Six western states consider different approaches in transportation funding
January 16, 2019
During the past five years more than one-half of all states have raised or reformed their fuel tax rate. Despite the progress toward addressing transportation funding needs, legislators in more and more states continue to pursue additional revenue enhancements.
In many western states, public officials are pursuing changes to how much transportation funding is available for road, bridge and transit work.
A fuel tax increase to raise transportation funding is anticipated to come up for discussion soon at the statehouse.
Advocates say additional revenue via the tax would provide a shot in the arm for the state to address a long list of road and bridge projects.
Critics counter that a fuel tax is not the best way for the state to move forward with transportation funding. They cite changing driving habits and more fuel-efficient vehicles on the roadways.
Arizona legislators have struggled in recent years to muster support for any one funding method. Although state lawmakers did approve a bill earlier this year to increase vehicle registration fees to help cover some costs for road repair.
State Rep. Cathrynn Brown wants to tap a state budget surplus to help pay for needed road work.
The New Mexico Department of Transportation estimated that $650 million was needed during a recent fiscal year. The state, however, was able to cover about $500 million of that amount.
Brown’s bill would help cover future shortfalls. Specifically, HB189 would direct $860 million of the surplus to the state road fund.
The diversions from the state’s general fund would be applied for the 2020 fiscal year and upcoming fiscal years.
The transportation funding bill awaits assignment to committee.
State law enacted one year ago requires the state to transfer $150 million from the general fund to pay for transportation needs. The state highway fund is set to receive $105 million. Counties and municipalities, and the multimodal transportation options fund are each scheduled to receive $22.5 million.
One Senate bill would increase the transfer to $340 million. The state highway fund would receive $266.5 million and counties and municipalities would get $51 million. The amount allotted for multimodal projects would remain at $22.5 million.
The bill, SB51, awaits consideration in the Senate Transportation and Energy, and Senate Appropriations committees.
An effort underway would index fuel taxes to the price of inflation.
Specifically, the bill introduced by the Joint Revenue Interim Committee would adjust the taxes on gas, diesel and alternative fuels based on the consumer price index. The changes would be implemented on July 1, 2020.
The Wyoming Department of Transportation reports more than $135 million in unfunded operating expenses. The amount includes more than $72 million in construction and maintenance.
The bill, HB64, would adjust the tax rates every two years.
The changes are estimated to raise $6.6 million annually for state and local roads.
Speaking to committee members on the issue, WYDOT Director Bill Panos said indexing alone would not solve the state’s funding shortfall. He said, however, that indexing is part of “a broad-based system of state support.”
One state lawmaker wants to make it more difficult for new taxes and tax increases to be implemented.
A 2017 law raised the state’s gas and diesel tax rates for the first time in nearly one-quarter century.
The law included an initial 4.5-cent increase in the gas rate and a 1.5-cent boost in the diesel rate. The gas tax is set to increase another 1.5 cents by 2023 while the diesel tax will increase another one-half cent over six years.
The change is estimated to eventually raise $49 million annually for state and local roadways.
Advocates said at the time the increases were necessary to avoid losing out on federal matching funds.
Rep. Forrest Mandeville, R-Columbus, has introduced a bill to require two-thirds of the legislature to enact a new or increased tax or fee.
The 2017 fuel tax increases were approved by the House and Senate by margins of 57 percent and 56 percent, respectively.
Mandeville’s bill, HB148, is in the House Taxation Committee. A hearing on the bill is set for Jan. 22.
Meanwhile, California Gov. Gavin Newsom is pursuing a plan that puts transportation revenue for local governments at risk.
The plan that is part of his newly-proposed budget is intended to help the state meet housing needs. The plan includes $7.7 billion to develop affordable housing throughout the state.
The target is fuel tax revenue earmarked for local governments as part of a massive transportation funding bill approved two years ago.
The 10-year, $52 billion transportation funding deal increased the diesel tax by 20 cents and increased the gas tax by 12 cents. Another 7.5-cent gas tax increase is scheduled to take effect on July 1.
The excise rates on gas and diesel will also be adjusted for inflation beginning in July 2020.
Newsom wants to incentivize local government to improve housing options or risk losing transportation funding. Cities and counties that fail to help him meeting his goal would lose fuel tax dollars.
Critics say that governments do not bare sole responsibility for failure to get housing projects complete. They point the finger at private industry for the failure to get needed work done.
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