State Transportation Funding: Updates on Six States

Gas and sales tax increases, state infrastructure banks, public-private partnerships and state lotteries are among the ideas being floated in state capitals around the country to help meet infrastructure needs. Here are a few updates from the last couple of weeks on how those ideas are faring.

Georgia: The DeKalb County NAACP is among those opposing a regional referendum to temporarily raise the sales tax to fund regionally selected infrastructure projects. They plan to launch a public campaign to oppose the July vote on the tax increase because the list of projects for the region does not include a specific MARTA rail link. Yonah Freemark at the Transport Politic blog writes that “this opposition puts the transit tax’s chance of passage in jeopardy … The fact that the vote is taking place in the middle of the summer rather than in November means there will be limited turnout. If voters in DeKalb are convinced that the tax will not serve their interests, it stands little chance of passage.” The Atlanta Journal-Constitution has more about the opposition in DeKalb here. You can also read more about this summer’s referenda in Georgia in this month’s issue of Capitol Ideas magazine and my recent follow-up blog post.

Iowa: As expected, it looks like discussion of a gas tax increase may have to wait for another day in the Hawkeye State. The Quad City Times reports that the state Senate this week passed a transportation budget bill that includes $350 million in spending authority but a plan to raise the gas tax by 8 to 10 cents a gallon over two years (as proposed by an advisory commission last year) appears to be all but dead after House Speaker Kraig Paulsen said recently the issue had lost public support due to rising prices at the pump. Senate leaders note that the transportation budget bill will require Iowa Department of Transportation officials to report quarterly on savings achieved by efficiency measures requested by Gov. Terry Branstad in lieu of a gas tax increase for the upcoming construction season. But the state faces a projected annual $200 million shortfall in funds needed for critical highway and bridge repairs and state Sen. Matt McCoy said he doubted the efficiency savings would come close to the $50 million asked for by the governor. Some Senate and House leaders still hope to keep the gas tax increase plan alive for this legislative session, which wraps up in mid-May.

Maryland: Gov. Martin O’Malley’s gas tax proposal, which would tack on a 6 percent sales tax phased in over three years in hopes of raising an additional $615 million annually for the state’s infrastructure needs, appears to be on the backburner for the moment as lawmakers in Annapolis deal with a $1.1 billion budget shortfall, Southern Maryland News reported last week.

Massachusetts: Gov. Deval Patrick this week filed a one-year, $1.5 billion bond bill which would also authorize the state’s first infrastructure bank. The governor envisions the bank would be similar to one proposed at the national level by U.S. Sen. John Kerry and others. It would make loans for energy, transportation and municipal development projects to leverage private investment. Patrick wants the one-year bond bill to keep transportation investments afloat until next year, when he plans to file a five-year bond bill to address long-term needs of the state’s roads, bridges, public transit systems and airports. Although public transit advocates have called for new sources of revenue to fund transportation, it now appears that consideration of new long-term funding strategies will be pushed to 2013 or later. State House News Service has more on the Governor’s plan here.

Ohio: Jerry Wray, the Director of the Ohio Department of Transportation (ODOT), writes in a news release this week about a $1.6 billion highway budget shortfall the state faces: “While the news of the $1.6 billion highway budget shortfall came as a shock to some, it has been expected for several years by those in the transportation community. Unfortunately, little was done about it, assuming the funds would be found before the projected problem became reality. Well, here we stand today and we are facing a massive shortfall. This practice of not being straight about the depth of our highway funding problem is coming to an end. We have to honestly face up to the problem if we’re ever going to fix it and protect the job-creating tool that is our highway system.” Wray points to the economic decline of recent years, increased fuel efficiency, inflation, declining gas tax revenues, rising construction costs and the federal stalemate over a long-term surface transportation authorization as contributing to the problems Ohio faces. Wray writes that his agency is working to reduce its own overhead costs and “to more efficiently and effectively build major projects faster than ever before.” He says the state is exploring new strategies for building highways, including utilizing private sector financing. “We’re studying the potential of the Ohio Turnpike, and looking at all of the options from moving the operations under ODOT, to bonding against the turnpike’s revenue to a potential lease,” he writes.

Pennsylvania: State Rep. Harry Readshaw has proposed legislation to authorize a state lottery specifically to assist municipal mass transit operations, the Baldwin-Whitehall Patch reported last week.