States to Watch in 2018: Transportation Funding

2017 was a big year for state transportation funding efforts, following in the footsteps of recent odd-number years 2013 and 2015 that also saw significant activity. So, what’s on tap for 2018? Here’s my annual look ahead.

A Quick Recap of 2017 Transportation Funding Activity

This year seven states (California, Indiana, Montana, Oregon, South Carolina, Tennessee and West Virginia) enacted new legislation to raise gas taxes and another (Utah) tweaked its gas tax formula to generate additional revenues. Voters in Maine and West Virginia approved bonding to fund transportation in 2017 ballot measures. Wyoming didn’t raise its gas tax but did increase licensing and registration fees and commercial vehicle weight fees. Other states, including Colorado, Idaho and New Hampshire, approved one-time transportation funding this year. Ten states approved new fees for electric and/or hybrid vehicles.

Even with all that activity in 2017, there are still plenty of states that could be looking to follow in the footsteps of those states in 2018. Here are profiles of 13 states that could try to tackle the issue next year:

Alabama

House Speaker Mac McCutcheon told AL.com earlier this year that while he thinks a House vote on a gas tax bill is unlikely for 2018—an election year in Alabama—that could change if Congress were to approve a federal infrastructure plan as President Trump has called for. “I think it would at least help the public realize that the need is there, the timing is now,” McCutcheon said. A bill introduced during the 2017 legislative session by Alabama state Rep. Bill Poole that would have raised the gas tax by 6 cents over two years couldn’t muster the votes to clear a procedural hurdle.

Arkansas

The Arkansas Department of Transportation (ARDOT) conducted a citizen survey earlier this year to see if and what type of taxes or fees residents might be willing to support to help fix state roads, Ozarks First.com reported. Among the options floated in the survey: increases in gas and/or diesel taxes, the state sales tax, and vehicle registration fees. Taxing the wholesale price of fuel and redirecting vehicle sales taxes to roads were also among the options. Department officials said they hope to put a funding initiative before voters next November. Gov. Asa Hutchinson said this fall he would not support an ARDOT proposal to use general revenue funds to make up for a $400 million shortfall in funding for road improvement projects, KATV reported.

Colorado

Colorado voters could consider two competing ballot measures in 2018 focused on transportation funding. Colorado Public Radio reported last month that the Denver Metro Chamber of Commerce is leading the charge for a measure that would raise the sales tax to pay for transportation improvements statewide. Another proposed measure would force lawmakers to take money from other state programs to put towards transportation. A sales tax measure that appeared to have bipartisan support failed to make it out of the legislature during the 2017 session. Lawmakers did approve a $1.8 billion bond measure for roadwork over the next 10 years. In addition, Denver voters approved a $937 million bond package in November, which will fund road repaving, bridge replacements, sidewalk construction, bike lanes and bus rapid transit projects, according to The Denver Post.

Connecticut

A 2017 budget crisis ended without a solution to the problem of gas tax revenues that aren’t growing enough to meet the state’s transportation needs. Legislative proposals to install or study tolls on I-84, the Merritt Parkway and I-95 failed to win support from lawmakers. The President of the Connecticut Construction Industries Association Don Shubert told Hartford Business.com last month that “In the near future, the state will have to consider incorporating other revenue sources and innovative financing tools to sustain infrastructure investment.” Shubert pointed to a January 2016 report from a panel of transportation experts that offered a menu of potential revenue sources. Shubert said the number of structurally deficient and functionally obsolete roadway bridges in the state is well above the national average and 57 percent of the state’s roadways eligible for federal aid are rated “not acceptable.”

Georgia

While the Peachtree State approved a major transportation funding package in 2015, Georgia lawmakers in 2018 could consider whether state government should provide direct funding for public transportation. A House Commission on Transit Governance and Funding assembled by Speaker David Ralston has been charged with studying how transit should be paid for, how it can be integrated into Georgia’s statewide transportation system and what governing structures would be needed if the state were to devote regular funding, the Atlanta Journal-Constitution reported. While the commission is not scheduled to complete its work until late 2018 or early 2019, it may identify some interim measures for consideration during the 2017 legislative session.

Hawaii

Lawmakers in 2017 failed to pass a transportation funding proposal requested by the state DOT and supported by Gov. David Ige for the second year in a row. The failure of the proposal, which included a 10-cent gas tax increase and increases in annual registration fees and the motor vehicle weight tax, was said to put a number of major road projects in jeopardy, Hawaii News Now reported. A report by the website 24/7 Wall Street this summer said Hawaii has the nation’s worst infrastructure with 29 percent of roads in poor condition.

Kentucky

A House transportation work group this year has been looking at what other states have done to finance new roads and maintain existing ones, Spectrum News reported. In September, the group heard from a former Pennsylvania transportation secretary about a 2013 transportation package in that state and from a policy specialist for the National Conference of State Legislatures about the mileage-based user fee pilot tests going on around the country. The work group, which is tasked with studying the road and transportation needs facing Kentucky, including declining road fund revenues, is expected to report its findings to the General Assembly next month.

Louisiana

Louisiana faces a fiscal cliff in 2019. The state reportedly is not generating enough money to receive matching federal funds for infrastructure and transportation projects and faces losing those funds if legislators can’t come up with a plan. Louisiana has a $13.1 billion backlog of road and bridge projects and needs to be spending another $700 million annually on roads, bridges and other transportation services, a task force appointed by the governor said. The state’s gas tax, one of the lowest in the country, has not been adjusted in nearly 30 years. A proposed 17-cent gas tax increase during the 2017 session failed to win support. That may have taken it off the table for 2018, 2019 and 2020 as well, The Advocate reported this summer. Next year and 2020 are non-fiscal session years for the legislature, while 2019 will see the state’s next gubernatorial election.

Massachusetts

Sen. Thomas McGee has filed legislation that would expand electronic tolling in Massachusetts to roads beyond the Massachusetts Pike to help pay for transit projects, MassLive.com reported last month.

Minnesota

Minnesota lawmakers in 2017 failed to pass a comprehensive transportation bill but were able to carve out an additional $555 million for transportation by issuing bonds and tapping a budget surplus. Gov. Mark Dayton had proposed higher motor fuel taxes. The transportation legislation authorized a study of expanding toll highways statewide, which is expected to be completed next year.

Mississippi

At a Senate Transportation Committee hearing this summer in Jackson, Mississippi Department of Transportation (MDOT) officials told Senators the condition of the state’s transportation system is bad and getting worse at an alarming rate, The Daily Journal reported. Moreover, further delays in making repairs could make the costs exponentially more expensive. Officials said about $400 million is needed annually to bring Mississippi’s infrastructure up to a satisfactory level over the next 10 to 15 years. Among revenue sources being floated to generate the revenues: a state lottery and a 7-cent-per-gallon increase in the motor fuel tax. The latter would generate about $164 million annually. But lawmakers at the hearing disagreed about whether raising the gas tax or rescinding 2016 legislation to reduce the state income tax would be the better course of action. Only five states have lower gas tax rates than Mississippi (18.4 cents-per-gallon). Others have argued however that more money for transportation won’t do much good without significant reforms at the state DOT, according to Mississippi Today. In October, Republican state Sen. Dean Kirby announced he plans to introduce a bill in 2018 that would ask voters in a state referendum whether they want taxes and fees raised to pay for road and bridge repairs, The Clarion Ledger reported. Voters would be able to view a list of the projects the money would go to in the state’s three transportation districts. Kirby also proposes a $150 annual fee on electric cars and a $75 annual fee on hybrids. Kirby said it was a successful referendum in Georgia that provided the inspiration for the plan. Mississippi Gov. Phil Bryant has expressed his support for putting transportation funding on the ballot next year.

Missouri

In May, Missouri lawmakers approved a resolution creating the 21st Century Missouri Transportation System Task Force. The panel was charged with: evaluating the condition of Missouri’s transportation system and the current funding plan, evaluating whether funding is sufficient to maintain the current system and serve future transportation needs, and making recommendations regarding the system’s condition and funding. The panel has until January 1 to file a report and make their recommendations, according to The News Tribune. Missouri’s gas tax hasn’t been raised since 1996 and the state ranks 47th in the nation in revenue per mile. Fees for vehicle registration and licensing haven’t increased since 1984. The task force’s first meeting in June included discussion of a gas tax increase and of tolling Interstate 70 across Missouri, two ideas that have met political opposition in recent years. Lawmakers this year inserted language into the state budget that bars the state department of transportation from pursuing tolling on that corridor. Some lawmakers have opposed a gas tax increase arguing broader tax reform is needed that would move more of the state’s general revenue to meet transportation needs. The Missouri DOT, which has a current budget of about $2.3 billion, says it needs about $825 million more annually to improve the state’s transportation infrastructure. Missouri requires that any plan raising taxes in a significant way must go before voters.

Utah

Legislation passed this year created the Transportation Governance and Funding Task Force, which was charged with studying and making recommendations on the governance, coordination, oversight and operational structures of transportation agencies in Utah, the funding needs and future funding sources. The panel’s recommendations are due to the governor and legislature on December 1. At the panel’s first meeting in May, Utah Department of Transportation Executive Director Carolos Braceras told lawmakers “We are going to double our population in 35 years and we are not going to be able to double our road miles,” The Salt Lake Tribune reported. State Sen. Wayne Harper, who authored the legislation creating the task force and serves as its co-chair, said the panel could look at ways to eliminate funding silos now separating money for transit, roads, airports and other projects. At the task force’s July meeting, Baruch Feigenbaum of the libertarian Reason Foundation warned members the gas tax is on its way out like “a rock star playing a final concert” and contributes to a funding system that is unsustainable over the long term, necessitating a need for new transportation revenue sources, The Deseret News reported. Feigenbaum suggested the state consider a separate tax for electric cars and a tax on bike tires, like one approved this year in Oregon. He also said the state could generate additional funding for public transit by using value capture to assess new property taxes near transit lines and impact fees. At an August meeting, the task force heard testimony about the potential for public-private partnership models such as asset recycling, according to The Deseret News. In October, state Sen. Howard Stephenson, who co-chairs the legislature’s Revenue and Taxation Interim Committee, announced he intends to introduce legislation in the 2018 session that would require Utahns with alternative fuel vehicles either to pay a $225 annual fee or participate in the state’s mileage-based user fee pilot.