Some States Hitting Roadblocks in Efforts to Find Additional Transportation Revenues

While a number of states have already completed work this year on transportation funding plans, officials in a number of other states are still hard at work seeking compromises, stating their cases and planning for the future if they’re ultimately unsuccessful in 2013. I have updates on nine of them, as well as links to a number of recent items on the trends in states seeking new transportation revenues this year.

State Transportation Funding Updates

  • Massachusetts: The Massachusetts House this week approved a transportation finance bill that calls for $500 million in new taxes, well short of the $1.9 billion Gov. Deval Patrick says is needed to address the state’s long-term transportation needs, the Associated Press reported. Patrick has promised to veto the bill, which passed the House just shy of the two-thirds vote that would be needed to override such a veto. The governor told reporters Tuesday that he’s open to a deal on a transportation bill that could fall somewhere in the middle of the two numbers but he reiterated the need to pump more revenue into the current bill, the AP said. Then on Thursday, Patrick said he’s open to an $805 million bill proposed by Senate leaders that redirects money from other parts of the state budget and imposes a new fee on utilities, The Boston Globe reported. Senate Democratic leaders expressed hope that the governor’s praise for the Senate proposal will help thaw relations and end a weeks-long standoff between the two branches of government. Senate leaders have scheduled a rare Saturday session to take up a revised version of the bill approved Tuesday by the Senate Ways and Means Committee. The Senate is looking at dedicating $80 million from an existing, little-known 2.5 cents per gallon surtax to transportation needs, the AP reported. Senate Republicans say they’ll move to strip all tax increases from the bill and will propose an increase in the percentage of revenue from casino licenses that goes to transportation. There is more on what’s at stake in Massachusetts from the state’s former transportation secretary, James Aloisi, who penned a scathing letter to the Massachusetts legislature for Commonwealth magazine in which he laments that lawmakers have again taken the “kick-the-can route” with the House’s $500 million plan. “How was I to know that the legislature would take another walk on the future,” he writes. “How was I to guess that 2009’s aversion to the gas tax would become this year’s modest embrace of a totally inconsequential 3 cent gas tax hike? How could I have predicted that the Legislature would embed in its plan a directive that MBTA fares and tolls once again increase, making the allocation of the burden even more egregiously inequitable, directed against the poor, the middle class, students, and the users of our only east/west interstate? Instead of the $1 billion solution we desperately need, we get instead a ‘maybe, if all goes well, $500 million fix’—if all your best case assumptions pan out.” Aloisi concludes his letter with a dejected “I give up. You win. And we all lose.”
  • Michigan: MLive Media Group reported recently on the time crunch Gov. Rick Snyder (R) faces to make the case for road funding. Snyder must win over members of his own party as well as Democrats. While the governor’s executive budget proposal highlighted the need for road funding, an appropriations bill passed by a House subcommittee last month did not include his proposal for increased registration fees and indexed wholesale fuel taxes to generate $12 billion over the next decade.
  • Minnesota: Senate Transportation Finance Committee Chairman Scott Dibble said this week he’s backing off his plan to raise gas and sales taxes to provide more revenue for roads, bridges and transit, according to Minnesota Public Radio. Dibble, who said Gov. Mark Dayton’s opposition to a gas tax increase influenced his decision, said a more “status quo bill” would likely emerge instead. But Dibble and Dayton both promised to make the case in the coming months for more revenues to fund transportation projects. And the chairman of the House Transportation Finance Committee Frank Hornstein said he’s not ready to give up on his own quest for more revenue this year. A statewide sales tax for transportation projects and a sales tax on fuel consumption are said to still be on his radar screen. A Twin Cities metropolitan area sales tax could pay for some transit projects, Hornstein has said. A budget bill that was to be considered today might also allow counties to impose a half-cent gas tax and a $10 annual fee on vehicles registered within their borders, according to the Associated Press. The AP also reported this week on the potential impact of delaying major transit and road projects if policymakers can’t agree on new funds.
  • Missouri: House Democrats are criticizing a proposed 1-cent sales tax approved by the Senate last month that would generate $8 billion over a decade to fund state and local transportation projects, the Associated Press reported. Voters would have to approve the tax via a Constitutional Amendment in the November 2014 election and it would have to go back on a statewide ballot after 10 years in order to be extended. In a letter to the bill’s Senate sponsor Mike Kehoe, the House members argue sales taxes have a disproportionate effect on the poor. They also say the measure would not set aside a dedicated portion to projects not involving highways and bridges, and could open the door to legislative interference in project selection.
  • Nevada: A Senate committee last week held a hearing on legislation (SB377) that would raise gas taxes by 2 cents annually for the next decade, the Associated Press reported. The bill’s sponsor, Sen. Tick Segerblom, said the move would generate $300 million in the first year and $3 billion over the next decade. Nevada faces a current backlog of $2 billion in needed repairs on state-maintained roads and bridges, a recent report by the transportation research group TRIP found. That cost is expected to rise to $3.4 billion by 2025 if nothing is done. The committee took no action on Segerblom’s bill.
  • Ohio: The recently passed state transportation budget provided for the creation of a task force to study transportation funding, including the possible future elimination of the state gas tax, reports Russ Zimmer of CentralOhio.com. It’s a study requested by county officials and engineers who say they want to be prepared for a rapidly approaching day when the gas tax can’t meet the repair needs of the state’s highway system. The study, by a yet to be appointed group of state legislators, is due in December 2014.
  • Pennsylvania: Members of Governor Tom Corbett’s administration have hit the road to make the case to the public what the governor’s transportation funding plan will mean for key projects around the state, The Meadville Tribune reported recently. The legislature has yet to take up Corbett’s plan, which includes lifting the ceiling on the wholesale gas tax, a move that could increase the tax on a gallon of gas by 25 cents. PennDOT, the state transportation agency, has issued a list of a dozen projects worth a combined $1.2 billion in construction costs that would benefit from the plan, with a more complete list promised later this spring. Corbett’s plan would generate $510 million in additional transportation funding in the first year and $1.8 billion annually by the end of five years.
  • South Carolina: The Associated Press reported this week that a House Ways & Means Subcommittee has rejected two proposals to increase the state gas tax to fund road construction. One proposal would have raised the tax by 10 cents a gallon, but would have provided South Carolinians a rebate for the first 2 and ½ years while the other would have started with a five-cent increase with yearly adjustments tied to the CPI. The South Carolina Department of Transportation says it needs an additional $1.5 billion annually for road and bridge work. The current House budget plan provides just $100 million. Moreover, the state faces a $29 billion shortfall in meeting road-repair needs through 2033. Meanwhile, The State newspaper reports that Senate Majority Leader Harvey Peeler, recognizing the lack of legislative support for a gas tax increase this year, is proposing the state take $103.5 million in revenues generated by sales taxes on cars and split it between the state DOT and the state infrastructure bank, which would use that money to borrow and leverage additional funds for major projects. But Democratic leaders say that would cut the state’s education budget by $20 million a year. Peeler also wants to tax out-of-state commercial truckers. In addition, his legislation would move the state infrastructure bank into the state DOT, officially classify ethanol as a motor fuel, and set aside 20 percent of the growth in the state’s revenues each year for bridge repairs.
  • Texas: Efforts to find an additional $4 billion a year that the Texas Department of Transportation says is needed appear likely to fall short with less than two months left in the legislative session, The Texas Tribune reported this week. The funding ideas that appear to have the most support include restoring $400 million in gas tax revenues currently diverted to the Department of Public Safety and using $1.7 billion from the Rainy Day Fund to put towards a revolving infrastructure fund to finance certain projects. The Tribune’s Aman Batheja writes that the dozens of road projects under construction across the state may be giving a misleading impression and contributing to lagging momentum for other revenue proposals. Batheja notes that “TxDOT has funded the last decade of highway projects in large part through toll projects and issuing billions of dollars in debt. The agency now faces a ‘fiscal cliff’ of sorts as it expects most of that debt-financed revenue to run out after 2015. At that point, the agency expects to dramatically scale back road projects while the state’s population will keep growing, leading to worsening congestion on roads.” Among the other revenue options considered this session: an increase in the vehicle registration fee, dedicating the sales tax collected on car sales to road projects and dedicating the sales tax collected from tires and auto parts. A broad coalition of business groups has endorsed a plan that incorporates many of the above revenue options that they say would raise $3.6 billion of the $4 billion TxDOT needs annually. The Austin American-Statesman also reported recently on the roadblocks in Texas. On Thursday, the Senate Finance Committee approved taking $6 billion from the state’s Rainy Day Fund for infrastructure projects, The Houston Chronicle reported. Gov. Rick Perry is said to support using the Rainy Day Fund for projects but he has called for spending far less than $6 billion. Perry was due to address transportation at a speech Friday in Austin.

Additional Reading

  • Burgess Everett at Politico had a piece this week on “States driving transportation revenue reforms.” It examines why three states that couldn’t be more different politically—Maryland, Virginia and Wyoming—are on the same page this year when it comes to seeking new transportation revenues.
  • The Washington Post recently compared the fuel tax changes in Maryland and Virginia.
  • An April 5th Washington Post editorial called the gas tax hike in Maryland “a victory of practicality over poll-driven politics that will pay dividends for years.” Had the legislature not taken action, the Post noted, the state could have run out of transportation funds for all but routine maintenance by 2017.
  • Our friends at Transportation for America are also tracking state transportation funding plans this year. This handy chart on their website provides an at-a-glance view of the major proposals in each state and the revenue sources under consideration. 
  • T4America’s James Corless is among those NPR’s Brian Naylor talked to this week for a story on the approaches Virginia and other states have taken to fund roads this year.