Georgia, Iowa, South Dakota, Utah Approve Transportation Funding Measures
February and March were busy months for state legislatures on the transportation front with four states approving major funding packages, several considering measures to revise gas tax indexing mechanisms to avoid losing transportation revenues in the wake of declining gas prices, and a whole host of other states continuing to contemplate or negotiate additional legislation that could bear fruit down the road. Here’s a roundup of the developments since my previous post on this topic.
Approved Transportation Funding Measures
- Georgia: Lawmakers passed a nearly $1 billion transportation funding measure that will convert a state sales tax on motor fuel to a 26 cents-per-gallon excise tax for passenger vehicles and 29 cents for tractor trailer trucks, which will also pay an impact fee of $50 to $100 based on weight, WSB Radio reported. The legislation also includes a $5 hotel/motel fee, which will go towards transportation. In addition, it imposes a $200 annual fee on noncommercial electric vehicles ($300 for commercial) and eliminates a tax break for purchase of such vehicles. While noting that the plan may help the state address a backlog of road and bridge maintenance, The Atlanta Journal-Constitution reported it won’t allow Georgia to make investments in interstate widening or transit projects that could have an impact on alleviating congestion in the state’s largest Metro area.
- Iowa: The state’s 10-cent fuel tax increase has already taken effect after Gov. Terry Branstad signed the measure in February. As the Des Moines Register noted, the governor worked with legislative leaders from both parties to reach a consensus on a funding package that will provide an additional $215 million annually for city, county and state roads. The gas tax had not been raised in Iowa since 1989. The measure also boosts the excise tax on aircraft fuel two cents, increases single-trip permit fees, and places restrictions on the authority for cities and counties to bond for transportation upgrades using property tax revenue, The (Cedar Rapids) Gazette reported. In addition, the legislature included provisions in the bill requiring the Iowa Department of Transportation to come up with $10 million in cost-cutting efficiencies for the fiscal year beginning July 1 and the following year.
- South Dakota: The state legislature approved and Gov. Dennis Daugaard signed a transportation revenue measure last month that included a six-cent gas tax hike and a one percent excise tax increase, the Associated Press reported. The measure also allows a county to impose a wheel tax of five dollars per wheel (up to $60 per vehicle), sets up a tiered levy system and increases license plate fees by 20 percent. It also raises the maximum speed limit on South Dakota interstates to 80 mph. The measure is expected to generate $86 million dollars a year in road and bridge funding. We’ll get the inside story on the South Dakota legislation when Senate Transportation Committee Chairman (and CSG Transportation Public Policy Committee Co-Chair) Mike Vehle joins us April 21 for a CSG eCademy webinar on the “Status of Federal Transportation Programs, State Impacts & Activities.” You can register here for the FREE event.
- Utah: Gov. Gary Herbert last month signed into law a bill that will raise the existing 24.5 cents-per-gallon gas tax by a nickel effective July 1, The Salt Lake Tribune reported. The tax had not been raised in 18 years. Lawmakers also included an indexing mechanism that will allow the tax rate to rise automatically with gas prices, thanks to a 12 percent sales tax that will take effect once the wholesale price of gas reaches $2.45 (it’s currently about $1.73). The gas tax increase is expected to bring in about $100 million over the next two years. In a separate piece, the Tribune took a look at how legislators made the increase happen.
Updates on Other States
- Colorado: A long-term plan for the state’s highways adopted last month by the Colorado Department of Transportation projects an $8.8 billion funding gap over the next 10 years, the AASHTO Journal reported. CDOT officials said they won’t be able to maintain current system conditions after 2025. The funding gap is blamed on lost purchasing power from the state’s fuel tax revenue stream in recent decades.
- Connecticut: Gov. Dannel Malloy has appointed a panel to recommend ways to pay for a long-term overhaul of transportation in the state, The Hartford Courant reported. Malloy is asking the 10-member panel to come up with recommendations by the end of the summer. The governor has proposed a 30-year, $100 billion overhaul and has said he’s open to some mix of tax surcharges, fees, public-private partnerships, bonding and highway tolls to help pay for it.
- Idaho: The Senate rejected a House bill that would have raised the gas tax, removed the state sales tax from groceries and lowered the top income tax rates, The Spokesman-Review reported. Other options remain on the table in the form of two other House-passed measures that would raise vehicle registration fees and shift money from the state’s general fund. Lawmakers say they are still committed to finding a transportation funding solution, KTVB-TV reported.
- Illinois: Lawmakers could look at a gas tax increase in the wake of neighboring Iowa passing its 10-cent increase, the Quad Cities Online reported.
- Kentucky: As one of their final acts before adjourning their 2015 session, lawmakers agreed to halt a scheduled 5.1 cents-per-gallon decrease in the state gas tax that would have taken effect April 1, the Cincinnati Enquirer reported. The gas tax was scheduled to decrease because in Kentucky, it is tied to the wholesale price of fuel. Such a decrease would have meant a $150 million cut in the state’s road fund on the heels of a $129 million cut from a decrease in January. The legislature’s action will freeze the tax at 26 cents per gallon.
- Louisiana: A legislative task force last month recommended that the state should consider allowing local governments to impose their own gas taxes, explore public-private partnerships and tie the gasoline tax to inflation, Houma Today reported. In all, the panel offered more than a dozen ideas to boost transportation funding, some of which could be considered during the legislative session that begins next week.
- Missouri: Lawmakers are considering a bill that would raise the state’s gas tax by 6 cents over the next three years, KFVS-TV reported. Voters in the state rejected a ballot measure last year that would have enacted a gasoline sales tax to help fund road improvements. State transportation officials say without an increase they’ll be forced to enact austerity measures.
- Nebraska: A measure to raise the state’s gas tax by 6 cents won narrow approval in the state Senate last week, The Beatrice Daily Sun reported. The bill (LB 610) still has to clear two more rounds of voting before it would end up on the desk of Gov. Pete Ricketts, who has said he’s opposed to raising the tax.
- New Hampshire: House Republicans abandoned a plan to increase the state’s gas tax after it became clear they could not muster enough support for the measure, the Associated Press reported. Lawmakers are now looking at other ways to try to avoid $88 million in cuts to the state DOT budget. While New Hampshire increased its gas tax by four cents last year, none of those funds went to the department’s budget. The revenues were targeted instead toward specific repair projects.
- New Jersey: Lawmakers and transportation officials now say a permanent fix for the state’s Transportation Trust Fund is unlikely this year after talks broke down in the efforts to find new revenues, The Record reported. Gov. Chris Christie is proposing a plan to eke out another year for the fund with a combination of bond proceeds, cash balances, Port Authority money and a loan repayment from New Jersey Transit, according to NJ.com. But Christie’s proposed budget would not provide enough for the state to fix its backlog of structurally deficient bridges, The Record reported. Meanwhile, Christie’s transportation chief Jamie Fox continues to say the state is in the midst of a transportation crisis.
- North Carolina: Lawmakers approved a measure that will cause the gas tax to drop a few pennies over the next 15 months but will ward off a larger tax cut that could have cost the state $800 million in transportation funding over the next four years, The Charlotte Observer reported. The law installs a new gas tax formula based on population growth and energy cost inflation and eliminates a volatile formula that produced wide swings in the tax rate mirroring the swings in global fuel prices. The state’s fuel tax had been composed of a flat rate and a wholesale component that was adjusted twice annually.
- Oregon: Efforts by lawmakers to reach agreement on new revenue to pay for improvements to the state’s roads and bridges stalled, the NW News Network reported last month. A proposed gas tax increase appeared to be the preferred revenue mechanism but Republicans are concerned about separate legislation to make fuel producers lower the amount of carbon in their products, which analysts say will increase the cost of gas by up to 19 cents per gallon. None of that money would go to infrastructure.
- South Carolina: Legislation to get more money to spend on the state’s roads and bridges appears to be in jeopardy because a plan to change how the state department of transportation operates that Gov. Nikki Haley wants to be a part of the bill has stalled in the state Senate, the Associated Press reported. When lawmakers return to Columbia next week, the House will consider a bill that would raise an additional $400 million for roads and allow the governor to appoint an eight-member commission to run the state DOT. While mostly in line with what Haley wants, the plan also includes a $50 million income tax cut she has said is not enough. Among the transportation revenue mechanisms reportedly in play in recent weeks: a 12-cent gas tax increase phased in over three years indexed to inflation, a doubling of driver’s license fees, increased registration fees, and fees for alternative fuel vehicles and hybrids. Lawmakers still have a couple of months to work out a deal on a transportation bill. The South Carolina legislative session ends in June.
- Tennessee: Gov. Bill Haslam said recently that while the state’s gas tax will likely need to be increased in the next four years in order for the state to continue funding transportation projects, it won’t happen this year, The Nashville Business Journal reported. We’ll hear more about the Volunteer State’s transportation challenges when Tennessee Transportation Commissioner (and CSG Transportation Public Policy Committee Vice Chair) John Schroer joins us on our CSG eCademy webinar April 21 on the “Status of Federal Transportation Programs, State Impacts & Activities.” You can register here for the FREE webcast.
- Texas: House Transportation Committee Chairman Joe Pickett introduced legislation last month that would ask voters to approve a constitutional amendment dedicating a portion of state sales taxes to provide more than $3 billion annually for the state department of transportation, The Dallas Morning News reported. Pickett said he hoped the plan would help wean Texas from its financial dependence on toll roads. The bill was one of several under consideration at a recent hearing. The Texas Senate meanwhile recently approved legislation that would instead ask voters to send part of the taxes collected on vehicle sales to the transportation agency.
- Vermont: The House approved legislation last month that puts a floor under the state’s Transportation Infrastructure Bond (TIB) fee to protect revenue when gas prices fall, VTDigger.org reported. In January, a decline in gas prices brought with it a $6.6 million TIB revenue shortfall. The Senate must still consider the measure, which is part of a larger annual transportation bill that also moderately decreases spending on road paving. Vermont State Rep. (and CSG Transportation Public Policy Committee Co-Chair) Diane Lanpher will also be among our guests later this month for our eCademy webinar on the “Status of Federal Transportation Programs, State Impacts & Activities.” You can register here for the FREE webcast.
- Washington: The Republican-controlled state Senate passed a $15 billion transportation package last month that included an 11.7 cent gas tax increase over the objection of many Democrats who opposed the proposal based on a provision intended to keep Gov. Jay Inslee from enacting low-carbon fuel standards as a way to cut greenhouse gases, The Seattle Times reported. House Democrats meanwhile want to hold off on approving the package until lawmakers can decide how to pay for additional K-12 spending ordered by the state Supreme Court. At a House Transportation Committee hearing late last month, business leaders and local government officials urged the panel to raise the gas tax and vehicle fees and spend the projected $15 billion on roads, bridges, mass transit and ferries, The Spokesman-Review reported.
- “How Red States Learned to Love the Gas Tax,” The Atlantic, March 31, 2015
- “A Fresh Approach to Funding Infrastructure is Gaining Momentum,” Innovation NewsBriefs, March 30, 2015
- “Feds launch audit of state highway spending,” The Hill, March 24, 2015
- “The tax hike states are agreeing on,” The Washington Post, March 13, 2015
- “GOP Governors Regret Tax Needs,” Bloomberg News, February 24, 2015
- “Funding Challenges in Highway and Transit: A federal-state-local analysis,” Pew Charitable Trusts, February 24, 2015.
- “State Legislation to Raise Transportation Funding,” Transportation for America
- “March 2015 State Transportation Funding Initiatives Report: States Continue Advancing Transportation Bills,” American Road & Transportation Builders Association Transportation Investment Advocacy Center.