Louisiana governor signs into law road revenue plan
July 12, 2021
A new law in Louisiana taps an existing funding source to raise road revenue.
State officials have been unsuccessful through the years to raise the 20-cent fuel tax to help cover transportation funding needs estimated at $14 billion. The tax rate is unchanged since 1990.
As a result, lawmakers have been forced to seek more road funding via other sources.
Aid coming from existing revenue
Gov. John Bel Edwards has signed into law a bill to redirect a portion of the state’s vehicle sales tax to a fund to pay for transportation work. The money from car and truck sales raises about $500 million annually.
The revenue now is deposited into the state’s general fund for purposes that include higher education and health care.
Starting in July 2023, HB514 will shift 30% from the sales tax now earmarked for the general fund to a transportation fund for large projects. Two years later the amount will increase to 60%.
Once fully implemented, the amount forwarded to transportation is expected to be about $300 million annually.
Critics said rerouting the revenue could make worse an expected budget deficit in July 2025 that could affect state universities and health programs.
In an effort to ease concerns, House Speaker Pro Tempore Tanner Magee, R-Houma, included some restrictions in the road revenue transfer. Specifically, if the state has a deficit of at least $100 million during any budget cycle, the amount transferred would be capped at $150 million.
A related provision limits the state to $150 million in borrowing for the transportation fund.
The intention is to allow the state to shift money back to higher education and health care on short notice.
Critical bridge in my district. Issues like these is why I fought so hard with @RickWardLA and others to fund infrastructure. This could add 45 minutes to someone trip to the hospital. Can’t go to school or see a doctor if you can’t get there. #lalege https://t.co/zENYvkds1T
— Tanner Magee (@TannerDMagee) July 2, 2021
Most of the sales tax money, or 75%, will be applied to a specific list of “mega projects.” Projects include replacing the Interstate 10 bridge over the Calcasieu River, building a new Mississippi River bridge in the Baton Rouge area, and upgrading Interstate 12 in eastern Louisiana.
The remaining road revenue will be used for existing bridge and road repairs. LL