Dozen states look at cap-and-trade to aid transportation
November 13, 2019
Due to a continued lack of federal activity to aid states with road, bridge, and transit funding, elected officials from coast to coast are working to find solutions to reduce funding gaps. What amounts to a cap-and-trade plan is one solution being considered.
Governors in the Northeast and Mid-Atlantic U.S. are working together to come up with a plan to bolster transportation funding. The group, titled the Transportation and Climate Initiative, is made up of eight Democratic and four Republican governors.
The study is looking at all truck, rail, air and ship movement through the region.
Among the options being considered by 12 states stretching from Maine to Delaware is a regional fuel tax to aid mass transit projects. The dozen states and the District of Columbia are considering a plan to gradually reduce emissions over a 10-year period.
The regional tax on gas and diesel purchases amounts to a “cap-and-trade” plan. The group of states have labeled the initiative a “cap-and-invest” program.
Critics say the group of states are looking to adopt the California method of driving up fuel costs, but on a regional basis. Despite being dubbed a cap-and-invest plan, they say the approach being pursued amounts to a hidden tax.
Others say the fuel tax is the most equitable way to generate additional revenue.
Advocates hope the public will view the cap-and-invest plan as an investment of additional revenue in transit, electric-vehicle charging and other transportation infrastructure. They say it would also provide health benefits from lower emissions.
Each state would be responsible for approving the final regional tax plan. Some states will require legislative approval to move forward. Other states only require action from the governor.
If the regional cap-and-invest fuel tax moves forward, tax collection would begin in 2022 and continue through 2032.
In the meantime, many of the states in the group have separate efforts under discussion to bolster transportation funding within their borders. Among the options being considered are tolls, raising fuel taxes, alternative fuel vehicle fees, bonds, and vehicle-miles-traveled taxes.
Other road funding action
The Michigan Senate has acted to move forward with a plan to authorize the study of tolls to address long-term road and bridge funding needs.
In Utah, a legislative task force has unveiled a plan to boost transportation funding via a tax reform package that includes higher costs for fuel purchases.