States to Watch in 2016: Transportation Funding
Eight states—Georgia, Idaho, Iowa, Michigan, Nebraska, South Dakota, Utah and Washington—raised their gas taxes in 2015. Two other states—Kentucky and North Carolina—made adjustments to their gas tax mechanisms to make revenues more reliable. The state of Delaware meanwhile enacted legislation to raise several vehicle and license fees in order to fund road repair and maintenance. And states such as Maine and Texas approved ballot measures that will result in more money going to transportation. All that activity surpassed 2013 when six states produced major transportation revenue packages. But despite all that activity and despite the fact that 2015 could see Congress approve a new long-term federal transportation bill, 2016 also could see a large number of states join the club, particularly if many of those states that have come close in recent years or have had processes in place to examine revenue options end up moving forward. Here’s a roundup of the states to watch in transportation funding next year and some additional resources where you can read more.
- Alabama: Gov. Robert Bentley said this month there’s a good chance the legislature would support a gas tax increase during their 2016 session. A House committee in August approved a 5 cent increase, which would have raised an estimated $70 million in its first year, but the measure stalled as lawmakers focused on patching a $200 million budget deficit.
- Arizona: A study from the office of the state Auditor General earlier this year reported that Arizona faces a $62.7 billion gap in highway funding over the next 25 years. The study recommended a legislative task force to find ways to bridge the gap and proposed options including higher gasoline taxes. Gov. Doug Ducey is said to oppose a gas tax increase. Senate Transportation Committee Chairman Bob Worsley meanwhile has proposed replacing the gas tax with a sales tax. Arizona’s gas tax has not increased since 1991.
- Arkansas: Back in May, Gov. Asa Hutchinson created a 20-person panel of state, local and business leaders to devise options on how to fund road projects before the end of the year. Among the proposals listed in the Governor’s Working Group on Highway Funding’s preliminary recommendation: increasing motor fuel taxes, transferring revenues from the sales and use tax on new and used vehicles from general revenue to the highway fund, and increasing registration fees for alternative fuel vehicles; a “revenue neutral” package that would redirect diesel and sales tax revenues back to the highway fund; a three-pronged approach that would index existing gas and diesel taxes to inflation, increase the taxes over three years and move toward a reportable mileage fee starting in 2017; a proposal that would eliminate the sales tax exemption for motor fuel and diesel; and a proposal that would increase the diesel tax by 5 cents per gallon.
- California: Gov. Jerry Brown estimated last year that deferred maintenance needs on the state’s highways total $8 billion annually. The state has just $2 billion available each year for that purpose. The governor called a special session in 2015 during which he and Democrats fought for an increase in fuel taxes and fees while Republican lawmakers suggested redirecting existing transportation money the state currently diverts for other uses and reducing redundancy at the state transportation department, Caltrans.
- Colorado: Some Republicans are said to be pushing a gas tax increase but Gov. John Hickenlooper, a Democrat, has been noncommittal. Next year is going to see some of the fruits of a big 2004 Colorado tax increase finally come online, including five new transit lines. But many believe it may be time to go back to the voters and say more money is needed for transportation to prepare for the significant growth the state is expected to see in the years ahead.
- Connecticut: Gov. Dannel Malloy has proposed a 30-year, $100 billion plan to overhaul the state’s aging transportation network. The legislature kicked that off by approving $2.8 billion in bonding in 2015. A half percent of the sales tax is also being tapped to fund the plan. Meanwhile, a task force created by the governor is expected to issue recommendations next month on other potential funding options. Malloy also has said he’ll continue to fight for a constitutional lockbox amendment to prevent lawmakers from redirecting transportation revenues to fill other budget holes.
- Delaware: The legislature this year approved a measure to increase DMV fees and generate an additional $23.9 million annually for the state’s Transportation Trust Fund. That’s expected to be matched by $24 million in borrowing over the next six years and comes on the heels of a 2014 toll hike that generated $10 million for transportation funding. But the Delaware Department of Transportation has reported a $780 million deficit for the next six years and Gov. Jack Markell has urged lawmakers to consider new sources of revenue.
- Indiana: A report last month from the transportation policy advisory group Cambridge Systematics found that the state’s fuel tax revenues will decline sharply in the decade ahead and make it impossible for the state to adequately maintain its 30,000 miles of roads and 6,000 bridges. Governor Mike Pence has introduced a plan to borrow $240 million to pay for $1 billion in road maintenance over 4 years. But Rep. Ed Soliday, who chairs the House Roads and Transportation Committee, has questioned the idea of increasing state debt for maintenance and suggested raising the state’s cigarette tax by $1 per pack could bring in $300 million in new revenue. Soliday says lawmakers will address immediate road and bridge preservation needs next year but a long-term solution may have to wait for the next two-year budget cycle in 2017.
- Louisiana: State lawmakers this year rejected a proposed 1 percent state sales tax to be directed to road and bridge projects. In August, an organization of current and former transportation officials called for a 10-cent increase in the per-gallon motor fuel excise fee. The state’s legislative auditor issued a report this year that said revenues coming into the Transportation Trust Fund (TTF) may not be sufficient to address infrastructure needs without increased or additional revenue sources or allocation of funds. Transportation became an issue in the governor’s race this year with candidates suggesting devoting more of the TTF to construction costs without saying how to pay for activities currently covered by the fund.
- Minnesota: There are two competing plans that lawmakers will consider next year: a $10.6 billion plan from Gov. Mark Dayton that relies on a mix of tax and license tab fee increases and borrowing and another from House Republicans that would tap a portion of the state’s projected budget surplus and dedicate tax revenues from the sale of motor vehicle parts and equipment to transportation. Minnesota is a state that has been talking about addressing transportation funding for the last several years.
- Mississippi: Another push to increase state transportation funding is expected in the 2016 legislative session but Gov. Phil Bryant, who just won reelection, already rejected tax increases a couple of years ago and Republicans picked up seats in the legislature. Bryant said during the campaign he didn’t think the state’s infrastructure was in as bad a shape as some have said. The governor this year approved the issuance of $200 million in bonds for transportation infrastructure, including bridges.
- Missouri: The state is gearing up to try again in 2016 to find a way to fund maintenance of highways and bridges after voters rejected a statewide sales tax last year and a gas tax increase proposal didn’t get off the ground this year. Some groups have called for raising the state’s 17 cents a pack cigarette tax to fund transportation projects.
- New Jersey: The state’s Transportation Trust Fund is due to run out of money at the end June. Democrats in the state Assembly picked up seats in this month’s election, which may embolden them to move forward with a gas tax increase. New Jersey’s 14.5 cents-a-gallon gas tax is the second lowest in the country after Alaska and was last raised in 1988.
- Rhode Island: Gov. Gina Raimondo has proposed a plan to start tolling commercial trucks in the state to pay for bridge repairs. The plan would use borrowed money to speed up repair and reconstruction and pay the money back with truck toll revenues. A group of Republican lawmakers has proposed an $875 million plan for bridge construction that would not include tolling or tax increases but would draw upon a variety of existing revenue sources.
- South Carolina: Some legislators and mayors are supporting a gas tax increase. Tolling has also been discussed. But budget forecasters said this month that the state will have an additional $1.2 billion for the next budget year thanks to the state’s growing economy and unallocated or unspent money from this and previous budget years.
- Tennessee: Gov. Bill Haslam and Transportation Commissioner John Schroer have been laying the groundwork for a potential gas tax increase next year by making a couple of laps around the state to hear about the Tennessee’s infrastructure needs and make the case for additional funding. There is still a lot of apprehension from lawmakers, however. Tennessee, a non-debt state, has been one of the states hit hardest by the federal uncertainty of recent years, which has prompted the postponement of millions of dollars in transportation projects. Tennessee has a backlog of transportation projects totaling more than $6 billion.
- West Virginia: A Blue Ribbon Commission appointed by Gov. Earl Ray Tomblin recommended increasing taxes, tolls and fees to generate more than $419 million annually for roads. Republican leaders have expressed concern about raising taxes and suggested the focus needs to be on cutting wasteful spending.
- Wisconsin: The state borrowed $350 million this year for transportation but is still in search of a long-term funding plan. Higher gas taxes, increased registration fees for electric vehicles and toll roads all have been mentioned as potential options.
Other States
- New Mexico: There was a gas tax increase proposed in that state this year that failed. It could come up again, but New Mexico has a very short legislative session next year so it’s unlikely.
- Oregon: The short length of the 2016 legislative session is also being given as a reason that a transportation revenue package will likely be put off to 2017 in Oregon at the behest of Governor Kate Brown, despite the fact that they were a “close-but-no-cigar” state this year.
Further Reading
- “State Transportation Funding,” Transportation for America.
- “Campaign Case Studies,” Transportation Investment Advocacy Center.
- Alabama: “Alabama roads falling apart,” Montgomery Advertiser, November 9, 2015.
- “Alabama Gov. Robert Bentley pushes gas tax hike to pay for road improvements,” AL.com, November 7, 2015.
- “Alabama House committee approves gas tax increase,” Associated Press, September 10, 2015.
- Arizona: “Lawmaker: Road funding depends on public support,” Casa Grande Dispatch, October 9, 2015.
- “Auditor General says state faces $62.7 billion gap in highway funding,” Arizona Capitol Times, September 28, 2015.
- “What Arizona can learn from Utah’s new transportation funding bill,” Phoenix Business Journal, August 17, 2015.
- Arkansas: Preliminary Recommendation, Governor’s Working Group on Highway Funding, October 22, 2015.
- “Gov. Hutchinson Creates Panel to Develop Arkansas Transportation Funding Options,” AASHTO Journal, May 8, 2015.
- “Highway funding stakeholders seek leadership on new ideas,” The City Wire, September 27, 2015.
- California: “California transportation funding agreement closer to reality?” Land Line Magazine, November 10, 2015.
- “Falling highways: California roads crumble as tax fight wears on,” Bay Area News Group, October 26, 2015.
- “Gov. Brown still struggling for GOP support for funding for road repairs,” The Los Angeles Times, October 18, 2015.
- Colorado: “Gas tax hike gets new attention but Hickenlooper remains uncommitted,” The Denver Post, August 21, 2015.
- Connecticut: “Transportation Advocates Press for Constitutional Lock Box,” Connecticut News Junkie, November 5, 2015.
- “Should Connecticut bring back highway tolls?” The Record Journal, November 2, 2015.
- “Malloy Reiterates His Call for Transportation Lock Box,” CT News Junkie, October 29, 2015.
- “Malloy Team: Transportation Is Key to State Economy,” Hartford Courant, October 23, 2015.
- “Your money: Gov. Malloy talks about the cost of transportation improvements,” Fox 61, October 9, 2015.
- “Malloy gets his transportation bonding—but not his ‘lockbox,’” The CT Mirror, June 29, 2015.
- Governor’s Transportation Finance Panel.
- Delaware: “Gov. Markell renews push for transportation funding in weekly message,” Delaware Public Media, August 16, 2015.
- Indiana: “Study highlights need for long-term Indiana road funding plan,” NWI.com, October 18, 2015.
- “Study of Indiana Transportation Infrastructure Funding Mechanisms,” Cambridge Systematics, October 16, 2015.
- “Indiana Governor Proposes Raising $1 Billion Over 4 Years for Road Projects,” AASHTO Journal, October 16, 2015.
- “Op-ed: My plan will do more for Indiana’s roads” (op-ed by Gov. Mike Pence), Lafayette Journal & Courier, October 16, 2015.
- “State, INDOT Exploring How to Fund 2016 Road Projects,” Network Indiana, September 8, 2015.
- Louisiana: “Louisiana Advocacy Group Calls for 10-Cent Hike in Fuel Fees to Help Fund Projects,” AASHTO Journal, August 14, 2015.
- Michigan: “Gov. Rick Snyder signs $1.2B road funding package,” Detroit Free Press, November 10, 2015.
- “Inside Michigan’s new road funding deal: fuel taxes, registration fees, tax relief and more,” Michigan Live, November 4, 2015.
- Minnesota: “Lawmakers agree about transportation needs, not funding,” West Central Tribune, November 20, 2015.
- “MnDOT Says Long-Term Project Funding Shortfall Getting Significantly Worse,” AASHTO Journal, November 13, 2015.
- “Minnesota road costs jump as lawmakers debate how to pay for it,” St. Paul Pioneer Press, November 7, 2015.
- “Report: Businesses oppose new transportation taxes,” Transit Talk, October 26, 2015.
- “MNDOT Commissioner: Long-range transportation plan a must,” Bemidji Pioneer, October 23, 2015.
- “Partisan differences remain on Minnesota road funding,” Minnesota Public Radio, October 13, 2015.
- Mississippi: “Election 2015: Mississippi gubernatorial candidates discuss transportation funding,” Land Line Magazine, October 23, 2015.
- Missouri: “New campaign to raise Missouri’s tobacco tax could fund transportation projects,” St. Louis Post- Dispatch, August 18, 2015.
- “Effort to pass a Missouri transportation funding plan to resume in 2016,” Missourinet, August 6, 2015.
- “Funding for Missouri transportation to be a priority in 2016 session,” Missourinet, May 19, 2015.
- New Jersey: “New Jersey Scraping the Bottom of Roadwork Fund as Tax Fight Looms,” Bloomberg Business, November 17, 2015.
- “N.J. Assembly Democrats eye transportation fix after election victories,” NJ.com, November 5, 2015.
- “Transportation Funding Debate Revolves Around Economic Impact of Tax Cuts,” NJ Spotlight, October 13, 2015.
- “GOLDEN: Has gas tax deal hit dead end?” Asbury Park Press, October 5, 2015.
- New Mexico: “Proposed increase in gas tax rate to fix roads fails,” Albuquerque Journal, February 6, 2015. (Will have short legislative session in 2016).
- Oregon: “Governor advocates hiring of consultant for ODOT,” Portland Tribune, November 19, 2015.
- “Kate Brown puts transportation funding off until 2017—but wants minimum wage hike in 2016,” The Oregonian, November 4, 2015.
- Rhode Island: “RI Trucking Association warns of legal consequences to Raimondo’s truck-toll plan, proposes alternative,” Providence Journal, October 28, 2015.
- “TGIF: 19 Things to Know About Rhode Island Politics & Media,” Rhode Island Public Radio, October 9, 2015.
- “GOP Lawmakers Unveil Plan to Fix Bridges Without Truck Tolls,” Rhode Island Public Radio, October 7, 2015.
- “Raimondo administration rolls out new toll plan,” WPRI, June 17, 2015.
- South Carolina: “State’s revenue growth sets up battle over need for gas-tax hike,” The Post and Courier, November 10, 2015.
- “No free fix: Lawmakers agree on roads as priority,” The Times and Democrat, October 31, 2015.
- “SC mayors: Hike gas tax to pay for road, bridge repairs,” The Herald, October 16, 2015.
- “Senator pushes for transport tax reform,” Columbia Daily Herald, September 24, 2015.
- Tennessee: “Haslam, transportation commissioner going on tour to promote transportation funding,” The Commercial Appeal, November 8, 2015.
- “Tennessee group says state needs $25.7 billion in transportation improvements,” Better Roads, October 26, 2015.
- “Gov. Haslam lays groundwork for potential gas tax increase,” Murfreesboro Post, October 13, 2015.
- “Gov. Haslam says long-term solution needed for transportation funding,” Times Free Press, October 7, 2015.
- “Tennessee lawmakers apprehensive over possible gas tax,” Times Free Press, September 13, 2015.
- “Haslam kicks off statewide transportation tour,” The Tennesseean, August 6, 2015.
- West Virginia: “State ending turnpike tolls could up gas tax by 5 cents,” The DPost, November 16, 2015.
- “Budget shortfalls pose issues to fix crumbling roads,” Bluefield Daily Telegraph, September 15, 2015.
- “State Leaders Won’t Rule Out Tax and Toll Hikes For Roads,” Associated Press, June 26, 2015.
- “Investing in West Virginia’s Future,” West Virginia Blue Ribbon Commission on Highways final report, May 2015.
- Wisconsin: “Higher gas taxes, toll roads could be considered by local lawmakers of both parties,” WJFW, November 16, 2015.
- “On road funding, GOP lawmakers say they’re ready for a real fix,” Wisconsin State Journal, November 13, 2015.
- “With $350M approved, what’s next for Wisconsin road spending?” Fox 11 News, November 4, 2015.
- “Journal Times editorial: Stop bickering, find way to get road projects done,” The Journal Times, October 7, 2015.