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Less Driving, Less Gas Tax; Fewer Car Purchases, Less Excise Tax

Published 2020-04-24 by Cory Allen Heidelberger

In good news, coronavirus means we’re all driving less.

In bad news, coronavirus means we’re all driving less. Transportation Secretary Darin Bergquist predicts doom for motor-fuel tax revenue:

Traffic fell off in mid-March as COVID-19 began to pop up in South Dakota, he said. A comparison of traffic on state roadways during the first three weeks of April for this year and last year showed a 40 percent decline, he said, and less traffic means less from fuel taxes.

“We’re going to see some huge reductions in highway fund revenues,” he warned.

Bergquist said South Dakota’s state highway fund received on average about $15 million monthly from motor-fuel taxes. Applying the 40 percent reduction in traffic would mean about $6 million less per month for the fund [Bob Mercer, “Amid COVID-19, Millions of Dollars Aren’t Flowing into South Dakota’s State Highway Fund,” KELO-TV, 2020.04.23].

Also down: car purchases and the concomitant excise tax:

People aren’t buying many vehicles either during COVID-19, according to Bergquist.

“I expect that to be fairly significant too,” he said. South Dakota charges a 4 percent excise tax on vehicle purchases. The reduction could be $4 million per month for months to come, he said [Mercer, 2020.04.23].

Auto prices are down, but one industry forecaster says the unlikely best-case scenario sees car sales dip 23% this year; its more likely scenarios predict a drop of 26% to 34%.

Related Recession News: Womply, a small-business tech provider, says auto repair and maintenance shops report their weekly revenue is 41% of what it was last year.

Red-light camera companies are also making less money. Ha!

Published in South Dakota

9 Comments

  1. Nix

    I feel like the little kid in the back of the room frantically waving his arm
    so that I would be called on.

    Answer?

    All of the revenue shortfalls can be permanently solved.

    Legalize Cannabis.

    2020-04-24
  3. Moses6

    is the queen going to take the fed money and bail out the state.As if she does point is she can not balance a budget with out fed aid

    2020-04-24
  4. Jeff Barth

    People drive fifty miles to and from my meeting and ask, “How can I stop the pipeline?” and I say, “Stop driving.”
    Looks like we’re getting there!

    2020-04-24
  6. jerry

    Let the states go bankrupt!! Indeed, including Puerto Rico. Put the senate bill in Moscow Mitch, pass it and have the dotard sign it. There, that will take care of our problem here in South Dakota as well. Governor Cuomo is correct in his demand.

    2020-04-24
  7. Debbo

    SD is in the usual red welfare state fix requiring blue state $.

    2020-04-24
  8. Cory Allen Heidelberger

    Cool data, Nathan!

    I notice that Google’s data show South Dakota’s mobility around workplaces down 31% around April 11. Minnesota –36%, nationally – 38%, in DC –48%.

    2020-04-24

Comments are closed.