A Bad Year for State Transportation Funding

Compared to 2013, few states are increasing transportation spending through tax increases. Only New Hampshire and Rhode Island saw limited gas tax increases, though both were accompanied by road or bridge toll eliminations. Missouri could be next.
June 27, 2014, 1pm PDT | Irvin Dawid
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Clearly 2014 is shaping up to be no 2013 when it comes to states increasing user fees, particularly the state gas tax, to pay for much-needed transportation improvements. Last year, "(l)egislators in Pennsylvania and Virginia reached breakthroughs after years of failed attempts to shore up infrastructure funding. Maryland, Massachusetts, Ohio, Vermont and Wyoming also passed significant transportation funding measures," writes Daniel C. VockGoverning’s transportation and infrastructure reporter.

Of course, it doesn't help that 2014 is an election year, which may have contributed to the unsuccessful efforts by "(g)overnors in Delaware, Michigan and Washington."

In August, Missouri voters will decide on a 10-year, three-quarter-cent general sales tax increase to fund transportation projects, though that would not constitute a user fee. Utah's legislature is considering increasing the 24.5 cents per gallon tax, not raised in almost 17 years.

Vock describes the limited scope of the two successful, though modest state gas tax increases, both accompanied by road or bridge toll eliminations. 

  • New Hampshire: The 18-cent gas tax, unchanged since 1991, will increase by 4.2 cents on July 1, but that increase is temporary.  
    • "The amount of the tax hike was determined by adjusting for inflation over the last decade. But the law won't adjust for inflation in the future. In fact, the gas tax hike will expire once bonds supported by the new revenue -- which will pay for widening of Interstate 93 -- are retired."
    • In addition, tolls will be eliminated from "a single turnpike interchange in southern New Hampshire."
  • Rhode Island: A 10-cent toll elimination on the Sakonnet River Bridge "that brought howls from local residents was the catalyst" for the legislature to increase the state gas tax by a mere one-cent, though it will adjust for inflation. 

With a looming cut-off of federal transportation reimbursements to states in late July or August if Congress can not agree to "patch" the Highway Trust Fund, which did not get off to a propitious start on June 26, states will likely have to take steps to slow down or halt current transportation projects and refrain from starting new ones unless they have secured alternative funding sources - like increasing state gas taxes.

It's a nasty loop when both state legislatures and Congress can't agree to raise revenue to fund state infrastructure.

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Published on Monday, June 23, 2014 in Governing
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