(The Center Square) – A new report shows that Delaware fully funds its roads with user fees, while Virginia, Maryland and Washington, D.C. rely more on other revenue sources, such as Virginia’s personal property tax.
Most states fund their roads through gas taxes, tolls and vehicle registration fees, known as user fees—charges directly from people using the roads. Gas taxes, for example, are collected per gallon of fuel purchased, and tolls and registration fees also contribute extra revenue.
Delaware stands out by funding 100% of its roads using only user fees. Meanwhile, Maryland covers 93.2%, ranking 10th, according to the Road Taxes and Funding by State report from the Tax Foundation.
Maryland has higher gas taxes than Virginia and generates additional revenue from toll roads, bridges and tunnels to maintain its roads, while Virginia and D.C. lag.
Virginia ranked 44th and funds only 44.7% of its road costs through user fees, while D.C. covers only 18.8%. Unlike Maryland and Virginia, D.C. has one of the lowest user fee-based funding in the country, largely due to the smaller road network and its heavy reliance on public transit.
When states don’t generate enough revenue from user fees, they turn to general tax revenue—such as sales and income taxes—to make up the difference, meaning that in Virginia and D.C., even people who don’t drive contribute to road funding.
Virginia has an additional layer when considering its personal property tax on vehicles, which varies by where you live across the commonwealth. The tax funds local budgets but does not directly pay for road maintenance like user fees do.
Despite efforts to diversify its transportation funding sources, Virginia continues to rely on general tax revenue more than states like Delaware.
Amy Friedenberger, communications manager for the Virginia Department of Transportation, outlined several legislative changes since 2013 that aim to diversify transportation revenue sources.
2013
Increased the Retail Sales and Use Tax statewide by 0.3% and dedicated the revenue to transportation.Raised Motor Vehicle Sales and Use Tax to the rate today of 4.15%Converted fuel tax from cents per gallon to a sales tax on the wholesale price (resulting in lower-than-expected revenue).Identified new revenue sources for regional authorities in Hampton Roads and Northern Virginia.
2020
Switched the fuel tax back to a per gallon rate, starting at 21 cents per gallon, with a planned increase of 5 cents per gallon for two years. Annually, the fuel tax rate is increased by the greater of CPI or zero.Implemented the Highway Use Fee that applies to fuel-efficient and electric vehicles to compensate for lost gas tax revenue.Reduced vehicle registration fees.Established regional authority for Central Virginia with funding sources similar to Hampton Roads.
Despite these changes, Virginia continues to rely on non-user revenue sources more than states like Delaware.
Adam Hoffer, director of excise tax policy at the Tax Foundation, said gas taxes and highway tolls are the biggest factors in how states fund their roads.
“Gas taxes and highway tolls are well-designed user fees that try to charge people for their road use; however, gas taxes and highway tolls are also some of the least popular taxes across the country,” Hoffer said in an email to The Center Square.
The differences in funding across Delaware, Maryland, Virginia and D.C. show each state’s approach to maintaining roads and infrastructure. While some rely more on user fees, others remain dependent on general tax revenue. This raises long-term questions about funding sustainability due to fuel efficiency and electric vehicle adoption reducing gas tax collections.
