New Revenues for Transportation Hard to Come By in 2012 Legislative Sessions

Maryland legislators wrapped up their 2012 regular session this week without passing a sales tax on motor fuel proposed by Gov. Martin O’Malley. Pennsylvania Gov. Tom Corbett said this week that high gas prices make it a bad time to impose more fees on motorists to increase transportation funding in his state. And legislation in Washington state that would have given cities and counties the authority to pass new taxes to pay for transportation appears dead for the year, as a special session wraps up in Olympia. Despite significant infrastructure needs around the country, many state policymakers are finding a rocky road in trying to come up with new dollars to meet those needs.

Maryland: Just three months ago, a gas tax increase in Maryland or at least the consideration of one looked like a sure bet. Maryland was on our list of “13 States to Watch in 2012” on transportation funding. A blue ribbon commission had proposed a 15-cent increase, which would have given Maryland the highest gas tax in the nation. O’Malley and Senate President Thomas V. “Mike” Miller seemed poised to go along with the recommendation. There was also talk of indexing the tax rate to limit the impact of inflation that has diminished the state’s buying power since the tax was last increased two decades ago. But at the end of January, O’Malley instead proposed an ill-fated 6 percent sales tax on the retail price of motor fuel as part of a larger bill dubbed the Maryland Transportation Financing and Infrastructure Investment Act of 2012. The legislation would have also put in place provisions aimed at making it harder for state officials to tap revenues intended for transportation to fill other budget holes, as the state has done in the past. Seeing the bill failing to gain traction in the final days of the session, O’Malley switched gears and began promoting the idea of raising the state sales tax by 1 percent and funneling that money to transportation. But the Maryland Legislature wrapped up its 2012 regular session Monday without so much as a committee vote on either measure. Another casualty of the session’s tumultuous final days (which also saw lawmakers fail to reach agreement on an income tax increase resulting in passage of a bare bones budget) was a bill that would have opened up the state’s existing legislation governing public-private partnerships (P3s). The measure would have established a more well-defined legislative oversight process for P3 agreements, centralized P3 authority within state government and allowed the state to accept and evaluate unsolicited proposals from the private sector. An amendment tacked onto the bill in the Maryland House of Delegates that some believed could have threatened pending litigation against a Baltimore development was not agreed to in a Senate committee and lawmakers ran out of time to work out the differences between the chambers. Some predict a special session in Maryland to try to resolve remaining budget issues and perhaps to address the state’s transportation needs.

Pennsylvania: Gov. Tom Corbett said Tuesday that it’s probably not the right time to impose more fees on motorists to put towards transportation funding.  The Pittsburgh Tribune-Review reported that the governor said at a news conference in Bridgeville that economic times and gas prices must be factored into the approach he ultimately decides to take in addressing the commonwealth’s transportation needs (which I detailed back in January for CSG’s Capitol Ideas). But it’s still unclear when or if the governor will come forward with a plan of his own to create new revenues for transportation. An advisory commission chaired by Pennsylvania Transportation Secretary Barry Schoch recommended last year that the state lift the cap on wholesale gasoline prices and increase registration and license fees. Corbett has faced some criticism from legislators (see here and here) for not fully embracing the recommendations or quickly coming forward with a transportation funding plan of his own. He also notably said in February that the state’s transportation needs are too large to be considered as part of the state budget and need to be considered separately.

Washington: A task force in Washington recommended earlier this year that the state expand funding options for transportation that could be enacted at the local level. A bill offered by state Sen. Mary Margaret Haugen (SB 6852) would have allowed counties to impose a local-option gas tax of one, two or three cents per gallon; allowed transportation benefit districts to impose a vehicle license fee of up to $40; and allowed counties to charge a motor-vehicle excise tax of up to 1 percent. The Senate passed the bill back in February. The House amended and approved the measure. But lawmakers failed to resolve differences between the two bills during the regular legislative session and a subsequent extra session that wrapped up this week. Earlier this year, the legislature declined to consider Gov. Chris Gregoire’s proposed fee on oil refined in the state which she said could raise $3.6 billion in transportation funds over the next decade. Instead lawmakers approved an 80 percent increase in the driver’s license fee, a $100 annual fee on electric cars, and other increases which combined don’t come close to the billions analysts say are needed to meet the state’s infrastructure goals. The task force recommended investing at least $21 billion in state funding over the next decade.    

More on Maryland’s P3 Plans

Maryland’s aforementioned efforts to revamp its use of public-private partnerships will likely be a key issue for the state’s transportation secretary, Beverley Swaim-Staley, when she speaks at this year’s InfraAmericas U.S. P3 Infrastructure Forum. As I’ve mentioned previously, for the second year in a row, CSG is a supporting organization for the event. It takes place June 19-20 at the Metropolitan Club in New York City. The forum is a great opportunity for state officials to network and learn about the latest trends in P3 infrastructure investment from their state government colleagues from around the country and from those representing the private sector investment community. You can read my coverage from last year’s conference here and here. And you can learn more about this year’s event here

Coming Soon: More on Transportation Funding Commissions

As mentioned above, Maryland, Pennsylvania and Washington all had commissions or task forces that met last year to come up with potential solutions to the transportation funding needs in those states. The commissions, as well as a similar one in Iowa, are the subject of two forthcoming publications: a Capitol Research brief and an article in the 2012 edition of CSG’s The Book of the States. Both feature interviews with chairs or members of the four panels, who talk about the process they went through to reach their recommendations and what has happened so far in their states. Look for both in the weeks ahead.