Gas tax mini-freeze, revenue diversion and competition from Indiana — what does it all mean?

June typically brings roses, nonstop mowing, and an update on why Illinois’ motor fuel tax is rising in July.

That won’t happen this year after the General Assembly delayed the annual motor fuel tax increase until January.

The 1.3-cent-per-gallon MFT hike suspension, which would have kicked in July 1, was part of the state budget passed June 1.

Lawmakers also shifted a $150 million gas sales tax windfall to the general fund.

The tax holiday will help families beset by inflation and pricey fuel, Gov. JB Pritzker’s office said. The average cost of a gallon of regular gas statewide was $4.62 compared to $3.36 a year ago as of Sunday, AAA reported.

St. Charles Republican Sen. Don DeWitte was among 18 Republicans opposing the legislation.

“They don’t even make pennies anymore,” DeWitte said. “I think it is a token notion by the governor who believes that 16 or 18 cents a tank is going to make a difference in people’s lives. It won’t.”

Democratic state Sen. Laura Murphy of Des Plaines supported the policy “because of the huge increase in gas prices caused by the Trump administration’s decision to go to war in Iran. The intent was to give citizens some relief,” she explained. “As small as it may be, it’s a start.”

The gas tax is based on inflation and would have cost drivers 49.6 cents a gallon compared to the current 48.3 cents a gallon.

The last increase, which occurred July 1, 2025, was also 1.3 cents. Although seemingly tiny, it will generate $75 million over 12 months, the Department of Revenue expects.

On the flip side, Illinois’ 6.25% gas sales tax is experiencing a revenue surge courtesy of sky-high prices.

For real consumer relief, “I would much rather see (Pritzker) cut the sales tax on gasoline,” DeWitte said.

That didn’t happen this session. Instead, lawmakers voted to divert $150 million of the extra revenues to the general fund to balance the budget.

“What the budget did was essentially acknowledge that those sales tax revenues have been running much higher than initially expected because they directly move with fuel prices,” said Paula Worthington, a senior policy adviser with The Civic Foundation.

“Some people call it the ‘dirty little secret’ around inflation and state tax revenues,” said Worthington, noting that when prices rise, sales tax revenues follow.

Indiana Gov. Mike Braun has suspended his state’s two gas taxes through July 7, she noted. Braun’s office said the result is a 62-cent-per-gallon drop for Hoosiers.

“The worry for Illinois would be that people traveling on the Indiana Toll Road, I-80, I-90 and people passing through Illinois will say, ‘I want to make sure I fill up in Indiana,’” said Worthington, who recently co-authored a “Gas Tax Holidays: Savings at What Cost?” paper with The Civic Foundation’s Lily Padula.

The Regional Transportation Authority estimates it would have received $130 million of the $150 million bonus as a result of the Northern Illinois Transit Authority Act going into effect last week.

The 2025 law, which replaces the RTA with NITA, offers reforms and a financial bailout for Metra, Pace and the CTA by dedicating a chunk of the 6.25% gas sales tax to transit.

The agencies should still receive an estimated $731 million in annual gas tax sales money, RTA Executive Director Leanne Redden said at a June 1 meeting.

The switch is supposed to be a one-year diversion, she added.

“While the funding from the NITA Act can fully resolve the fiscal cliff for 2026 and 2027, diversions like this can create some uncertainty and could in the future make it (more) difficult to fully achieve the policy goals laid out under the NITA Act,” Redden said.

Got a comment? Drop an email to mpyke@dailyherald.com.

One more thing

You can tap dance onto your Metra train in the suburbs and shimmy off downtown en route to any Broadway in Chicago performance for free this summer. The offer extends to round trips on any line through Aug. 16 for riders who display show tickets to conductors. Dancing is not required.

Gridlock alert

Naperville residents should expect some angst driving on the Washington Street bridge over I-88 due to lane reductions as crews repair pavement. Construction wraps up later this summer.

Similarly, Schaumburg-area drivers will experience delays and fewer lanes at the Beverly Road and Roselle Road interchanges with the westbound Jane Addams Tollway. The Illinois tollway is modernizing the toll plazas with work continuing through the year.