337,488 in May.  And in any event, another change in process would be required to explain the outward flow during the first quarter of this fiscal year.

Be that as it may, this change could conceivably challenge the interpretation that truckers are making a point of driving through Rhode Island and stopping for gas.  The consequence of that challenge, however — if the state’s take of the fuel tax is positive and on the upswing — is that the state has even more to lose if truckers plan their routes around the state due to tolls.

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