New Mexico lawmakers weigh 3-cent gas tax hike to fund roads

New Mexico lawmakers are weighing a proposed three-cent increase to the state’s gasoline excise tax, which would raise it from 17 cents to 20 cents per gallon. The Revenue Stabilization and Tax Policy Committee heard testimony on the bill this week as the state faces growing costs for road repairs.

State Sen. Bobby Gonzales, a sponsor of the proposal, said the extra revenue is meant to offset rising road repair costs. “Say you buy 12 gallons a week, 3 cents a gallon is 36 cents per week, but is under 20 dollars a year,” Gonzales said. “Less than one tank, is under 20 a year. Bad roads cost them more in repairs.”

The tax hike would generate about $57 million a year for the state, with roughly $9 million directed to road work funds for cities and counties across New Mexico. The proposal comes after the New Mexico Department of Transportation told lawmakers last week that road construction costs are projected to grow by 136% by 2050, while NMDOT’s ongoing projects are worth a collective $1.4 billion.

Gonzales said the increase would close about one-fifth of NMDOT’s projected funding gap in coming years.

Some lawmakers questioned the timing, pointing to higher fuel prices tied to the war in Iran. “I think the challenge for you, senator, when you’re presenting this bill, is addressing those issues, because every single person is going to be thinking about how much they just had to spend on their gas tank and filling up their gas,” Sen. Carrie Hamblen said.

Under the proposal, the state’s special fuel excise tax, which includes diesel, would also rise from 21 cents to 25 cents per gallon. The legislative session starts in January, and if enacted, the fuel tax increases would take effect in July 2027.

Lawmakers also discussed changes to the state’s Motor Vehicle Excise Tax that would not raise taxes but would direct a larger share of that revenue toward New Mexico’s roads.