Maine governor signs into law highway fund budget

July 18, 2023

Keith Goble

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A new law in Maine taps existing state revenue for highway repairs.

The state’s fuel excise tax is the primary source of funding for transportation work. The state’s 30-cent excise rate on gas and 31.2-cent rate on diesel account for nearly two-thirds of all Highway Fund revenue.

The tax rates, however, are unchanged since 2011.

Over that time, the excise rates have lost ground because of inflation. To help counter the problem, Maine voters have approved 12 transportation bond issues over 14 years. The bonds have combined to total more than $1 billion in bonds.

The money has been used to support the Maine Department of Transportation’s work plan. The agency has relied on the funds to cover the annual cost of road and bridge maintenance and repairs.

A new approach

Gov. Janet Mills has signed into law a bill that allows the state to move away from relying on bonds to help cover transportation costs.

LD259 taps sales and use taxes related to vehicle purchases to help the state address the funding shortfall.

Specifically, 40% of the 5.5% sales tax on vehicle purchases will be routed to transportation. Additionally, 40% of sales and use taxes collected by the Bureau of Motor Vehicles is also tapped for infrastructure repair.

All told, the changes are expected to raise more than $100 million annually for roads and bridges.

The governor said the bill creates a sustainable source of funding for roads and bridges.

“(LD259) advances our work to reduce borrowing, create a sustainable, long-term source of funding for infrastructure repair, and unlock nearly a billion dollars in matching federal funds,” Mills said in prepared remarks.

The funds allow the Maine DOT to implement its three-year work plan. The plan contains 302 bridge projects, 1,178 miles of preservation paving and more than 2,000 miles of light capital paving. Another 271 miles of highway construction and rehabilitation, and 264 highway safety and spot improvements are included. LL

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