Updates on States to Watch in 2017: Transportation Funding
Last December, I compiled my annual list of the states to watch on transportation funding. Last month we followed that up with a CSG eCademy webinar featuring Alison Premo Black of the American Road & Transportation Builders Association and reporters from three key states. With legislative sessions well underway in many places, it’s time to see where things stand in the debates about transportation funding going on around the country.
- Alaska: Testimony at a recent House Resources Committee hearing on a bill (House Bill 111) that would overhaul the state’s oil and gas taxes and tax credits leaned heavily against the measure, Alaska Public Media reported. Meanwhile the House Transportation Committee recently considered a separate measure (House Bill 60) supported by Gov. Bill Walker that would triple the state’s gasoline tax by 2018, The Juneau Empire reported. Alaska’s 8 cents a gallon gas tax is the lowest in the nation and an increase to 24 cents would still leave the state below the national average.
- Arizona: Gov. Doug Ducey is vowing no gas tax increase this year and is counting on the Trump administration to help the state deal with its road construction needs, reports Capitol Media Services. Ducey sent a wish list of more than $500 million worth of projects to the White House. Meanwhile, a Senate committee last month approved two measures: SB 1146 would impose new fees and taxes on motor vehicles in order to replace money Ducey plans to take from gas tax and vehicle registration fee revenues to fund the state highway patrol. SB 1147 would give county supervisors the authority to ask voters to impose a 10 cents-a-gallon tax and use the revenues for local road needs. The second measure was approved by the full Senate and sent to the House. A House committee earlier had approved a measure to put a statewide 10 cent gas tax increase on the 2018 ballot, but the chair of the House Ways & Means Committee declined to give it a hearing.
- Arkansas: A House committee has approved bills that would allow the state Highway Commission to issue bonds for 20 years to fund highway construction and maintenance and to levy a 6.5 percent gas tax increase to pay for the bonds, according to the Associated Press. Voters would be asked to approve the measures, which now go to the full House. The measures would raise about $200 million a year, supporters say.
- California: The Senate Governance and Finance Committee last week approved Senate Bill 1, which would generate about $6 billion annually for roads, bridges and transit systems in the state, KCRA-TV reported. State and local agencies would split the revenues evenly. The measure would increase the gas tax by 12 cents per gallon over three years, increase the diesel fuel excise tax by 20 cents, increase the diesel sales tax by 4 percent, increase vehicle registration fees by $38 and require drivers of zero emission vehicles to pay an annual $100 fee. The state faces a 10-year, $59 billion maintenance shortfall while local governments face a $78 billion shortfall.
- Colorado: Democratic House Speaker Crisanta Duran and Republican Senate President Kevin Grantham offered a compromise proposal (HB 1242) last week that would let voters decide in November whether to increase the sales tax for 20 years in order to generate $300 million each year for the Colorado Department of Transportation, the Denver Business Journal reported. To offset the tax increase, the measure would reduce registration fees that were hiked in 2009. Voters would also be asked whether the state should take the new sales tax revenue and use it to sell $3.5 billion in bonds that would allow the state DOT to start work on some expensive road projects. The compromise bill is seen as a breakthrough after months of reportedly difficult negotiations but lawmakers from both parties say it’s likely just a good starting point for further discussion on what is seen as the legislature’s top priority this session.
- Hawaii: A Senate committee last month approved a bill (SB 1012) that would raise the state’s gas tax, the vehicle registration fee and the vehicle weight tax, according to the Honolulu Civil Beat. The director of the Hawaii Department of Transportation told lawmakers recently his agency needs an additional $100 million in funding to prevent further deterioration of roads in the state. Senators have also been considering a measure (SB 1183) to extend Oahu’s tax surcharge to pay for rail that would also direct an unspecified amount of money from the surcharge to the state highway fund.
- Idaho: Two transportation funding proposals were introduced late last week, both of which would allow the state to issue hundreds of millions of dollars in bonds, the Associated Press reported. The first proposal would allow the state to issue $300 million in bonds to borrow money for road projects and repay it with future federal highway payments. An additional $200 million would be issued in bonds to pay for state and local transportation projects. The measure also allows surplus state general funds to go to transportation for an additional five years. The state has been funneling a portion of those funds to roads and bridges since 2015, a set-up that’s due to expire this year. In addition, the bill would replace fuel tax funding for the Idaho State Police with 1 percent of the state’s general funds. It would also exempt road materials from the sales tax. If that proposal fails, a second measure would be considered that would include only the $300 million bond issuance.
- Indiana: The House has approved legislation (HB 1002) that would raise fuel taxes by 10 cents per gallon, open the door to tolling interstate highways and shift all state gas sales tax revenue to a dedicated infrastructure account that currently goes into the general fund, The Northwest Indiana Times reported. A companion measure (HB 1001) would hike the cigarette tax by $1 per pack to cover the $300 million in general fund revenues lost in the shift. But a bumpier road could be in store for the funding plan in the state Senate, leaders said recently. Indiana needs to raise about $1 billion a year more over the next two decades to meet its pavement and bridge quality goals, analysts say.
- Louisiana: The state faces a loss of federal dollars for roads and bridges next year without a major injection of state money, Louisiana’s Secretary of Transportation said recently, according to The Advocate. A task force appointed by Gov. John Bel Edwards said in December the state needs to spend an additional $700 million per year to address transportation needs. A gas tax increase of 23 cents per gallon would be needed to raise that amount if it was the sole source of funding. But Edwards’ recommendations are expected to be well under $700 million to attract the two-thirds support he’ll need in the House and Senate for a tax increase to win passage. The Louisiana legislature convenes for its 2017 regular session on April 10.
- Minnesota: The Post Bulletin reported on a rally last week by Rochester business leaders at the State Capitol in which they called on lawmakers to get serious about long-term transportation funding. Gov. Mark Dayton is pushing for a gas tax increase this year, which he said would cost Minnesotans about $3.50 per week and help the state cover an $18 billion shortfall in its transportation budget, The Star Tribune reported in January. Republicans instead want to use some of the money from a projected budget surplus for a transportation funding package, the newspaper reported last month.
- Mississippi: House leaders have revived a plan to divert a 7 percent tax on items sold by online retailers to a program to repair the state’s roads and bridges, the Northeast Mississippi Daily Journal reported. The plan, which passed the House last week, would generate between $50 million and $70 million. The bill now goes to the Senate. About 30 online retailers are currently voluntarily collecting the tax for the state and under current law those revenues go to the state’s general fund. The legislation would divert 50 percent of those revenues to the Mississippi Department of Transportation and 25 percent each to cities and counties.
- Missouri: Sen. Bill Eigel said recently he wants to open up general revenue to help the state meet its transportation needs and provide up to $2 billion for roads and bridges, according to The Missouri Times. Eigel’s comments came after another state Senator, Doug Libla, told Missourinet last month that he doesn’t plan to introduce a measure to raise the state’s gas tax this year as he has done in the past.
- Montana: The state faces an $874 million annual shortfall through 2021 in improving road, highway and bridge conditions, according to a recent report by the national transportation research group, TRIP. State Rep. Frank Garner has proposed legislation (HB 473) that would increase the state gas tax 8 cents to generate $61 million more annually with $23.5 million of that channeled to cities and counties for local projects, the Big Sky Business Journal reported.
- New Mexico: The Senate approved legislation (SB 95) earlier this month to increase the gas tax for the first time in more than 20 years but Gov. Susana Martinez has pledged to veto the bill if it reaches her desk, The Santa Fe New Mexican reported. In addition to a 10-cent gas tax increase, lawmakers have proposed an increase in the fee charged on the purchase of new or used cars and trucks. While drivers have been logging more miles on New Mexico’s roads in recent years, they are buying less gasoline and the road fund has stagnated. Gas tax revenues peaked at $114 million in 2007.
- Oklahoma: The Oklahoma House voted last week to approve HB 1449, a measure that would impose an annual $100 fee on owners of plug-in hybrid and electric vehicles, KGOU reported. Ten states currently levy fees or taxes on electric vehicles.
- Oregon: A group of Oregon mayors told legislators last week they want to see a large, statewide transportation funding package this year that would include funding for transit, bike and pedestrian infrastructure, The Oregonian reported. A joint committee of lawmakers is reportedly drafting a transportation spending package that could include tolling on congested roads in the Portland area. An initial plan released by the committee included an extensive list of potential revenue sources but no list of specific projects, Oregon Public Broadcasting reported. The Oregon Department of Transportation is also hoping the federal government will allow them to use tolling for upgrades to I-5 and a widening of the Abernethy Bridge. A recent report said the state needs an extra $1.3 billion a year for transportation.
- South Carolina: The South Carolina House approved a plan recently that includes a 10-cent gas tax hike over five years, the Associated Press reported. The plan also includes a higher vehicle registration fee, a $60 fee for hybrid vehicles, a $120 fee for electric vehicles, a $250 fee for vehicles purchased out of state and registered in South Carolina and higher sales taxes on the purchase of used cars. A Senate plan that could get a vote this week includes a 12-cent increase over three years, according to the Associated Press. The plans would raise an additional $600 million or $800 million annually. Gov. Henry McMaster suggested last week that rather than an increase, he would like to see more of existing gas tax revenues actually go to fixing roads and bridges. But, unlike his predecessor Nikki Haley, he did not issue a veto threat.
- Tennessee: Gov. Bill Haslam’s transportation funding proposal is awaiting a vote in the House after a House Transportation Subcommittee approved an amended version of the plan which eliminated a gas tax increase and a measure to index the tax to inflation. As amended, the plan would use a portion of existing revenue generated through the sales tax to pay for transportation projects. It retains tax cuts that were included in Haslam’s original proposal. The Governor’s proposal could see additional changes in the full House and Senate.
- Utah: The Utah Senate this month approved a bill (SB 277) to authorize up to $1 billion in bonding over four years to speed up transportation projects, The Deseret News reported. The bill does not add new revenue. Utah was one of eight states to raise its gas tax in 2015.
- West Virginia: Gov. Jim Justice said in his State of the State Address last month that he wants lawmakers to increase the state’s gas tax by 10 cents a gallon, increase a vehicle license fee by $20, increase turnpike tolls by $1 and increase the current limit for the state to issue project bonds that could be backed by its annual federal highway funding, the AASHTO Journal reported. A recent report by the national transportation research group TRIP said driving on deficient roads costs West Virginia motorists $1.4 billion annually in vehicle operating costs, congestion-related delays and traffic crashes.
Other State Activities of Note
- Connecticut: Gov. Dannel Malloy last week called on business leaders to help him convince legislators to support a lockbox to safeguard transportation funds, The CT Mirror reported. State lawmakers meanwhile considered the issue of electronic tolling on Connecticut highways at a recent hearing.
- Wisconsin: According to a January memo from the Wisconsin Department of Transportation, Gov. Scott Walker’s plans for transportation would result in more congestion, deteriorating road conditions and decades of delayed projects, The Milwaukee Journal Sentinel reported. Walker responded to the memo at an event earlier this month by saying trends and technology could change road usage in the future, which would allow the state to decrease the scope of some projects. He said officials should “factor driverless cars, changing work patterns, millennials eschewing driving and the popularity of rideshare companies like Uber and Lyft into future projections,” The Cap Times reported. As a recent Wisconsin State Journal editorial noted, Walker has refused to support increases to the gas tax or vehicle registration fee or to consider open-road tolling. Senate Majority Leader Scott Fitzgerald has said he wants to borrow more money for roads. A recent audit of the Wisconsin Department of Transportation said the agency significantly underestimated the costs of major highway projects and did not do all it could to manage expenses.
- “States Aren’t Waiting for Trump to Seek Funds for Infrastructure,” Bloomberg, March 9, 2017.
- “U.S. states see favorable conditions for gas tax hikes,” Reuters, February 8, 2017.
- “As Gas-Tax Profits Decline, More States May Turn to Tolls,” Governing, January 30, 2017.
- “Gasoline Taxes,” Institute on Taxation and Economic Policy.
- “State Funding Initiatives Report,” Transportation Investment Advocacy Center (American Road & Transportation Builders Association), February 2017.
- “State Transportation Funding Proposals Since 2013,” American Association of State Highway & Transportation Officials, Standing Committee on Finance & Administration, As of February 10, 2017.
- “What to Watch in the States: Gas Tax Hikes and Swaps,” Tax Justice Blog, February 2, 2017.