Funding Sources

Federal Motor Fuel Tax

The Federal-Aid Highway Act of 1956, signed into law by President Dwight Eisenhower on June 29, 1956, called for the construction of a 41,000 mile system of Interstate highways to be paid for by taxes on motorists, such as the federal motor fuel tax. The federal motor fuel tax was set in 1956 at three cents-per-gallon and is now 18.4 cents-per-gallon.
Revenue collected from the 18.4 cents-per-gallon federal motor fuel tax and the 24.4 cents-per-gallon federal diesel fuel tax are the primary source of funding for the federal Highway Trust Fund, which distributes funds to state and local governments for highway and bridge repairs as well as other surface transportation improvements, including public transit, walking and bicycling facilities.
A new federal highway reauthorization bill will provide West Virginia with an additional $60 million annually.

To match it, West Virginia must generate approximately $12 million in additional funds annually.

State Motor Fuel Tax

Gasoline and Special Fuel Excise Tax – Tax imposed upon every distributor, producer, retail dealer, importer or user, based on the quantities of all gasoline or special fuel sold or used in the State.

Despite the fact that the Gasoline Tax was increased several times between FY 1970 and FY 2003, the real value of the Gasoline Tax revenues has dropped overall from $222 million in FY 1970 to $217 in FY 2003, a loss of 2 percent.

Wholesale Motor Fuel Tax- Consumers Sales and Use Tax on the sale of gasoline and special fuel, imposed at the wholesale level on distributors and importers. The average wholesale price of gasoline and special fuel is determined annually based on sales data supplied by distributors and from other information.

The real value of Wholesale Tax revenues was relatively stable in the early part of the period, reaching a maximum of $90 million in FY 1988. Since its peak, however, the real value of this revenue stream has fallen by over 26 percent to $66 million in FY 2003.

The current state motor fuel tax is 32.2 cents-per-gallon. This includes a 20.5-cent fixed rate and 11.7-cent variable rate.

Privilege Tax

The privilege tax is a tax imposed upon the privilege of effecting the certification of title of a motor vehicle in the amount equal to five percent of the value of the vehicle at the time of such certification. The value of the vehicle is determined as either:

The actual purchase price or consideration of the purchaser, if the vehicle is new.
The present market value at the time of transfer or purchase, if the vehicle is used.

The tax was first enacted in 1935 (at two percent of vehicle value); increased to five percent in 1971.

Despite being nearly $10 million below its peak in FY 2002, the Privilege Tax, in contrast to the other revenue streams, has risen by more than 223 percent in real terms from $51 million in FY 1970 to $164.6 million in FY 2003.

Since this tax is based upon the retail sale of vehicles, the increase is tied more to the price increases in these vehicles over the period and less to increases in the number of vehicles purchased.

Motor Vehicle Registration Fees

Registration fees are based on a vehicle’s classification and are renewed annually or in some cases on a multi-year basis. Payment of the registration fee allows the owner to drive on the roads legally.

From a peak of $122.5 million in FY 1973, Registration Fees fell to $84.6 million in FY 2003, demonstrating a decline of 31 percent.

Drivers License and Permit Fees

Driver’s license and instruction (learner’s) permit fees are imposed as a means to verify that a person has successfully passed all appropriate parts of the driving examination and is qualified to operate a motor vehicle upon a public highway.

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