Six states increasing gas taxes on July 1

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Six states are scheduled to increase their gas taxes on July 1 to help pay for transportation projects, according to the Citizens for Tax Justice and the Institute on Taxation and Economic Policy (ITEP). 

The groups said Monday that drivers in Idaho, Georgia, Maryland, Rhode Island, Nebraska and Vermont will be charged more at the pump beginning on Wednesday as a result of laws taking effect at the start states' new fiscal year. 

A seventh state, California, is decreasing its gas tax by 6 cents, according to the group. 

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ITEP Research Director Carl Davis said Monday in a blog post that the states are increasing their gas taxes by a range of 0.35 cents to 7 cents per gallon in an effort to replace federal transportation funding that has largely dried up in recent years.  

"While some drivers may view this as an unwelcome development during the busy summer travel season, the reality is that most of these 'increases' are simply playing catch-up with inflation after years (or even decades) without an update to the gas tax rate," Davis wrote. 

"Moreover, these increases will fund infrastructure improvements that directly benefit drivers and other travelers — an especially important step at a time when Congress’ commitment to adequately funding infrastructure remains highly uncertain," he continued. 

The largest gas tax hike of the bunch is a 7-cent-per-gallon increase that is scheduled to take effect in Idaho, according to the tax watch groups. 

Drivers in Georgia will face the second-largest tax hike of the week, when their prices at the pump go up by 6.7 cents per gallon. 

Maryland is poised to implement a 1.8-cent-per-gallon increase, and Rhode Island is raising fuel levies by 1 cent per gallon, according to the report. 

Nebraska and Vermont have the smallest gas tax increases, scheduled at 0.5 cents and 0.35 cents per gallon, respectively. 

The pending increases are just in recent years, as states try to make up for a lack of federal infrastructure funding.

The additional money will be collected on top of an 18.4-cent-per-gallon federal gas tax charged to all drivers in the U.S. to fill the federal government’s transportation funding coffers. 

Lawmakers in Washington face a July 31 deadline to pass federal transportation funding before it expires, and they are struggling to come up with a way to pay for an extension. 

Transportation advocates in Washington have pointed to states' willingness to raise their gas taxes as evidence that a hike in the national gas tax hike would be politically palatable. 

Conservative groups in Washington have made clear they would consider an increase in the federal fuel levy a tax hike, however.

The federal gas tax has been the main source of transportation funding for decades, but it has not been increased since 1993, and more fuel-efficient cars have sapped its buying power.

While the tax hike has backing from business associations and unions, opposition from conservative groups, such as Heritage Action and the Club for Growth, led GOP leaders in the House to call it a nonstarter.

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax will only bring in $34 billion annually without an increase.  

The Department of Transportation has said the Highway Trust Fund will run out of money in late July or early August if Congress does not come to an agreement on an extension in the next couple of weeks.