Purchasing Power
Fuel taxes and vehicle license taxes are the primary sources of funding for Arizona’s roadways. These are deposited into the Highway User Revenue Fund (HURF) for distribution to the state and local governments.
HURF relies heavily on an 18 cent per gallon motor fuel tax last changed in 1990 that is the fourth lowest rate in the country, 20 cents lower than the nationwide average, and is not indexed for inflation.
The emergence of new and developing technologies, in addition to an increase in the sale of electric, hybrid, and other fuel-efficient vehicles that pay little or no fuel taxes, continues to erode gas tax revenues while causing wear and tear on the roads.
Although nominal HURF revenues have increased slowly, their purchasing power has decreased sharply -- reducing the amount of maintenance counties, municipalities and the state are able to conduct and making expansion of roadways challenging.
Transportation Funding
Counties maintain their local roadways primarily from state shared revenues distributed through the Highway User Revenue Fund (HURF) and Vehicle License Taxes (VLT) distributed specifically for transportation purposes. Some counties also have a voter-approved excise tax for roads, which are separate from excise taxes collected by regional transportation authorities - like the Maricopa Association of Governments (MAG).
Highway User Revenue Fund
The Arizona Highway User Revenue Fund (HURF) was established in 1974 and is the primary source of revenues available for highway construction and transportation in Arizona. The collections for HURF come from gasoline and use fuel taxes, motor carrier fees, vehicle license tax, motor vehicle registration fees, and other miscellaneous fees. The HURF revenues are then distributed to counties, cities, towns and the State Highway Fund.
Vehicle License Tax
Vehicle license taxes were originally levied as a property tax to fund general government services. Today, a portion of these revenues is allocated to counties based on the population living in unincorporated areas to use to support the maintenance and operation of local roads. Unlike VLT resources counties receive for general government services, transportation VLT distributions may only be used for road purposes.
Local Road Excise Tax
Countywide road maintenance sales taxes may be approved by voters in counties with fewer than 400,000 residents. These taxes are capped at 0.5% and apply to all taxable transactions in the county. Revenues may be distributed solely to the county or shared with municipalities, based on the Board of Supervisors’ resolution and voter approval.
COUNTY ROADWAY NEEDS
Resources available for the maintenance and operation of the county roadway system fall short of the cost. This results in the condition of county infrastructure declining, which ultimately will result in higher costs to taxpayers as roads have to be reconstructed.
In 2018, the Arizona Association of County Engineers (AACE) conducted a comprehensive study to quantify the funding need and condition of Arizona’s county roads. They found that 35% of the approximately 20,800 miles of roads in the county system were in poor or very poor condition.
Access CSA’s monthly Revenue Dashboard on transportation revenues to track performance of county HURF and VLT in real-time.
Explore the County Encyclopedia to see trends in transportation funding over decades and by county.