Louisiana legislators approve road revenue plan

Repeated failures in the Louisiana Legislature to raise road revenue via new taxes has led lawmakers to approve tapping an existing funding source.

State officials have been unsuccessful through the years to raise the 20-cent fuel tax to help cover transportation funding needs that are estimated at $14 billion. The tax rate is unchanged since 1990.

A shift from focus on raising new revenue

House and Senate lawmakers have sent to the governor a bill to redirect a portion of the state’s vehicles 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 would shift 30% from the sales tax now earmarked for the general fund to a transportation fund for large projects. Two years later the amount would increase to 60%.

Once fully implemented, the amount forwarded to transportation is expected to be about $300 million annually.

Critics say 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 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 would limit 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.

Most of the sales tax money, or 75%, would 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 revenue would be used for existing bridge and road repairs.

Other options fail

Annual efforts in the Legislature to increase the state’s fuel tax rate continue to fall short. The latest effort backed by Rep. Jack McFarland, R-Jonesboro, called for more than doubling the tax rate to 42 cents over 12 years.

Another option brought before lawmakers this year called for using an existing revenue source to aid road and bridge work.

In place since 2018, a 0.45-cent temporary sales tax is collected by the state to boost funding for needs that include education and healthcare. The tax, which was approved to aid state government during a budget crisis, has a 2025 sunset date.

One bill called for shifting more than $800 million over three years from the temporary sales tax to the Transportation Trust Fund.

The bill specified the tax revenue must be used for transportation work. Additionally, half of the money would be divvied up among the state’s nine transportation districts.

Related legislation covered revenue from the 0.45-cent temporary sales tax.

The bill would extend collection of the tax from 2025 to 2031. A portion of the revenue also would be used to fund infrastructure work.

Marijuana revenue

As introduced, HB514 sought to impose a sales tax on raw or crude marijuana recommended for therapeutic use. Half of the revenue from the 4.45% tax would be sent to a construction subfund in the state’s Transportation Trust Fund.

The provision was removed to focus on shifting the state’s vehicle sales tax to transportation.

Gov. John Bel Edwards has not indicated whether he will sign into law the amended version of HB514. LL

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