Vermont Latest State to Approve New Transportation Revenues; Updates on Three Other States

The Vermont state legislature voted this week to increase gas taxes to raise additional revenues for transportation. The Green Mountain State became the latest state to address transportation funding needs during 2013. I also have updates on what’s going on in three other states with regards to transportation funding.

Shumlin-Brokered Compromise in Vermont

The House and Senate this week approved a final transportation package brokered by Gov. Peter Shumlin that includes increases in gas and diesel taxes, The Vermont Digger reported. The package raises the diesel tax by 3 cents per gallon over two years and the gas tax by 6.5 cents per gallon.

As part of the compromise, the House abandoned a measure to index the gas tax to inflation, which would have translated into automatic annual increases of about a quarter of a cent per gallon. But the legislation sets up a process whereby gas tax rates can be reviewed once every three years. The package also includes a provision that the new fuel tax assessment “shall be used exclusively for transportation purposes and not be transferred from the Transportation fund.”

Vermont needed to raise about $36.5 million in transportation revenues to avoid losing out on $56 million in federal transportation funds. Moreover, a transportation funding committee that issued its final report earlier this year found that the state faces a $241 million annual shortfall across all transportation modes just to preserve the existing system.

As Vermont Transportation Secretary Brian Searles, who chaired the panel, told me in a recent interview, “We here in Vermont have about 632,000 people, which would qualify us in terms of population with many American cities. So we don’t have a whole lot of taxing capability or taxing capacity. Our strategy historically on transportation has been to use our state transportation funds largely to match federal funds with two exceptions: one is the … grant programs for the towns, which are state (funded), and our operations and maintenance folks basically.”

I’ll have more from my interview with Searles (as well as members of four other transportation funding commissions) in a forthcoming Capitol Research brief.

Other State Updates

  • Missouri: Republican House Speaker Tim Jones said recently that unless he sees more support from his own party, he’s unlikely to bring up a Senate-passed measure that would let voters decide whether to raise the state’s sales tax by a penny and dedicate that revenue to the state’s transportation infrastructure, according to the Kansas City Star. The tax would sunset after 10 years unless renewed by voters and could raise $8 billion over that decade. The state’s gas tax would be frozen at its current level and new toll roads and bridges would be prohibited while the tax is in effect. If approved, the one-cent sales tax would be placed on the November 2014 ballot. Under Missouri’s constitution, voter approval is required for tax increases that produce new annual revenues greater than $50 million. The state hasn’t raised its gas tax in more than 20 years. Missouri is another state featured in my forthcoming Capitol Research brief on Transportation Funding Commissions.
  • North Carolina: Gov. Pat McCrory and Secretary of Transportation Tony Tata recently outlined a new strategy for transportation spending without addressing ways to increase transportation revenues to help the state address shortfalls caused by falling gas tax collections and other factors, The News Observer reported (see here and here). McCrory and Tata’s new Strategic Mobility Formula would overhaul existing 24-year-old formulas for deciding where and how best to spend transportation dollars. That could mean more money for new construction and less for maintenance and operations and an emphasis on highway, transit and rail projects that reduce travel times and urban traffic jams—possibly at the expense of rural transportation needs. Projects that promise to stimulate economic development will be rated higher under the new formula. But McCrory and Tata told reporters they plan to wait “a year or two” before proposing new transportation revenue options.
  • Washington: The state Senate last week passed what lawmakers described as a bare-bones, $8.7 billion transportation budget proposal, which some hope will eventually be beefed up by a transportation revenue package working its way through the House that would include a gradual 10-cent hike in the per-gallon gas tax, the Associated Press reported.  Then on Monday, the House Transportation Committee passed the 12-year, $8.4 billion revenue package, which also increases weight and registration fees and gives local counties the authority to ask voters to approve additional revenues. The package would also get $3.7 billion from issuing bonds. The transportation package includes funds earmarked for a number of existing large-scale infrastructure projects in the state. Plans to build a replacement bridge on I-5 over the Columbia River have proven contentious during the session, with critics suggesting the current design makes the bridge too low for passing ships and that it should not incorporate light rail. A Seattle Times editorial this week laid out the concerns of others, who believe the House plan concentrates too much on new big ticket projects and not enough on maintaining the current system. It sets aside less than $1 billion for maintenance, operations and preservation, much less than the $3.1 billion over 10 years suggested by a business consortium called the Washington Roundtable … Also, the state’s resident ballot initiative promoter and anti-tax crusader Tim Eyman is at it again, KIRO-TV reported. He recently filed an initiative for voter consideration that would require an annual vote in the state legislature on each tax increase unless the legislature puts a constitutional amendment on the ballot to require a 2/3 vote to raise taxes. House Transportation Committee Chair Judy Clibborn said the initiative would be a “disaster.” “It would tie our hands, completely,” she said. “It would make it impossible to bond … It’s not just about transportation. What company would come here, if you can’t make a decision that lasts longer than a year?”

Additional Reading

  • A recent Oregon Department of Transportation report looks at the impacts of road usage charges (aka mileage-based charges or VMT fees) in rural, urban and mixed counties. It has been commonly thought that rural people drive more miles and would pay more than urban drivers under a VMT system but the report calls that into question, finding that “despite perceptions that a road usage charge is unfair to rural residents, the data collected and analyzed for this study reveal that rural residents, on average, will not be affected in any significant way by a road usage charge—financially, behaviorally, or technologically.”