For decades, states have relied on gasoline taxes to provide much of the money to maintain roads and bridges. But as cars become more fuel-efficient and some Americans switch to electric vehicles, state leaders say the gas tax won’t pay the bills for much longer.
At the same time, many cities have seen their streets clogged with Amazon and other delivery trucks as consumers increasingly opt for home delivery. In several states, lawmakers are considering charging for those deliveries as part of their road funding solution.
“If you’re going to tear up our roads, you should help maintain them,” said Colorado state Rep. Cathy Kipp, a Democrat who chairs the Energy and Environment Committee.
In July 2022, Colorado became the first state with a retail delivery fee, a charge on all vehicle deliveries to consumers in the state. The fee, which is currently 29 cents per delivery, provides funding for highways, bridges, tunnels, electric vehicle charging stations and projects to reduce air pollution and electrify vehicle fleets and transit systems. It has raised more than $160 million.
Colorado leaders have had to simplify the law to facilitate businesses comply, but they say it’s largely a success story. Minnesota passed its own retail delivery fee in 2023, and lawmakers in New York and Illinois have proposed similar measures. Meanwhile, lawmakers and transportation officials in several other states have commissioned studies to consider the concept.
Some retailers and GOP lawmakers say the fee hurts consumers, and many Colorado businesses initially struggled to comply with the law.
“The 27-cent delivery fee is not trivial, its impact is not negligible, and it has a profound impact on our citizens — especially those who are already struggling to pay their bills and provide for their families,” wrote Republican state Rep. Rose Pugliese, the House Minority Leader, in a guest op-ed for the Colorado Springs Gazette column a few months after the Act entered into force.
But supporters of the fee say they see interest in it growing across the country, especially as delivery vans become more common in many neighborhoods.
Transport financing “for the future”
Colorado law limits how lawmakers can expand taxes. With revenue from the gas tax dwindling, lawmakers had no obvious solution to pay for the roads. They ultimately settled on a retail delivery fee, which is not classified as a tax.
Initially, the program caused difficulties for many businesses due to the requirement to report charges separately on each receipt.
“It was really complicated and very burdensome for our mid-sized and small businesses to have to reprogram their software to add a whole additional item,” Kipp said.
Last year, Kipp joined a bipartisan group of lawmakers to overhaul the program, removing the requirement that companies itemize the fee on each receipt and allowing companies to pay the fee themselves rather than spread it across each order. It also exempted retailers with sales of less than $500,000.
Since the amendment passed, Kipp said she has stopped hearing complaints about the program. Chris Howes, president of the Colorado Retail Council, said he hasn’t heard any recent complaints either.
“We’ve already explained that,” he said. “People have accepted it and moved on.”
Amazon did not respond to Stateline’s interview request, and the National Retail Federation deferred questions to state affiliates. The Chamber of Progress, a tech industry advocacy group, had not arranged an interview by press time.
Last year, Minnesota lawmakers passed their own retail delivery fee, a 50-cent surcharge on purchases over $100. Lawmakers heard from local governments that they were struggling to maintain roads and urgently needed state aid to fill the gap.
“This is an attempt to future-proof our transportation funding,” said Democratic state Rep. Erin Koegel, who sponsored the bill. “We keep getting grades from civil engineers who say our infrastructure is a C- or D. We had to think of ways to bring more revenue into the system.”
Koegel said the measure is a compromise. Her initial proposal, which did not include a $100 threshold for purchases, was intended to be a deterrent, similar to cigarette taxes. She said the delivery vehicles add to traffic congestion in many cities and damage streets that were not built with the gigantic vehicles in mind. But lawmakers ultimately decided to limit the fee to higher-priced purchases to protect lower-income consumers.
Minnesota’s fee is expected to generate $59 million in its first fiscal year. The money will be distributed to cities, counties and towns to facilitate them fund roads.
Traffic all day long
Cities and counties in Washington state as well I asked for facilitateand some local leaders have asked state lawmakers to consider a retail delivery fee — or authorizing cities to charge one. State lawmakers have ordered analysispublished last month examining the potential for such a program. The report found that the fee could generate between $45 million and $112 million in revenue in 2026, depending on which companies and orders were covered.
“We’re seeing traffic in our system all day long now, and the expansion of these delivery services is part of that,” said Democratic state Sen. Marko Liias, who chairs the Transportation Committee. “We’ve had a history of user-fee transportation. This seems like a mechanism that could help in that regard.”
Liias stressed that some version of the fee will likely be discussed in the next legislative session. He said he has already heard mighty arguments on both sides of the issue.
In some areas, the growth in retail shipments has put the greatest strain on infrastructure surrounding shipping facilities. CenterPoint Intermodal Center in Illinois, the nation’s largest inland port, connects interstate trucking, rail lines and barges on the Mississippi River.
“There really needs to be a change in the tax structure because a lot of these facilities don’t generate the local sales tax that you would at a brick-and-mortar store,” said Democratic state Sen. Rachel Ventura, whose district includes the CenterPoint facility. “We have a lot of traffic in both directions, and the environmental burden, the road repairs and the tax burden goes down locally.”
Ventura has drafted a bill that would allow communities to charge fees for intermodal facilities — places where products are transferred from one mode of transportation to another. Local governments that opt in would be able to spend the money on roads within a five-mile radius of the facilities. The fee, which would be based on the weight of each shipment, is expected to generate $33 million to $68 million annually.
The bill has not yet passed the committee, and Ventura said lawmakers are still discussing how to proceed despite opposition from the trucking industry.
In New York, a Democratic bill has been introduced to impose a 25-cent fee on deliveries within New York City, but it is still in committee. Meanwhile, state agencies in Nevada and Ohio have commissioned studies to examine the feasibility of retail delivery fees. Those reports have not yet led to legislative action.
