Transportation on the Special Session Agendas in Texas & Washington; Updates on Five Other States

Transportation funding is getting a close look as lawmakers convene in special sessions in Austin and Olympia this week. I also have items on how Connecticut lawmakers recently approved a measure to make the state’s transportation fund off-limits to budget raids, how Michigan’s high gas prices may be hurting the chances of a gas tax increase, and how a compromise transportation plan might emerge in Pennsylvania. Plus, news from the world of public-private partnerships and additional links to recent items and resources.

Texas Lawmakers to Consider Transportation

Redistricting won’t be the only item on the agenda for the special legislative session in Austin. Gov. Rick Perry has decided to add abortion and sentencing guidelines legislation to the call as well as a funding solution to address the Lone Star State’s congested transportation system. Lawmakers have already filed multiple proposals aimed at seeking new revenues for transportation, The Houston Chronicle reported.

During the regular session, lawmakers could only come up with an additional $400 million for the state highway fund, about $3.6 billion less than what Texas Department of Transportation officials have said is actually needed just to maintain current congestion levels. Proposals to increase fees, borrow money and divert sales tax revenue were all shot down.

One idea being floated for the special session, Aman Batheja of The Texas Tribune writes this week, would divert half of the oil and gas severance taxes that go into the state’s Rainy Day Fund to the state’s highway fund, which supporters in the Senate say would raise nearly $1 billion annually for road construction. The change would require voter approval of an amendment to the state’s Constitution. A House proposal would send some of the revenue for the Rainy Day Fund to public education which would then allow lawmakers to re-direct the 5 cents of the state gas tax that now goes to schools back to transportation.

Batheja reported Wednesday that the chairman of the Senate Finance Committee hopes his panel will approve the Senate plan, in the form of SJR 2, on Friday so that the full Senate can consider it early next week.

Special Session Number Two in Washington

Gov. Jay Inslee called for a second special legislative session that started Wednesday, just hours after the first 30-day special session ended Tuesday night with lawmakers deadlocked on a state budget, only a temporary budget plan in place and a July 1st deadline looming to pass operating, capital and transportation budgets to avert a possible government shutdown.

Senate Transportation Committee Co-Chair Curtis King issued the Republican version of a 10-year, $8.4 billion transportation plan this week, The Seattle Times reported. Like the bill offered by his House counterpart, Rep. Judy Clibborn, a Democrat (and co-chair of CSG’s Transportation Public Policy Committee), King’s bill calls for a 10-cent gas tax increase, mainly to pay for highway expansions, with smaller shares going to ferries and road maintenance. His plan also would allow the present sales tax for transit of 0.9 percent to be raised to 1.2 percent, but only if voters approve a ballot measure. House Democrats on the other hand had proposed funding transit by allowing the Metropolitan King County (Seattle) Council or voters to impose a car-tab tax of $150 per $10,000 of vehicle value, with 60 percent of the revenues earmarked for transit and 40 percent for roads. King said the car tab would put the burden for transit on the backs of drivers while a sales tax would socialize the cost of what he sees as a social issue (transit). Sales taxes however are viewed as regressive as they affect lower income people disproportionately. According to the Institute for Taxation and Economic Policy, Washington state already has the nation’s most regressive tax structure.

The Olympian newspaper also reported this week on the differences between the House and Senate plans.

Other State Transportation Revenue Updates

  • Connecticut: The Nutmeg State is one of several in 2013 to look at protecting a Special Transportation Fund from being raided for other government needs. Lawmakers okayed a lockbox for the fund as part of a transportation bill that won unanimous approval last week, The Connecticut Post reported. “I think it’s an important assurance for people who want to know when they invest in transportation or buy gas that those funds are going toward improving our infrastructure for the future,” state Rep. Gerald Fox said of the measure. But some legislators expressed disappointment that the lockbox provision won’t take effect until July 2015 and that the newly approved state budget takes about $120 million from the dedicated transportation fund to offset deficits elsewhere.
  • Michigan: Higher gas prices in Michigan are prompting state lawmakers to be skittish about increasing gas taxes as the summer driving season begins, The Detroit News reported this week. Legislation to raise hundreds of millions of dollars in new fuel taxes is stalled and some House Democrats are calling on the state’s Republican Attorney General to investigate the recent spike in prices that has pushed Michigan’s statewide average gas price to $4.20 a gallon—57 cents higher than the national average. Proposed changes to the gas tax were scheduled to be considered in the House Transportation Committee this week but lawmakers could decide to postpone any decision until this fall.
  • North Carolina: Gov. Pat McCrory’s proposed overhaul of the state’s transportation spending formula, which I blogged about back in April, appears to be quickly making its way through the legislature, The News Observer reported. But some are concerned that the replacement for the old formula, which created artificial obstacles to the state’s efforts to solve some of its most vexing transportation challenges, could make it more difficult to fund light rail lines, sidewalks, bike trails and regional transit. McCrory’s proposal, dubbed the Strategic Mobility Formula, would require that 40 percent of all transportation construction money be spent on projects of statewide importance. Another 30 percent would be divided among seven regions. Lawmakers are being asked to approve the proposal quickly, before the state DOT finishes putting together the detailed criteria they will use to rank one project over another. A Senate floor vote is expected soon.
  • Pennsylvania: Gov. Tom Corbett said this week he expects the transportation bill passed by the Senate last week to undergo some surgery before it finally reaches his desk, CBS Philly reported. In February, Corbett proposed raising about $1.8 billion a year for transportation by lifting a cap on gas taxes at the wholesale level. The Senate-approved plan would raise an additional $700 million by raising vehicle fees and fines for moving violations. House Transportation Committee Chair Dick Hess also predicted an eventual compromise bill will likely fall somewhere between the Governor’s proposal and the $2.5 billion Senate bill. Corbett was in Pittsburgh last week touting the link between transportation funding and public safety, during an appearance at the 85-year-old Liberty Bridge, one of the state’s 4,000 structurally deficient bridges, Gant Daily reported. “This bridge is declared structurally deficient and if it were ever posted with a weight restriction, it would set off a change in traffic flow that could clog other city arteries,” Corbett said. “We need a transportation plan that provides a reliable stream of funding to keep our roads and bridges in shape.” The Pittsburgh Tribune-Review also reported this week on the challenges Pennsylvania faces in trying to address bridge deficiencies.
  • South Carolina: The chairman of the South Carolina Department of Transportation John Edwards said this week he has issues with a Senate-approved budget plan that would use $50 million to leverage about $500 million in bonds from the State Transportation Infrastructure Bank to spend on roads and bridges, Tim Smith of The Greenville News reported. Edwards said he doesn’t like the idea the plan relies so much on borrowing. But lawmakers were unable to agree on a permanent transportation funding fix during the 2013 session with the Senate opting for the bond plan and the House passing a plan to use $60 million from the budget for bridge work and $80 million a year in vehicle sales tax revenue for roads.

Public-Private Partnerships: News & Resources

I’m about to head up to New York for the InfraAmericas U.S. P3 Infrastructure Forum. It’s one of the premiere conferences in the country focused on public-private partnerships and brings together state and federal officials with representatives from the private sector entities that make up the P3 industry. CSG is a supporting organization for the conference. I previewed the event for a recent edition of the Capitol Ideas E-Newsletter.  I’ll of course have a full report when I return (you can read my coverage of last year’s event here). In the meantime, here are some recent links on the topic at hand:

  • Charles Lammam and Hugh MacIntyre make “The Case for Public-Private Partnerships” in a piece for The Journal of the American Enterprise Institute: “As governments across the United States wrestle with the challenge of providing high-quality transportation infrastructure, they should increasingly consider public-private partnerships. The record shows that such partnerships are more likely to be built on time and on budget, and that they offer greater value than conventional infrastructure projects.”
  • Leonard Gilroy of the Reason Foundation takes a look at the first six years of the Indiana Toll Road lease in a recent policy brief: “In short, the state took advantage of a powerful opportunity to leverage an asset that was underperforming in the state’s hands, unlocking the economic value previously trapped within it as a government-run asset and investing it into new capital assets with long-term value in delivering needed new infrastructure to improve the movement of people and goods statewide.” The brief takes a look at operations and maintenance on the toll road, the investment that has taken place in the road, and the Major Moves program, which allowed the state to fully fund its 10-year transportation plan. They also respond to common critiques of the lease deal, including: “Indiana sold its toll road,” “The Indiana Toll Road concessionaire paid too much for the lease and is defaulting,” “Indiana mortgaged its future and will have nothing left once lease proceeds are spent,” “The ITR lease contains a non-compete clause inhibiting the state’s ability to build roads,” and “Toll road leases hurt public sector labor.” TollroadsNews offered its own take on Reason’s policy brief in a recent post. You can also check out my article about the legacy of the Indiana Toll Road lease, which appeared in the March-April issue of CSG’s Capitol Ideas.
  • The company that built and operates SH 130, the Central Texas toll road with the nation’s fastest speed limit, had its credit rating downgraded last month, the Associated Press reported. Moody’s Investor Service dropped the rating by four grades because the road is carrying about half the traffic it was projected to when it opened last October.

Additional Reading

  • Speaking of speed limits … Ryan Holeywell of Governing magazine reported recently on four states where legislatures voted to increase speed limits in 2013.
  • The temporary Interstate 5 bridge over the Skagit River should open sometime next week, The Bellingham Herald reported.
  • Automotive News reported recently on all the states debating whether to tax hybrid and electric cars to try to capture transportation revenues from drivers of those cars who aren’t paying gas taxes.  
  • Outgoing U.S. Transportation Secretary Ray LaHood announced this week that demand continues to be strong for the latest round of TIGER (Transportation Investment Generating Economic Recovery) grants. The department received 568 applications from all 50 states, the District of Columbia, Puerto Rico, Guam and American Samoa. The applications requested more than $9 billion, far exceeding the $474 million set aside for the program, which awards grants for capital investments in surface transportation infrastructure on a competitive basis.