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Special Examination 20-10

Motor Fuel Funds

Slowed Growth in Motor Fuel Funds did not Impact Current Transportation Projects

January 2021

 

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KEY RECOMMENDATIONS

This report is intended to answer questions posed by the House Appropriations Committee. It does not include findings with recommendations.

 

BACKGROUND

This special examination of Motor Fuel Funds was conducted at the request of the House Appropriations Committee.

Motor Fuel Taxes

The state imposes an excise tax on motor fuel in the state. The excise tax applies to gasoline, fuel oils (diesel), liquid petroleum gas, aviation, and special fuel. The current rate is $0.287 per gallon for gasoline and $0.322 per gallon for diesel.


Tax Administration

The Department of Revenue (DOR) is responsible for performing the functions necessary to administer motor fuel taxes, including licensing and collecting payments for motor fuel taxes. An average of $1.8 billion has been collected from motor fuel taxes annually since fiscal year 2016.


Use of Motor Fuel Funds

Motor fuel funds are primarily appropriated to the Georgia Department of Transportation (GDOT) and must be spent on the construction and maintenance of state roads and bridges. In fiscal year 2020, about $1.9 billion from motor fuel funds were appropriated to GDOT. Motor fuel funds accounted for half of GDOT’s total appropriations for fiscal year 2020 and 96% of all state funds. While each GDOT program except Intermodal receives motor fuel funds, Routine Maintenance, Capital Construction, and Local Maintenance and Improvement Grants received 76% of the amount appropriated to GDOT.

 

KEY FINDINGS

While motor fuel revenue and its related appropriations have increased annually over the past five fiscal years, the growth rate has slowed. The slowed growth in motor fuel revenue has not impacted current state transportation projects.


Motor fuel tax revenue growth resulting from the Georgia Transportation Funding Act of 2015 has slowed in recent years.

  • In the five years prior to the Georgia Transportation Funding Act of 2015, annual motor fuel tax revenue averaged approximately $1.0 billion, compared to $1.8 billion since the Act passed.

  • Motor fuel tax revenue increased annually from almost $1.7 billion in fiscal year 2016 to almost $2.0 billion in fiscal year 2020. About 96% of fiscal year 2020 motor fuel tax revenue was derived from the state excise, while interest accounted for about 4% of total revenue.

  • The growth rate of motor fuel tax revenue slowed from 6% in fiscal year 2017 to 2% in fiscal year 2020.

Motor Fuel Tax Revenue from FY 2011 to FY 2020


Gasoline and diesel consumption are key drivers of motor fuel tax revenue, which is also affected by the annual tax rate adjustment.

  • Factors affecting gasoline and diesel fuel consumption, which comprise nearly all monthly taxable gallons sold, explain changes in motor fuel tax revenue.

  • Strong relationships were found between fuel consumption and key factors, including the labor force, transit usage and vehicle miles traveled.

  • Between fiscal years 2017 and 2020, adjustments to the state excise tax rate resulted in approximately $228.3 million more revenue than if the state excise tax rate were not adjusted.

Slower growth in motor fuel tax revenue has not significantly impacted current state transportation projects.

  • The Georgia Transportation Funding Act of 2015 generated approximately $4 billion in additional revenue, which allowed GDOT to increase the number of funded transportation projects.

  • In order to maintain budgetary compliance, GDOT’s committed funds must be reported in the year in which they are spent. As a result, between 6% and 24% of GDOT’s annual appropriations has been reserved.