States Look to Fill Pot Holes and Budget Holes
States are facing three major hurdles to filling their transportation and infrastructure coffers in 2015: continued fallout from the recession, crumbling infrastructure and an increase in the utilization of alternative transportation fuels. Much of the current funding for state infrastructure needs comes from two sources – federal funding and state gas taxes. Pressure has been on both federal and state lawmakers to raise their respective gas taxes in order to shore up infrastructure maintenance, but the move remains unpopular among the public despite plummeting gas prices.
In addition to the gas tax, many states are looking at alternative proposals in order to fill gaps in their maintenance funds, including a tax or fee on “miles traveled” as well as raising excise or sales taxes on traditional fuels. Below we look at numerous state efforts to do so.
In Connecticut, Democratic Gov. Dannel Malloy made transportation investment a priority for his second term, but did not offer specifics about potential projects. On December 3, Governor Malloy told the CT Mirror, “I’m going to be talking about transportation…so people can make decisions. That will be ongoing throughout the next four years. Certainly, we will begin in earnest shortly.” The state will open a new busway in March 2015 and begin a major expansion for its commuter rail system in 2016.
Delaware Transportation Secretary Shailen Bhatt directly criticized the troubled federal transportation budget process, claiming that states “should not have to engage in creative financing to solve a federal budget problem,” according to the Delaware News Journal. When adjusted for regional inflation, the state’s Transportation Trust Fund has lost 34 percent of its buying power, and it has been forced to shelve a number of much-needed infrastructure improvements.
Republican legislators in Georgia will be challenged to find as much as $1.5 billion in new money to address the state’s aging and insufficient infrastructure, according to the Atlanta Journal Constitution. These lawmakers could face a vote on a gas tax hike or an increase in the state sales tax, both of which are distasteful for a Republican majority with a healthy number of Tea Party supporters. Keith Golden, the state Department of Transportation commissioner, tried to appeal to a state’s rights position before a gathering of lawmakers in early December. “We are much too dependent…on the federal government and that gas tax program,” he said. Republican Gov. Nathan Deal has declined to propose a solution at this time, stating that he prefers that a House or Senate committee make the first move.
A transportation task force appointed by Idaho Republican Gov. Butch Otter estimates that the state would need an additional $260 million per year to maintain its transportation infrastructure. Policy proposals for fixing this shortfall include increasing vehicle registration fees, utilizing the current sales tax on automotive parts for transportation funding, increasing fuel taxes and charging a purchase fee for new or used vehicles, according to the Capital Press.
Iowa Republican Gov. Terry Branstad indicated that the time is right to raise the state’s fuel tax in an effort to fund much needed road and bridge improvements. According to the Des Moines Register, this emphasis on a politically controversial issue marks a shift from his campaign, which addressed mostly small and unproblematic policy proposals. The problem of highway funding has dogged the legislature for years, and neither Democrats nor Republicans have previously been willing to support tax increases to improve those conditions. However, legislators are likely to be in a more cooperative mood in 2015, since Governor Branstad was reelected and the parties will share power in the House and Senate.
Republican Gov. Rick Snyder and legislative leaders will put a ballot proposal before Michigan voters in May 2015 to increase the state’s sales tax from six percent to seven percent, while eliminating the sales tax on motor fuels. This is one piece of a larger plan to generate $1.2 billion a year in new revenue for transportation maintenance, according to MLive.com. A package of bills recently passed by the House and Senate stand to take effect if the ballot proposal is approved. These bills would, in part, change the calculation of existing fuel taxes, as well as eliminate certain registration discounts and increase fees for heavy trucks.
The Minnesota Department of Transportation commissioner Charles Zelle told Minnesota Public Radio that he does not see room in the state’s $1 billion budget surplus to fix its roads and bridges. He would prefer that the state establish a steady stream of revenue, like a road-usage fee, rather than rely on one-time funding. Democratic Gov. Mark Dayton proposed a wholesale gas tax in 2014, but Republicans found the proposal unacceptable.
Legislators on both sides of the aisle in New Jersey have expressed reluctant support for a gas tax hike in an effort to address the looming collapse of the state’s Transportation Trust Fund, according to the Asbury Park Press. Although many acknowledge that the state must address this problem with some kind of tax increase, Assembly members are particularly loath to approve a tax hike because they will face reelection in 2015.
In light of a $5 billion windfall from bank settlements, many in New York are calling for Democratic Gov. Andrew Cuomo to use the funds to improve infrastructure and transportation systems, according to cityandstateny.com. Sen. Joseph Robach, R-Greece, chair of the Senate Transportation Committee, plans to negotiate more reliable transportation funding with the federal government for the future, and would like to shift away from a fuel tax toward something independent of fossil fuel consumption. Governor Cuomo has supported the idea of using these funds to bolster aging infrastructure and would like to do so through a new infrastructure bank, but other legislators caution against treating these one-time funds like an ongoing source of revenue.
Wisconsin also faces a difficult choice in addressing its transportation budget shortfalls, according to the Wisconsin State-Journal. The Transportation Finance and Policy Commission has recommended a number of solutions, including increasing its gas tax by five cents per gallon, increasing annual commercial vehicle registration fees by 73 percent and increasing driver’s license fees. It also proposed to eliminate the sales tax exemption for a vehicle’s trade-in value and adopting a mileage-based fee system for passenger vehicles and light trucks. Many state lawmakers have joined Republican Gov. Scott Walker in decrying a gas tax increase, as well as the possibility of instituting toll roads.