Locals going to fill up their cars since July 1 may have noticed that their gas cost a bit more than normal – at least an extra 3 cents a gallon.

And with recent state legislation prices are only going to continue to get higher.

House Bill 1, which went into effect July 1, raised the state’s tax on all gasoline from 18 cents to 21 cents. Over the next two years, the tax will see two more 3-cent increases.

Revenue generated by the gas tax covers infrastructure improvements across the state. For the Mississippi Department of Transportation, the gas tax is the primary source of state-level funding, Executive Director Brad White told The Dispatch.

“We spend our state funds first on maintenance and construction projects,” White said.

In Fiscal Year 2024, the state gas tax generated $315 million for MDOT to go along with about $800 million from federal taxes, White said. With the gas tax increase, the agency is projected to receive an additional $50 million by July 1, 2026, another $105 million in the next year and another $158 million in its third year when the tax reaches its intended 9-cent increase, White said.

But with $450 million worth of additional repairs and maintenance on state highways identified by MDOT and Federal Highway Administration last year in a study, the extra revenue still may not be enough.

“This money that we’ll begin receiving will just allow us to go further toward getting highways in the shape that the Federal Highway Administration wants them to be in,” White said. “It’s still not going to allow us to get into the realm of the perfect, but I don’t know that it was reasonable to expect that type of a shift in revenue in a year. It’s a wonderful way to start.”

MDOT has largely been operating on a flat budget since the last tax increase in 1987 even though costs for projects have increased in that time, White said.

“Materials cost more, concrete, asphalt, equipment cost more,” White said. “Trying to have a dedicated staff with salaries costs more. So we were running a business off of a 1987 funding model, but with 2025 prices. So we were doing less work.”

White believes that the legislature should look into other additional forms of revenue for MDOT because of the importance of the roads to other governmental services like health care, policing and schooling, he said.

“This is a core function of government, and I think should be at the top of the list of those things that we find a way to fund in a way that provides for the taxpayer and doesn’t overburden them at the same time,” White said.

Paving the way for increased tax rates

The price of gas tends to fluctuate based on a number of different external factors but it did rise by the legislated 3 cents since the law went into effect, said Matt Bogue, president for Dutch Oil Company in Columbus and partner with Sprint Mart.

While consumers may not have noticed the increase on their receipts, Bogue’s concern is that consumers eventually will as rates continue to rise beyond the planned 9-cent increase over the next three years, he said.

“I have concerns for the consumer that over time, the tax on fuel could get out of hand in Mississippi,” he said.

HB 1 outlines additional increases starting in July 2029 based on the National Highway Construction Cost Index, which tracks price changes with highway construction costs over time.

The stipulation allows the state to increase the gas tax by no more than 1 cent every other year, the bill said.

Bogue has concerns as these additional increases continue to pile up, he said.

“My concern with that provision in the law is that, where Mississippi was the second lowest fuel excise tax in the nation just last month, we could be looking at a scenario, 30 to 40 years down the road, where Mississippi is all of a sudden one of the highest fuel excise taxes in the nation,” Bogue said.

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