The U.S. Department of Transportation announced yesterday that travel on Wisconsin roads in April increased 2% over the same month last year, continuing a string of consecutive month-over-month VMT increases on the state system.
With the unemployment rate near record lows, worker incomes on the rise and low oil prices, travel demand is also increasing. Unfortunately, increased travel is not translating into higher fuel tax collections, due to more fuel-efficient vehicles.
Total state tax collections in Wisconsin increased 25% from 2006-15 with few increases in tax rates and, in fact, decreases in income tax rates. This is because a growing economy increases salaries and the price of goods and services, resulting in a growing revenue stream with no increase in tax rates.
State fuel tax revenues, on the other hand, grew only 4% from 2006-15 as the repeal of indexing and greater fuel efficiency restricted the growth of the state’s largest source of transportation revenue.