published Wednesday, September 25th, 2013

Personal Finance: Taxes and fees make driving most expensive in Georgia

Chris Hopkins

Owning a car is an expensive proposition, no matter where you live. But if someone asked you which state holds the dubious distinction of being the costliest state in which to drive, what would you guess? If you said California, you are close (the Golden State is number two). According to a recent study by financial data provider Bankrate, the state with highest cost of car ownership is Georgia.

The Bankrate study looked at typical operating costs including fuel, insurance, fees and maintenance in ranking the states according to the amount their drivers spend on their vehicles. Georgians claim first place at $4,233 per car each year, followed by California, Wyoming, Rhode Island and Nevada. Tennessee comes in a distant 32nd place at $3,078 per year.

Perhaps surprisingly, the most economical state in which to drive is Oregon, at a measly $2,204 per year. The national average is $3,201.

Why does it cost so much to own a car in Georgia? First, they drive a lot in the Peach State, thanks in part

to the expansive commuter footprint surrounding Atlanta, combined with a relative lack of public transportation. U.S. Department of Transportation statistics show that Georgians drive, on average, nearly 19,000 miles per year, second only to Wyoming and 4,500 miles less than a typical Californian. Tennesseans log around 15,500 miles in a year, while Alaskans drive the least, just under 10,000 miles annually.

Meanwhile, according to data from GasBuddy.com, gasoline prices in Georgia averaged about 10 percent higher than the national average last year. Not only do they fill ‘er up more often down south, but they pay more to do it.

Along with all that driving comes higher insurance rates and bigger repair bills, thanks to the heightened collision risk and extra wear and tear.

But the greatest factor in Georgia’s outsized driving cost is the toll taken by the government. Taxes and registration fees are the biggest single factor explaining the differential operating costs across states, and Georgia has the highest in the nation, averaging $1,952 per year according to Kelley Blue Book. Tennesseans pay $1,012 per year, while drivers in Alabama contribute $662. No wonder Oregon drivers win the cost contest; they pay a paltry $157 in taxes and fees per year on their jalopies.

The data was compiled by Bankrate into their first-ever Car Cost Index to help compare differences in automotive expenses across states. In ranking the states, the index ignores the cost of depreciation (the decline on value over time), since it does not vary much across states.

Unfortunately for Georgia drivers, there is no prize money for first place.

Bankrate also offered some helpful tips for reducing the cost of operating your motor vehicle, two of which deserve mention for their creativity. Drive less, and move closer to work.

Christopher A. Hopkins, CFA, is a vice president for Barnett & Co.

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