Updates on States to Watch on Transportation Funding

This week, an update on more than 20 states looking at transportation funding this year. Per-gallon gas tax increases, indexing, sales taxes, tax swaps, motor vehicle excise taxes, vehicle registration fees, transportation fund lockboxes and bonding are among the issues factoring into the discussions around the country. I also have information about how you can join us for our latest eCademy webinar this week on the states to watch on transportation funding.

State Updates

  • California: Assembly Speaker Toni Atkins is proposing a new road user fee to help fund repairs to the state’s roads, The Sacramento Bee reported. Atkins hasn’t determined how the fee would be assessed but has mentioned vehicle mileage, vehicle license fees and a car insurance add-on as possibilities.
  • Connecticut: Some are calling 2015 the “year of transportation” in Connecticut, where Gov. Dannel Malloy’s 30-year transportation proposal is expected this month. But The Hartford Courant also reports that lawmakers have introduced more than 140 transportation-related bills for this legislative session. Among them are several measures that would protect the state’s Special Transportation Fund from being tapped for other expenses.
  • Delaware: Newly sworn in Delaware Transportation Secretary Jennifer Cohan said last week one of her biggest priorities will be to look for ways to increase transportation funding, which could include a gas tax hike or an increase in DMV fees, WDEL Radio reported. A 10 cent per gallon gas tax increase was proposed last year but never made it through the legislature. Cohan reportedly wants to look into public-private partnerships as well.
  • Georgia: House Republican leaders have introduced a plan to raise about $1 billion a year for transportation and establish dedicated annual funding for transit, The Atlanta Journal-Constitution reported. The plan would shift the state away from a sales tax on gas to a 29.2 cents per gallon excise tax. It would eventually end the local sales tax on gas but it would allow counties and cities to levy their own excise tax. The plan also calls for a $200 fee for owners of electric and alternative fuel vehicles, the revenues from which would be designated for transit. More immediately, the 2016 state budget would include a $100 million bond package to pay for critical road and bridge improvements and transit projects. With the legislation, lawmakers also will look to raise funding to recapitalize the Georgia Transportation Infrastructure Bank, The Atlanta Business Chronicle reported. One controversial aspect of the bill is likely to be the 6 cents-per-gallon local gasoline excise tax, which cities and counties would vote on and which would replace the Special Purpose Local Option Sales Tax some communities now are collecting, once those taxes expire. Lawmakers would also need to figure how to replace the $175 million the state’s general fund currently receives annually from the fourth penny of the state sales tax on gasoline. Those funds go for such purposes as education and public safety. One Tea Party group in Georgia has already labeled the plan a tax increase, saying it would raise gas prices 7.7 cents per gallon. Gov. Nathan Deal meanwhile is expressing concern about the plan’s $100 million bond package, arguing it doesn’t provide the sustainable funding that is needed, WSB radio reported.
  • Idaho: Some lawmakers are now questioning whether raising the fuel tax and registration fees can provide enough revenue to fix the state’s annual transportation funding shortfall of $262 million just for maintenance and repairs and additional $281 million for capacity and safety improvements, The Lewiston Tribune reported. They say it may be necessary to tap general fund dollars to fill the gap. But Gov. Butch Otter has said he won’t entertain proposals that would see transportation competing for those dollars with education and other required programs and services.
  • Iowa: Lawmakers in both parties are optimistic that a 10-cent gas tax increase will have a strong chance of passage this session to help the state plug a $215 million funding gap, The Des Moines Register reported. The state last raised its gas tax in 1989. But conservative, anti-tax groups are mobilizing against an increase, the newspaper reported elsewhere. And some lawmakers who don’t like the idea of an increase are suggesting ideas like legalizing marijuana and fireworks to bring in revenues instead, The Quad City Times noted.    
  • Maryland: Gov. Larry Hogan says he’ll seek a repeal of the automatic increases to the state’s gasoline taxes that were included in Maryland’s 2013 transportation funding package, Roll Call reported. Last fall, voters in Massachusetts repealed that state’s automatic gas tax increases.
  • Michigan: Voters in May will consider a 1-cent sales tax hike to help repair the state’s roads. Lawmakers reached a last-minute deal in December to put the question in voters’ hands. The tax increase is projected to produce $1.2 billion annually for roads and $100 million for transit. Dan Vock of Governing magazine looked recently at the potential challenges the measure might face, including the opposition of anti-tax groups. One such group is urging state elections officials to approve ballot language that will give the public detailed information about the sales tax proposal, which is also expected to produce $300 million for K-12 schools and $95 million for local governments, The Detroit Free Press reported. Business group are lining up on either side in advance of the May 5 vote, The Detroit Free Press reported. The merits of another provision in the ballot proposal that would create a $75 annual surcharge for electric vehicles and $25 surcharge on most hybrids are also continuing to be debated, Michigan Live reported. Some in Detroit meanwhile are concerned about how the May vote will impact a vote on additional funding for the city’s Regional Transit Authority in November, according to U.S. News & World Report.   
  • Minnesota: Gov. Mark Dayton has proposed an $11 billion plan to fix roads and bridges and improve transit in the state. It calls for a 6.5 percent gross receipts tax on gasoline at the wholesale level, which would mean motorists would pay an additional 16 cents a gallon at the pump at current gas prices and up to 22 cents a gallon more if gas prices ever reach the $4 a gallon mark again. The governor also wants a half-cent increase in the sales tax for the seven-county metro area around the Twin Cities, which would go toward mass transit improvements, The Star Tribune reported. Republican legislators say the tax increases will “disproportionately impact poor and middle class families” and contend there are ways to increase funding without raising taxes. That’s something Dayton says “doesn’t reflect reality.”
  • Mississippi: The chairman of the Senate Highways and Transportation Committee, Willie Simmons, wants lawmakers to approve $300 million for timely repairs on state highways and bridges and an additional $100 million for locally maintained roads and bridges, The Mississippi Business Journal reported. Simmons’ legislation may face an uphill battle though since many lawmakers prefer to wait for completion of a comprehensive study and proposals from a transportation task force created by the state chamber of commerce.
  • Missouri: House Speaker John Diehl is criticizing Gov. Jay Nixon for not laying out a plan to fund transportation but simply stating the obvious in his State of the State address that there should be discussion about tolling I-70 and increasing the gas tax, Missourinet reported. Diehl wants two House committees to study the Missouri Department of Transportation’s use of its current resources.  … Meanwhile, it looks like Missouri Transportation Director Dave Nichols won’t stick around to see what future cuts to his department might look like. He announced last week he plans to resign May 1 after 30 years at MoDOT, the Associated Press reported. Nichols was among the speakers at the 2013 CSG National Conference in Kansas City. Nichols has been meeting with lawmakers in Jefferson City in recent weeks about various proposals to raise the gas tax, the Kansas City Business Journal reported. Among the ideas under consideration: simply hiking fuel taxes by two cents a year for three consecutive years, indexing the gas tax to the consumer price index, or eliminating the flat, cents-per-gallon tax and assessing a tax based on a percentage of the retail price of fuel. Each two cent-a-gallon gas tax increase would generate about $78 million in additional revenue a year. Any action the legislature would take to raise taxes by $86 million a year or more would require them to have voters decide. Missouri voters rejected a sales tax increase last August that would have provided billions of dollars for road and bridge repairs.
  • Montana: House Republicans plan to reject most of the bonding proposed in Gov. Steve Bullock’s nearly $400 million infrastructure bill, the Associated Press reported. They plan to divide Bullock’s plan into seven separate bills, including one that would address funding for roads in eastern Montana affected by the oil boom. Bullock has said he would veto any infrastructure plan paid for by all Montanans and only benefiting some.
  • New Mexico: Gov. Susana Martinez has proposed a plan to raise $180 million over three years for highway spending using infrastructure bonds backed by severance taxes on oil and gas production to leverage federal and other funds, the AASHTO Journal noted. Now state Rep. Larry Larranaga has upped the ante proposing a five-year, $300 million commitment.
  • North Carolina: Gov. Pat McCrory used his State of the State address last week to discuss his plan to borrow about $2.5 billion for transportation and building projects, The (Raleigh) News & Observer reported. He’s asking lawmakers to put the bond measures on the statewide ballot for consideration by voters. The governor backed away from a pledge he previously made to recommend targeted new revenue sources to shore up the state’s gas tax revenues. He now says he’ll wait for legislators to take the lead on recommending any specific new transportation taxes or fees.
  • Oregon: Senate Democrats say a transportation funding package is in doubt for this session because Senate Republicans don’t want to support bills to continue limiting vehicle carbon emissions, The Oregonian reported.
  • South Carolina: The House Transportation Infrastructure and Management Ad Hoc Committee, which spent nearly six months studying how to fund road and bridge repairs, issued its recommendations last month and they differ substantially from a plan put forward by Gov. Nikki Haley, The Post and Courier reported. The committee proposes reducing the state’s 16.75-cent-per-gallon gas tax and increasing the sales tax on gas at the wholesale level. The new combined tax would have a ceiling to protect South Carolinians from fluctuating gas prices. There is also a plan in the recommendations that would eventually allow the state to turn over ownership of state-owned roads to counties. Haley has proposed raising the gas tax by 10 cents over three years while reducing the state income tax from 7 percent to 5 percent over a decade. The governor has also called for a restructuring of the state department of transportation.   
  • South Dakota: Gov. Dennis Daugaard’s plan to raise $41 million in state revenue through fuel tax increases and a motor vehicle excise tax hike and another $10 million for local projects through vehicle registration fee increases appears to be gaining ground among legislators, the Associated Press reported. The proposal is half of what a legislative panel chaired by Senate Transportation Committee Chairman (and CSG Transportation Public Policy Committee Co-Chair) Mike Vehle proposed. Senate Majority Leader Tim Rave said last week he’ll replace the Senate proposal with provisions that mirror the governor’s package as a starting point for his chamber’s deliberations.
  • Texas: Lt. Gov. Dan Patrick said last week he supports a proposal by Senate Transportation Chairman Robert Nichols to dedicate some of the sales tax already collected on car sales to road work in the state, The Texas Tribune reported. Currently all of the vehicle sales tax collected—about $4 billion annually—goes to the state’s general fund. But some Democrats have expressed concern that permanently dedicating a large portion of the sales tax to roads could hamstring future legislatures. The state department of transportation has said it needs an additional $4 billion to $5 billion a year to keep congestion from getting worse in the state. Last year, Texas voters agreed to amend the constitution to dedicate some oil and gas production tax revenues to transportation. But that won’t produce near the amount needed.  
  • Utah: A gas tax increase is on the agenda for the 2015 session, which got underway last week, The Deseret News reported. Lawmakers are reportedly split however over whether to make the per-gallon charge a sales tax that adjusts annually or just raise the existing gas tax 5 or 10 cents. While the state does not have an existing budget hole right now, transportation officials project an $11.3 billion gap in transportation funding through 2040. Meanwhile Gov. Gary Herbert has said he wants to take approximately $94 million out of the state’s transportation fund to put towards education this year, The Spectrum reported.
  • Washington: Republican Senate Transportation Committee Chairman Curtis King is looking at an 11.5 cent per gallon gas tax increase phased in over three years, KUOW reported. Lawmakers are reportedly feeling pressure to fund a new round of transportation projects as well as maintenance and preservation efforts. Gov. Jay Inslee, a Democrat, has said he’d rather see a carbon emissions charge on industrial emitters than a gas tax increase. King opposes a carbon fuel tax because the revenue would not be required to go toward transportation, unlike gas tax revenues, The Yakima Herald-Republic reported.   
  • Wisconsin: Rather than supporting a gas tax increase, Gov. Scott Walker now says he wants to borrow $1.3 billion to fund transportation projects over the next two years, The Milwaukee Journal Sentinel reported. The bonding plan has reportedly produced concern on both sides of the aisle, the Wisconsin Radio Network reported.
  • Transportation for America has a new report just out entitled “Capital Ideas: Winning State Funding for Transportation: Lessons from Recent Successes.” The report identifies seven factors for success and reviews case studies from Virginia, Massachusetts, Pennsylvania, Indiana, Wyoming and Vermont. Also, on the T4America blog, you can read about how Governors are stepping out in favor of raising transportation revenue this year.   

States to Watch in 2015 on Transportation Funding: The CSG eCademy

T4America Director James Corless will be among our guests tomorrow for our CSG eCademy webinar on the states to watch this year on transportation funding. He’ll talk about the latest revenue mechanism trends around the country and about resources available to policymakers. We’ll also get live reports from seven states looking at funding options this year from reporters who cover politics, state government or transportation for daily newspapers and other publications. And we’ll get an insider’s perspective from one state legislator about what’s happening in his state. The webinar takes place Tuesday, February 10 at 2pm ET. You can learn more and register for the free event here.