States to Watch in 2017: Transportation Funding

After a year in 2015 when eight states raised gas taxes, 2016 saw less activity. New Jersey raised its gas tax by 23 cents and Rhode Island funded a multi-year bridge repair program with a new toll on large commercial trucks and a combination of borrowing and refinancing. But other than those states and a couple of others that approved bond measures for infrastructure projects and the like, most postponed or agreed to extend their transportation revenue discussions into 2017. That means a large number of states could see activity next year on that front. While some have been embroiled in the funding debate for months or years and will continue those conversations, others had a special task force in 2016 to explore revenue ideas and could look to move those ideas forward during the 2017 legislative sessions. Here’s a list of the 14 most likely candidates.

14 States to Watch

  • Alabama: House Speaker Mac McCutcheon said recently that finding ways to maintain and increase the capacity of the state’s roads and bridges will be among his top priorities when the legislature convenes in February, The Times Daily reported. McCutcheon proposed a gas tax increase last year but never actually introduced it. He said lawmakers could do a gas tax increase that would be a percentage, like a sales tax. That way revenue could increase as the price of gas rises. Another plan would be to increase the tax by two cents and create a $1 billion bond issue to fix bridges. Another two-cent increase could be distributed to counties and municipalities for their transportation needs.
  • Arizona: Gov. Doug Ducey signed legislation earlier this year creating a surface transportation funding task force charged with trying to find solutions for a transportation revenue shortfall that’s expected to reach $15 billion by 2040. The panel is expected to issue a final report to the legislature by the end of the month.
  • California: A special legislative session on transportation wrapped up in November without a deal to finance billions of dollars in repairs to state roads, The Sacramento Bee reported. The administration of Gov. Jerry Brown and Assembly and Senate leaders all say they are committed to getting something done in 2017. Brown had put forth a $3.6 billion proposal this summer, while some Democratic legislators wanted a $7.4 billion package. Republicans have opposed efforts to raise the state gas tax as part of any package, The Los Angeles Times noted.
  • Colorado: A plan to reclassify the state’s hospital provider fee to provide more money for transportation that has been pushed by business leaders and Democrats including Gov. John Hickenlooper for the past two years but that Republicans have opposed doesn’t appear any closer to winning support in 2017, The Denver Business Journal noted. But despite not supporting that option, new Senate president Kevin Grantham says finding new funding for transportation is one of his highest priorities.
  • Indiana: The Funding Indiana’s Roads for a Stronger Safer Tomorrow Task Force, comprised of four members of the Senate, four members of the House and eight lay members, has been meeting since July to try to come up with solutions to the state’s transportation funding challenges. Among the ideas reportedly discussed: fuel taxes, alternative fuel vehicle levies, mileage-based user fees and tolling interstates. Some on the task force have questioned whether an indexing mechanism should be attached to any gas tax increase, Indiana Public Media reported. While they can save politicians some difficult votes down the road, they make future increases less transparent, some argue.
  • Louisiana: A task force appointed by Gov. John Bel Edwards has recommended that state funding for roads and bridges increase by $700 million annually and has deemed raising the state’s 20-cents-per-gallon gas tax the “most reliable, proven and meaningful” way to do so, The Advocate reported. The gas tax would need to increase by about 23 cents per gallon to generate the additional $700 million. Increases in registration and special permit fees for commercial trucks are also recommended by the panel. Tax increases require the support of two thirds of the House and Senate in Louisiana. Louisiana has a $13.1 billion backlog of road and bridge needs. Tolling and public-private partnerships also could be tapped to help finance big ticket projects like a new bridge over the Mississippi River in Baton Rouge, the panel said.    
  • Minnesota: Republicans and Democrats appear to agree that the state needs hundreds of millions of additional dollars for transportation funding but they can’t agree on where new money should come from, The Mankato Free Press reported in October. Minnesota Department of Transportation projections say the state has a 20-year funding deficit of $16.3 billion, which translates to an annual deficit of $815 million. A compromise proposal supported by Gov. Mark Dayton late in the 2016 legislative session would have added a nickel to the state’s 28.5 cent gas tax, increased license tab fees and dedicated some revenue from sales taxes on auto parts to generate $600 million more annually. Republicans have opposed fuel tax increases.
  • Mississippi: Could the largest tax cut in the state’s history approved during the 2016 session be repealed and those funds redirected to roads and bridges? That’s what a group of Senate Democrats has proposed, The Mississippi Business Journal reported last month. The plan faces long odds, even they concede, and lawmakers could consider other possible tax changes during the 2017 session aimed at making the state more competitive. Analysts say a more conventional path would be an increase in the state’s 18.4-cent fuel tax. But Republicans worry about the impact of raising taxes on long-term economic growth. 
  • Missouri: Despite an annual shortfall in state funds for road and bridge repair that is expected to reach $500 million next year, the state’s Republican-dominated legislature has appeared unwilling to support a significant tax increase that would then have to go to Missouri voters, who have also been unwilling to support such increases in recent years, The Kansas City Star noted. The trucking and convenience-store industries have opposed toll roads in the state. But state department of transportation officials warn the funding shortfall is taking its toll over time. Missouri has not raised its 17-cents-per-gallon gas tax in two decades. Analysts say if lawmakers can decide on a path forward, they will need to present a united front to sell it to the public.
  • Montana: Gov. Steve Bullock has proposed a 2017 bill calling for $200 million in cash and bonds to be spent on the state’s infrastructure needs, according to The Billings Gazette. Bullock has also proposed a new infrastructure trust fund, which could tap coal severance tax revenues for infrastructure in future years.  
  • Oregon: Legislators are expected to consider a major roads funding bill in the 2017 legislative session. By March, they should have in hand an audit of the Oregon Department of Transportation that was requested by Gov. Kate Brown. Members of the legislature’s Joint Interim Committee on Transportation Preservation and Modernization toured the state this year to gather input on what to include in a transportation funding package. Oregon’s Constitution requires that gas tax revenues be used only for roads so if they look to fund transit and other modes, they would need to find other kinds of revenue. The state has long been exploring the concept of mileage-based user fees and lawmakers could be poised to take the next step on that front in 2017, The Oregonian reported in June. A panel originally appointed by then-Gov. John Kitzhaber in 2014 estimated the state needs $964 million in additional funding annually. A $343.5 million package fell short during the 2015 legislative session. 
  • South Carolina: With Gov. Nikki Haley tapped by President-Elect Trump to serve as U.S. Ambassador to the United Nations, all eyes are on Lt. Gov. Henry McMaster. But he’s not saying yet whether he could support an increase in the state’s 16.75-cent-a-gallon gas tax, The State reported. Some would like to see lawmakers consider an incremental increase to the gas tax in the neighborhood of 20 cents per gallon over four years to lessen the impact on consumers, The Post and Courier noted earlier this year. The House approved a 10-cent increase offset by a tax cut during the 2016 session but it was shot down in the Senate amidst election year concerns.
  • Tennessee: Tennessee lawmakers may be preparing to debate an increase in the state’s gas tax in 2017 after a couple of years of hinting from Gov. Bill Haslam and Transportation Commissioner John Schroer, Nashville Public Radio reported. New House Majority Leader Glen Casada has said he’s open to a dedicated funding source to build more roads. Tennessee’s gas tax ranks among the lowest in the nation and has not increased in more than 20 years. The legislature could see a battle over whether future gas tax revenues could be used for mass transit in places like Nashville, where local officials say $6 billion in federal, state and local funds for transit is needed over the next 25 years.
  • Wisconsin: “No Easy Answers” is the title of a document Assembly Speaker Robin Vos distributed to Republican members in advance of the 2017 legislative session. The state faces a $1 billion transportation budget deficit. Gov. Scott Walker has vowed not to raise gas taxes or vehicle registration fees without tax cuts elsewhere. But Assembly Republicans are promising to keep all options open—including gas tax increases, vehicle registration fees and toll roads—as they begin public hearings on the issue this week, according to The Chippewa Herald.