Arizona's Roads Are Running on Empty: How Will We Pay for the Infrastructure of Tomorrow?

Arizona is growing. New businesses are opening, industries are expanding, and families continue to make our state their home. That growth brings tremendous economic opportunity, but it also requires something fundamental: a transportation infrastructure system capable of keeping up.

Roads, highways, bridges, and other transportation infrastructure are essential to Arizona's economy. They allow employees to get to work, businesses to move goods, contractors to deliver materials, and families to get where they need to go.

But there is a growing problem with how Arizona pays for that infrastructure.

For decades, Arizona has relied heavily on gasoline taxes to help fund the construction, maintenance, and improvement of its transportation system. Yet the state's gasoline tax has not increased since 1991, even as the cost of building roads has climbed dramatically and vehicles have become increasingly fuel-efficient.

The result? Arizona is attempting to fund a modern transportation system with a revenue model established many decades ago.

And that model is becoming less effective every year.

Arizona's Gas Tax Hasn't Increased Since 1991

Arizona's state gasoline tax remains at just 18 cents per gallon, a rate that took effect in October 1990, at the beginning of fiscal year 1991.

That means the state has gone more than 35 years without increasing its gasoline tax.

Unlike a sales tax, which generates additional revenue when prices increase, Arizona's gasoline tax is a fixed amount per gallon. Whether gasoline costs $1.50 or $4.50 per gallon, the state still collects the same 18 cents.

Over time, that has created a significant funding challenge.

Inflation has increased the cost of construction materials, labor, equipment, and virtually everything else required to build and maintain transportation infrastructure.

Using the Consumer Price Index, the 18-cent gasoline tax established in 1990 would need to be approximately 46 cents per gallon today just to maintain its original purchasing power.

Put another way, inflation alone has eroded approximately 61% of the purchasing power of Arizona's gasoline tax.

The 18 cents collected today can purchase only about 39% of what that same amount could purchase when the tax was last increased.

And that's before accounting for another major challenge: vehicles are using less gasoline to travel the same distances.

More Miles, Less Gasoline, Less Revenue

Over the past several decades, vehicle manufacturers have made tremendous advances in fuel efficiency.

That's good news for consumers, who can travel farther while purchasing less gasoline. But it presents a challenge for a transportation funding system that relies on the number of gallons purchased rather than the number of miles driven.

According to the Federal Highway Administration, the average fuel economy across all motor vehicles increased from approximately 16.4 miles per gallon in 1990 to 19.2 miles per gallon in 2024.

That's roughly a 17% improvement in fuel efficiency.

Because gasoline taxes are collected by the gallon, this translates into approximately 15% less fuel-tax revenue generated per mile driven, assuming the same tax rate and comparable taxable fuel use.

Consider what that means.

In 1990, a vehicle averaging 16.4 miles per gallon would generate approximately $10.98 in gasoline tax revenue for every 1,000 miles driven.

At 19.2 miles per gallon, that same 1,000 miles generates approximately $9.38.

The vehicle travels the same distance and uses the same road infrastructure, but generates less revenue to help maintain it.

Electric vehicles present an additional challenge. Fully electric vehicles purchase no gasoline and therefore generate no gasoline tax revenue through their operation. Although Arizona collects vehicle registration fees and certain other transportation-related revenues, those mechanisms do not necessarily replace the fuel taxes that would otherwise be generated.

As more Arizonans purchase fuel-efficient, hybrid, and electric vehicles, this challenge will become increasingly important.

The Combined Impact: Roughly Two-Thirds Less Purchasing Power Per Mile

When inflation and fuel efficiency are considered together, the impact on transportation funding is substantial.

Using national inflation data and Federal Highway Administration fuel consumption figures, the purchasing power of gasoline tax revenue generated per mile driven has declined by approximately 67% since 1990.

That means Arizona's fixed gasoline tax generates roughly one-third of the inflation-adjusted revenue per mile that the same tax generated when its current rate was established.

This is an illustrative comparison based on national vehicle efficiency and inflation trends, not a measurement of Arizona's total transportation revenue. Population growth, total miles driven, fuel purchases, and other revenue sources also affect overall collections.

Nevertheless, the underlying challenge is clear.

Arizona's transportation infrastructure needs have not disappeared. Roads still require maintenance. Highways still need expansion. Bridges still need repair.

But the traditional funding mechanism is delivering significantly less purchasing power for each mile traveled.

Arizona Communities Are Finding Other Ways to Fund Transportation

To Arizona's credit, state and local leaders have worked to address transportation needs through other funding mechanisms.

The Arizona Legislature has periodically directed funding toward individual highway expansions, road improvements, and other infrastructure projects. These investments are valuable, but project-specific appropriations do not necessarily provide the predictable, long-term funding needed to plan and maintain a statewide transportation network.

Local and regional governments have also stepped forward.

In 2024, Maricopa County voters approved Proposition 479, continuing an existing half-cent sales tax dedicated to regional transportation infrastructure for another 20 years, through 2045. The funding supports highways, arterial roads, and public transportation improvements across the Phoenix metropolitan region.

Similarly, in March 2026, Pima County voters approved Propositions 418 and 419. Together, those measures authorized a new 20-year regional transportation plan and renewed an existing half-cent sales tax to fund approximately $2.67 billion in transportation improvements throughout southern Arizona.

These investments demonstrate that Arizona communities recognize the importance of maintaining and expanding transportation infrastructure.

But they also illustrate a larger point: Arizona increasingly relies on regional funding solutions and individual appropriations to supplement a statewide transportation funding system that has not kept pace with changing economic and technological realities.

Proposition 141: Should Arizona Eliminate a Potential Future Funding Tool?

Against this backdrop, Arizona voters will consider Proposition 141 in November 2026.

Proposition 141 would amend the Arizona Constitution to prohibit taxes or fees based on vehicle miles traveled, commonly referred to as VMT. The measure would also prohibit certain laws or rules that monitor or limit vehicle miles traveled without consent, subject to specified exceptions.

The proposal raises an important question about the future of transportation funding.

Should Arizona permanently prohibit one potential method of paying for transportation infrastructure before policymakers have even fully explored whether it could be useful?

To be clear, AZAGC is not aware of an active statewide proposal in Arizona to implement a vehicle-miles-traveled road usage fee.

But other states have begun examining mileage-based road usage charges as an alternative or supplement to traditional gasoline taxes.

The concept is relatively straightforward: rather than paying for transportation infrastructure based exclusively on how much gasoline a vehicle consumes, drivers could contribute based on how much they use the road system.

Such an approach could potentially address the growing disparity between traditional gasoline-powered vehicles, highly fuel-efficient vehicles, and electric vehicles.

Importantly, a mileage-based system would not necessarily require the government to track where a person drives.

A Road Usage Fee Doesn't Have to Mean Vehicle Tracking

One of the concerns frequently raised about vehicle-miles-traveled systems is privacy.

Understandably, Arizonans do not want the government monitoring where they travel, how often they drive, or which routes they take.

But mileage-based road usage programs do not inherently require that type of tracking.

Oregon, for example, operates a road usage charge program called OReGO that allows participating drivers to select mileage-reporting options with or without GPS technology. Oregon's Department of Transportation states that it does not receive participants' driving routes or location information.

Other potential approaches include periodic odometer readings or reporting the total number of miles driven during a registration period.

In other words, determining how many miles a vehicle travels does not necessarily require knowing where that vehicle has traveled.

Any future Arizona proposal would need to address privacy, administrative costs, fairness, treatment of out-of-state travel, and how mileage charges would interact with existing gasoline taxes.

Those are legitimate policy questions deserving careful public discussion.

But Proposition 141 would remove the option of adopting a mileage-based tax or fee through ordinary state legislation, regardless of how a future program might be designed.

Protecting Arizona's Ability to Grow

Arizona's transportation infrastructure is not simply a government expense. It is an investment in the state's economic future.

Businesses depend on reliable roads to transport products and materials. Construction companies depend on accessible highways to reach jobsites. Employees depend on efficient transportation to get to work. Families depend on safe roads to get to school, medical appointments, and everyday destinations.

As Arizona continues to grow, those demands will only increase.

The challenge is that the funding model established more than 35 years ago is becoming increasingly disconnected from how Arizonans actually use their transportation system.

Inflation has reduced the purchasing power of gasoline tax revenue. Improved fuel efficiency means fewer gallons purchased for every mile traveled. Electric vehicles can travel thousands of miles without contributing gasoline tax revenue.

At the same time, Arizona continues to need new highways, safer intersections, improved bridges, and ongoing maintenance of its existing transportation network.

There is no single, simple answer to how Arizona should pay for all of these investments.

Increasing gasoline taxes, relying on regional sales taxes, making individual legislative appropriations, or exploring alternative road usage fees each comes with policy and economic considerations.

But eliminating potential solutions before they can even be evaluated makes addressing the challenge more difficult.

Keeping Arizona's Transportation Future Open

Opposing Proposition 141 does not mean supporting a new mileage tax. It does not mean endorsing government vehicle tracking. And it does not mean that Arizona must adopt a vehicle-miles-traveled funding system.

A "no" vote would simply preserve the state's existing constitutional flexibility to consider such options in the future, subject to the legislative process and applicable legal protections.

For AZAGC, the larger issue is ensuring Arizona can continue to invest in the transportation infrastructure that supports economic growth, public safety, and quality of life.

Arizona has built its reputation as a state that welcomes opportunity, encourages investment, and plans for growth.

Maintaining that success will require a transportation system capable of supporting the next generation of businesses, workers, and families.

Arizona needs more options for funding its transportation future, not fewer.

Writing a permanent prohibition into the Arizona Constitution before the state has even determined how it will address its long-term transportation funding challenges may be, quite literally, a bridge too far.