States Look to Increase Transportation Funding

USA Today reported this week that at least 13 states are currently looking at increasing their gas tax or other revenue options to address their increasing transportation needs. The newspaper points out, according to the policy think tank Institute on Taxation and Economic Policy, sixteen states haven't raised gasoline taxes in 20 years or more, AGC chapters are working in many of these states in support of efforts to increase transportation investment. A sampling of some of the initiatives include: Wyoming: The Wyoming House on January 18 passed legislation by a vote of 35-24 to increase the state’s motor fuels tax by ten cents, from 14 to 24 cents per gallon. The increase would provide the Wyoming Department of Transportation and local governments an annual revenue increase of $71 million. The initiative was proposed and pushed by Gov. Matt Mead (R) who said that, “though $71 million won't entirely cover the $134 million annual funding gap for Wyoming's roads, it is a good start.” The Wyoming Senate is expected to take up the legislation next week. The last time Wyoming raised its motor fuels tax was 1998. AGC’s Wyoming Contractors Association (WCA) was the leading advocate for the increase. With an overwhelmingly strong fiscally conservative makeup in the legislature (52 Republicans out of a 60 member House and 26 Republicans out of a 30 member Senate) WCA used AGC’s publication, “The Conservative Case for Infrastructure Investment” in seeking support for the measure. TRIP worked with WCA promoting the revenue increase, releasing a report on Tuesday, January 22, at a news conference in the Wyoming State Capitol Rotunda. This is the third TRIP report in as many years in support of the effort. Virginia: Virginia Governor Bob McDonnell (R) has offered an alternative proposal to address his state’s chronic transportation underinvestment. The proposal would eliminate the state gasoline tax of 17.5 cents per gallon and replace the lost revenue by increasing the state’s sales and use tax (SUT) by 0.8 cent and dedicating that portion for transportation, increasing the portion of the existing SUT for transportation, increasing the vehicle registration fee by $15, and imposing a $100 fee on alternatively fueled vehicles. According to the Tax Foundation, the proposal would provide an additional $1.221 billion in revenue for transportation over the next five years. If a federal law is enacted to allow states to collect sales taxes on internet sales at the time of purchase, the proposal would generate an additional $1.6 billion in revenue over the next five years. If adopted Virginia would be the only state in the country without a gas tax. The proposal would retain the tax on diesel fuel. n making the announcement Governor McDonnell pointed out that it is intended to address problems with reliance on the gas tax for future transportation investments because the gas tax: is a cents per gallon fee and therefore looses buying power over time due to inflation, is difficult to get political support for increasing and more fuel efficient vehicles and vehicles that rely on alternative fuels decrease the amount of revenue that is generated. Virginia’s legislature is currently in session and the Senate is expected to consider the proposal next week.  Minnesota: Minnesota Governor Mark Dayton (DFL) appointed a task force last year to make recommendations on new sources of revenue to fund the state’s highway and transit needs in response to a Minnesota Department of Transportation (MnDOT) warning that the state faces funding shortfalls of tens of billions of dollars. The task force recently delivered its report which called for increases in local sales taxes, gas taxes and vehicle registration fees. The draft recommendations call for raising taxes by $20 billion over 20 years and for shifting transit funding from the state to metro governments. The task force recommended a 2 cent per year increase in the gas tax every year for 10 years. Leaders of the transportation committees in both houses of the legislature indicate they will be developing large scale multi-modal funding packages this year. AGC of Minnesota scheduled a news conference this week to highlight the scope and breadth of the needs where TRIP released a report titled, “Minnesota’s Transportation Challenges and the Improvements Needed to Address Them.” IOWA: AGC of Iowa is gearing up to push a gas tax increase in its state legislature this year. The House Transportation Chair has said he plans on debating a gas tax bill in his committee by the first of March.  The Senate transportation committee chair has similar plans.  The chapter is promoting a 10 cents per gallon increase that would generate an additional $230 million per year for road improvements.