Transportation Funding Measures Advance in Georgia, Iowa, Washington State
A gas tax increase appears on the fast track to final passage in Iowa. Transportation funding measures in Georgia and Washington also moved forward this week. And governors, state DOT officials and legislators in a variety of other states introduced or defended major transportation packages as the funding conversation heated up in those states. Here’s a roundup of the latest developments.
- Connecticut: Gov. Dannel Malloy said this week the state should spend $100 billion over the next 30 years to transform its transportation network and that two-thirds of that money should go towards widening interstates and rebuilding major bridges, The Hartford Courant reported. The governor offered no recommendation on how to come up with the money but tolls, new taxes, tax surcharges or public-private partnerships—or some combination of all of those—are the most likely options, the newspaper said. Republican lawmakers offered a less ambitious $37 billion plan last week that they said could be accomplished with spending cuts and new bonding but it has stirred little interest at the state capitol. The Greenwich Daily Voice reported on what the Republican plan, dubbed Prioritize Progress, contains.
- Georgia: The House Transportation Committee this week approved legislation that would raise more than $1 billion a year in new transportation funding by 2020 by replacing the state sales tax on gasoline with an excise tax of 29.2 cents per gallon, a rate that would be adjusted for inflation, The Atlanta Business Chronicle reported. The approved measure included changes aimed at concerns of local governments and school systems. The legislation would also impose an annual fee of $200 on private electric vehicles and $300 a year on commercial EVs and eliminate a state tax credit on purchases or leases of such vehicles. A change in the bill removed a provision that would have required revenue from the electric vehicle fees to go toward transit projects. The dedication of most forms of tax revenue to specific purposes is prohibited under the state’s constitution. That means the bill now contains no money earmarked specifically for transit. Legislative leaders instead pledged to put $100 million in the state’s annual bond package toward transit improvements. The publication noted that the committee’s vote came on the same day a study was released showing Georgia’s deteriorating, congested roads and bridges are costing motorists $7.9 billion a year. The bill’s chief sponsor, Rep. Jay Roberts, said Georgia needs to invest in transportation to attract jobs. “If we don’t move forward, we’re going to send the wrong message,” he said. “Other states facing the same issues either are addressing them or have addressed them.” The Georgia Senate has been conducting its own meetings on transportation funding.
- Idaho: Legislation was introduced in the Idaho House this week that calls for an 8 cent fuel tax increase next year and additional 1 cent increases in subsequent years, a 50 percent increase in car registration fees, and a shift of $22 million from the general fund to roads, The Spokesman-Review reported. The bill’s sponsor, House Transportation Committee Chairman Joe Palmer, said the proposal is just a starting point in discussions about future transportation funding. Idaho faces a $262 million annual funding gap just to keep roads and bridges from deteriorating and has not raised its gas tax since 1996, The Idaho Statesman noted. Another funding option under consideration: increasing the state sales tax but eliminating the sales tax on groceries and putting the resulting net of $150 million toward road and bridge maintenance. The House is also considering a plan to eliminate the sales tax on asphalt and other materials used for road maintenance, which could reduce the cost of individual projects. Other bills would eliminate sales tax exemptions for out-of-state residents who purchase vehicles in the state and for people who purchase 50 gallons or more of fuel for use out of state or on off-road vehicles, The Lewiston Tribune reported.
- Iowa: Legislation to increase the state gas tax 10 cents took three big steps this week and appears on the fast track to final passage. First, the Senate Transportation Committee approved the measure earlier in the week, The Sioux City Journal reported. It’s an effort to help cover the estimated $215 million annual shortfall in the state’s road construction and repair budget. “We’re optimistic that we have support (among lawmakers),” said committee chairman Sen. Tod Bowman. “We’ve worked really hard to educate the public on the need. We have established the reason why we need to do it.” Then on Thursday tax-writing committees in both the Senate and House gave the greenlight to the bill, advancing it to the floors of each chamber, The Des Moines Register reported. Final votes on the measure could happen as early as Tuesday, sending the bill to Gov. Terry Branstad for his signature.
- Minnesota: Gov. Mark Dayton outlined a list of more than 600 transportation projects that would be possible if lawmakers approve his plan to spend $6 billion over the next decade, The Pioneer Press reported. To pay for the plan, Dayton has proposed a 6.5 percent gross receipts tax on gasoline at the wholesale level, which would go up as gas prices rise. He also wants to see an increase in license tab fees and the issuance of $2 billion in trunk highway bonds, The Star Tribune reported. But Republicans disagree about the scope of the state’s infrastructure problem and the financial means to repair it. A House Republican plan released last month eschewed tax increases and would instead tap a projected state budget surplus and cut spending at the state DOT to fund $750 million in repairs over four years. Republicans criticized Dayton’s project list as “political earmarking.” The Pioneer Press also took an in-depth look at how Minnesota maintains its roads in a recent piece. And The Star Tribune had an op-ed from University of Minnesota professor Lee Munnich criticizing recently introduced legislation that would forbid any public academic institution in the state from using state funds or resources to “study, test, demonstrate, evaluate or promote a potential mileage-based user fee.” See Oregon below for more on mileage-based fees.
- New Jersey: Democratic legislative leaders had hoped to strike a deal with Republican Gov. Chris Christie on a plan to replenish the state’s Transportation Trust Fund before the governor’s budget speech next week but that now appears unlikely, NJ.com reported. Democrats have said an increase in the gas tax is necessary. Christie has said that and other ideas are “on the table” and his transportation commissioner has indicated it’s all but inevitable. But some Republican lawmakers have said that rather than raising the gas tax, the state should look to get more transportation funding from the federal government or change its school funding formula to free up more dollars, something Democrats say is unrealistic. Meanwhile, The Wall Street Journal reported this week that Christie is under increasing pressure to fix the trust fund problem but faces a political challenge as he eyes a run for president. Some believe the governor could force a separate tax cut vote before even considering raising the gas tax. Christie could also veto a gas tax increase and give Republicans tacit permission to override him, the newspaper said. Christie stressed in a speech Thursday that he will continue to oppose “any efforts to hike taxes in New Jersey,” NJ.com reported.
- North Carolina: Senate Republicans recently offered a proposal that would cut the state’s gas tax by 2.5 cents and add a new minimum rate that would keep it from falling lower, Bruce Siceloff of The (Raleigh) News & Observer reported (Siceloff was on our “States to Watch” webinar earlier this month). The move is projected to generate $1.2 billion over four years. Two Senators supporting the change said their goal is to make the revenue source less volatile and more reliable. But an editorial in The Fay Observer noted that while the bill would reduce the present tax from 37.5 cents a gallon to 35 cents, under current law the tax rate would fall to 30.4 cents a gallon on July 1. But since the new law would establish the minimum gas tax as 35 cents a gallon, there would be a de-facto tax increase on July 1. While the Republican lead sponsor of the bill Sen. Bill Rabon is calling it “a two-and-a-half-cent tax cut, period,” Democratic Sen. Ben Clark noted “You don’t generate $1.2 billion over four years with a tax cut.” Gov. Pat McCrory is asking for a $1.2 billion bond issue instead and has told lawmakers he would “support any efforts to protect and stabilize our existing transportation revenue streams.”
- Oregon: The AASHTO Journal noted that the Oregon Department of Transportation has a website set up for the July launch of the state’s 5,000-volunteer mileage-based road usage charge program. The website notes that Oregon is not the only state studying the mileage-based fee concept. California, Washington and other Western states are as well and farther afield states like Indiana, Wisconsin, Michigan, Illinois, Maine, Delaware and Florida are all investigating the concept.
- South Carolina: Transportation Secretary (and former AASHTO official) Janet Oakley appeared before a state Senate committee this week and was asked whether the state actually needs an additional $1.5 billion annually through 2040 to repair, maintain and expand the state’s roads as a recent SCDOT study said, The State newspaper reported. Oakley said she stood by the results of the study but also said she supports Gov. Nikki Haley’s roads plan, which would raise only $400 million a year primarily by raising the state’s gas tax by 10 cents over three years. Oakley told Senators that Haley’s gas tax proposal is “quite honestly … pretty bold” for a Republican governor.
- Washington: Republicans on the Senate Transportation Committee have pushed through committee a $15.1 billion package that includes an 11.7-cent-per-gallon gas tax hike but it contains a “poison pill” Democrats don’t support that would shift the bill’s funding for transit, pedestrian and bike path projects to work on roads if Gov. Jay Inslee installs low-carbon fuel standards, The Kitsap Sun reports. Republicans argue they are supporting a gas tax increase now and a low-carbon fuel standard probably would raise gas prices even more later.
- Wisconsin: During a recent appearance, Transportation Secretary Mark Gottlieb defended Gov. Scott Walker’s decision to emphasize borrowing for transportation projects this year rather than supporting fee or tax increases, The Marshallfield News Herald reported. Gottlieb advocated last year for increases in the state gas tax—which hasn’t been raised since 2006—and vehicle registration fees. “The governor did not feel it was a good time to raise taxes and fees on individuals or businesses in the state,” Gottlieb said.
- General: There have also been a variety of articles in recent weeks looking at overall trends among states considering transportation funding issues this year. Among them:
- “States seek alternatives for highway, bridge funding,” Associated Press, February 18, 2015.
- “Falling Bridges Taking a Toll; Some States Move to Raise Gas Tax,” National Public Radio, February 10, 2015.
- “Raising Gas Taxes Gets Bipartisan Boost from Governors,” Governing, February 9, 2015.
- “At Least a Dozen States Consider Possible 2015 Increases in Motor Fuel Taxes,” AASHTO Journal, February 6, 2015.
- States to Watch in 2015: Transportation Funding: In case you missed it, our webinar on the states to watch in 2015 from earlier this month is now archived here in the Knowledge Center.