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Beyond the pump: Evaluating fresh approaches to transportation funding

An empty gas station with rows of abandoned power blue pumps glowing with neon lights in the middle of the night

Current state gasoline taxes aren’t enough to cover our transportation funding needs. Evaluating alternatives needs to involve taking five key principles into account. Read our policy evaluation framework, created by T4A Policy Associate Stephen Coleman Kenny with support from T4A Policy Director Benito Pérez, NRDC Senior Transportation Advocate Zak Accuardi, and T4A Policy Intern Julia Camacho.

An empty gas station with rows of abandoned power blue pumps glowing with neon lights in the middle of the night

Our transportation systems are largely funded by motor fuel taxes that finance the federal Highway Trust Fund. Since the 1980s, these funds have been allocated using a roughly 80/20 split between highway and transit spending under the assumption that drivers were paying a larger share and deserved to receive more investments in return. However, after a crisis in 2008 when the national fund ran out of money—requiring billions of dollars in bailouts ever since—this system has proven to be outdated and unstable.

Why the gas tax status quo needs to change

In 2008, the National Surface Transportation Infrastructure Financing Commission wrote that the United States has an “ever-expanding backlog of investment needs” that then-current transportation funding policies would only cover one third of. As of 2016, public transit systems have faced a backlog of over $105 billion for maintenance and replacement costs.

Today, this problem is only worsening. America’s reliance on gasoline taxes in order to fund roads and transit systems is proving to be unsustainable. As vehicles become increasingly efficient and electric vehicles (EVs) become more commonplace, overall levels of fuel consumption are decreasing—thus lowering gas tax revenues and further widening the infrastructure funding gap. Without a change in our revenue-raising systems, our roads and transit infrastructure will crumble. It’s critical we act now. 

As policymakers explore potential alternatives to the gas tax, a variety of options have emerged, including the following: 

  • Road pricing, or taxing by vehicle miles traveled (VMT)
  • Adding new tolls
  • Congestion pricing
  • Flat vehicle registration fees
  • Indexing the gas tax to inflation
  • Taxes on external costs of driving like emissions and accidents
  • General revenue subsidies
  • Duties on fuel sales

Many of these proposals are not new—for instance, T4A wrote about raising the gas tax or indexing it to construction fees back in 2014. But save for some VMT-based road pricing pilot programs in Oregon, Virginia, and most recently Utah, little progress has been made.

Choosing the right option

There are a variety of possibilities, but no one option fits every regional context. Rather, the process of evaluation has to be sensitive to the goals and priorities of state and federal transportation programs. With that in mind, there are five main needs that new proposals will need to address, which we compiled into a policy evaluation framework:

  • Outcomes: How the funding scheme changes road user behavior by incentivizing one of the following outcomes: electrification (EV adoption), mode shift away from personal vehicles, or maintaining the status quo.
  • Fairness: Ensuring that the funding scheme is fair to all users by having road users (including drivers of internal combustion engine (ICE) cars and EVs alike) pay user fees in accordance with the wear and tear they impose on the road system.
  • Stability: Estimating the revenue projections of the proposed system and whether or not it raises enough money to maintain the transportation system in both the short and long term.
  • Equity: Examining how the structure of the funding scheme impacts different socioeconomic groups, and how the benefits and burdens are distributed. 
  • Feasibility: Considering the administrative costs, jurisdictional issues, technology for implementation, political popularity, and public support for the proposal. 

There are tradeoffs between these goals, but looking at the possible alternatives to the gas tax through these five lenses provides a starting point for choosing a new policy. Find examples of our policy evaluation framework in action here.

Taking a closer look at a VMT tax and its implementation in Oregon

Among the options mentioned above, road pricing, or a tax on VMT, has emerged as a popular frontrunner among policymakers and thought leaders. A VMT tax would impact ICE cars and EVs equally, would include usage of all roads—not just interstates or toll roads—and would result in a precise user charge, especially if adjusted for vehicle weight, that drivers pay based on their wear and tear on the road system.  However, the shortcomings of a VMT tax lie in the other four aspects—equity, outcomes, feasibility, and revenue stability. 

A VMT tax would be regressive, penalizing people who need to drive the furthest—in other words, rural households and those who live farther from city centers—and already have to pay high transportation costs as a result. Additionally, a VMT tax only incentivizes mode shift for that same group of people, who are the most likely to not be able to shift away from driving due to a lack of transportation alternatives.

Furthermore, a simple VMT tax doesn’t incentivize EV adoption over ICE cars or even just more efficient vehicles over heavier ones that use more fuel, since all vehicles are treated the same. With regards to feasibility, VMT taxes have faced technology challenges, high administrative costs, and public opposition. And in terms of revenue stability, a VMT tax is sufficient only if we maintain high levels of driving in the long term.

Oregon, a state that has historically been especially reliant on the gas tax for transportation funding, has tested out a VMT tax. In 2001, Oregon created a Road User Fee Task Force (RUFTF) in order to evaluate possible alternatives as hybrid vehicles and EVs began to rise in popularity. RUFTF decided to try implementing a road usage charge and launched a VMT pilot program in 2012 that succeeded in four areas: policy and public acceptance, technology, operations, and cost. This led to the creation of the voluntary OReGO program in 2015 that now enables drivers of EVs and efficient vehicles to pay a per-mile charge in exchange for reduced vehicle registration fees or gas tax rebates.

It’s notable that one of the aspects that wasn’t considered was outcomes—how the funding scheme changes (or doesn’t change) the behavior of road users, incentivizing electrification or mode shift or neither. Oregon’s eventual vision is to have a dual tax system—VMT for EVs and efficient vehicles, and a gas tax for all other vehicles.

When asked whether a VMT tax for fuel-efficient vehicles punishes drivers trying to do the right thing environmentally, Jim Whitty, who led the implementation of these programs at Oregon’s DOT, said that “making the great choice to buy a less polluting vehicle doesn’t make it a great choice to let the road system crumble.” And when asked why people who will pay more under a VMT system would volunteer to participate in the program, Whitty didn’t have a clear answer.

Notably, as of 2020, only 701 drivers were actively participating—well under the 5,000 that the program had initially envisioned. Oregon is now considering making OReGO into a mandatory policy, but other states should still try out other options before rushing to commit to a VMT tax.

Reevaluating America’s transportation funding systems

It’s of course critical that we act now to resolve this growing funding gap in order to address pressing maintenance needs and invest in the future of America’s transportation systems. When choosing an alternative policy (or combination of policies) to replace the current gas tax, it will be important to consider these five aspects—outcomes, fairness, stability, equity, and feasibility.

However, federal and state leadership will be as critical as funding. Both levels of government have a crucial role in transportation funding. Much innovation is fostered in localities, but without an overarching vision and approach, this can result in a patchwork of approaches that can spur inequitable outcomes.

It’s also important that we consider the ultimate impacts of this transportation funding system: namely, how the money is actually used. In a foundational 2006 report on possible alternatives to the fuel tax, for example, the Transportation Research Board acknowledged that their analysis prioritized problems related to highway financing over public transit. 

We can’t afford to pour money into expanding highways and worsening America’s transportation woes. Even if we achieve an optimal policy that maximizes revenue raised for transportation funding, we need to ensure that the money raised by any of these proposals is actually used for projects that prioritize maintenance and repair and make advancements towards reliable, affordable, and frequent transit systems that connect people to the places they need to go.

Learn more about how to evaluate alternatives. Read our policy evaluation framework here.

There’s a reason why Missouri voters twice rejected gas tax increases

A truck painting lane markings on a two-lane road in Missouri.

Missouri spends more of its transportation budget on building new roads than maintaining its existing roads—23 percent of which are in poor condition. If it did a better job prioritizing maintenance, perhaps it wouldn’t need to ask taxpayers for a bailout. 

A truck painting lane markings on a two-lane road in Missouri.

A truck painting lane markings on a two-lane road in Missouri. Photo by MoDOT.

The state of Missouri gets over $1 billion a year from the federal government to support their highway needs. They match that with another $1.5 billion in state transportation funding for a total of $2.5 billion in spending a year. 

This large sum is what they have to cover the maintenance and upkeep of 77,000 miles of roadway. At ~$24,000 a mile per year to keep a new road in good condition, that means the state has somewhere in the neighborhood of $1.85 billion in baseline maintenance needs for its existing system each year. Of those miles of roadway, 23 percent are in poor condition. (Their repair costs could be much higher: to restore bad roads to good condition costs more than the $24k per lane-mile figure for keeping new roads in good repair.)

The bottom line is that Missouri has a lot of built-in, predictable costs that they need to cover and a pretty deep well of existing transportation funding. But Missouri, along with 20 other states across the country, is actually spending more money on building new roads than on maintaining the ones they already have. According to their own reporting, Missouri is spending 31 percent of their federal funding on new roads while spending only 20 percent on repair of existing roadways. (Note that Missouri’s largest metropolitan area, St. Louis, is heralded for having the least traffic congestion in the country, which makes you wonder why the state feels the need to widen roads.) 

After spending more money on expansion than repair, Missouri cries poverty and asks its taxpayers for more money. Perhaps it’s no surprise that voters have said no to them—twice. Should a bank loan you money to expand your deck while your roof is leaking?

Now the state is selling bonds to cover the cost of replacing rural bridges—an important investment. But one has to wonder, how many bridges and roads could they have already replaced with existing funds if those funds were prioritized to maintaining existing infrastructure before building the next shiny new highway or adding more lanes somewhere? At the very least, shouldn’t taxpayers expect as much money to go into highway maintenance as into expansion? 

Unfortunately, neglecting repair while spending more money on building new roads is perfectly legal and permissible under the federal transportation program. Congress is just fine with Missouri neglecting needed repairs and increasing their overall need by adding more lanes, and as a result, Missouri is not alone. 

This lack of accountability and clear priorities is why Missouri’s roads—and other roads, bridges, and transit systems in poor condition across the country—won’t be fixed by simply spending more money. In spite of unprecedented high levels of transportation funding, including from the Recovery Act, roadway conditions nationally have deteriorated over the last 10 years. Even if we double nationwide transportation spending, there is no guarantee that roads will improve in Missouri or elsewhere without a change to the underlying policies. This is why every conversation about transportation policy that begins and ends with money just isn’t good enough right now.

Missouri is fortunate to have powerful members of Congress that are uniquely positioned to change and improve policy. We can require states receiving federal money to maintain roads before building new ones. They could also require it of themselves.

Prioritizing repair is common sense. We cannot afford to waste any more time and money.  

Read more about Missouri and 20 other states making the same mistake in our report Repair Priorities. 

Stories You May Have Missed – Week of January 12th

As a valued member, Transportation for America is dedicated to providing you pertinent information. This includes news articles to inform your work. Check out a list of stories you may have missed last week.

  • The U.S. Chamber of Commerce is supporting a 25 cents increase in the gas tax to fund an infrastructure package. (Washington Post)
  • Congress must pass an extension of government appropriations this week or a government shutdown will happen. (Vox)
  • “GOP leaders face most difficult shutdown deadline yet.” (The Hill)
  • Cities and researchers are finding clever ways to get data that transportation network companies (TNC) like Uber and Lyft refuse to provide. (Citylab)
  • GM says they plan to have a car with no steering wheel Or pedals ready for streets In 2019. (NPR)
  • Minnesota Governor Mark Dayton has proposed a $1.5 bond for infrastructure projects that would fund a variety of types of infrastructure, including express bus service in Minneapolis. (Minnesota Star Tribune)
  • Louisiana Governor John Bel Edwards has proposed a $600 million highway improvement plan for the state. (The Advocate)

Stories You May Have Missed – Week of October 27th

Stories You May Have Missed

As a valued member, Transportation for America is dedicated to providing you pertinent information. This includes news articles to inform your work. Check out a list of stories you may have missed last week.

  • “White House eyes 7-cent gas tax hike for infrastructure plan.” (The Hill)
  • National Economic Council Director Gary Cohn discussed with the Bipartisan House Problem Solvers Caucus last week a potential timeline of an infrastructure package and the possibility of a gas tax raise. Mr. Cohn said that an infrastructure package could happen in the early part of 2018 and that a gas tax increase could be voted on as part of an infrastructure plan. (Politico Morning Transportation)
  • House Republicans are scheduled to release their tax reform plan on Wednesday. Details are scarce right now but many tax credits could be at risk including potentially the parking and transit benefit, to help pay for the expected reduction in corporate and individual tax rates. (CNN)
  • 16 State DOT’s gave back their biking and walking money from the Federal Highways Administration rather than investing in bike and pedestrian projects. (Safe Routes To School)
  • A new report from MIT looks at the potential future effect of Automated Vehicles on real estate and how communities will develop. (The Drive)
  • The Utah Legislature and Salt Lake City are currently examining and debating potential governance reforms to the Utah Transit Authority (UTA) structure. (Deseret News)
  • A new business group, the Washington Partnership is pushing to overcome political differences and get Virginia, D.C. and Maryland to agree on how to reform Metro. The Washington Partnership is concerned that the problems at Metro will harm the Washington D.C. metro economy. (Washington Post)

Stories You May Have Missed: June 19th – June 23rd

Stories You May Have Missed

As a valued member, Transportation for America is dedicated to providing you pertinent information. This includes news articles to inform your work. Check out a list of stories you may have missed last week.

  • U.S. Conference of Mayors attendees are “hungry for details about Trump’s infrastructure plan.” (Marketplace)
  • The Senate Commerce Committee has rejected the White House’s proposal to privatize the U.S. air-traffic control system. (The Hill)
  • Autonomous vehicle bills are on the horizon. (The Hill)
  • “States raising gas taxes to fund transportation improvements.” (Fox News)
  • Inside Uber CEO Travis Kalanick’s resignation. (NY Times)

South Carolina legislature overrides governor’s veto to increase state gas tax

Last week the South Carolina legislature voted to override a veto from the governor to successfully raise the state’s gas tax and other fees to increase funding for state highway projects. South Carolina is the 29th state to raise new transportation revenues since 2012.

To view details on the all of the states that have new revenue since 2012, please see this page, along with the rest of our resources on state funding & policy.

South Carolina’s new law (H. 3516) will raise fuel tax rates by a total of 12 cents per gallon by increasing the rate by 2 cents each year until 2022. When fully implemented, the 12-cent tax increase will generate an estimated $486 million annually.

The funding bill adds a new five percent tax on vehicle sales, netting $73 million annually. It also increases registration fees by $16 (netting $26 million annually) and adds a new $120 biennial fee on electric vehicles and a $60 biennial fee on hybrid vehicles (for $1.5 million annually).

New funding will be directed to maintenance and new construction on the state’s transportation system and to the state infrastructure bank to finance new projects. The law does not make major changes to the state’s transportation priorities

To offset the impact of tax and fee increases, the law creates a refundable tax credit in the amount of either the increased fuel tax cost or the amount paid on vehicle maintenance (whichever is less). This credit expires in 2022.

The House voted 95-18 and the Senate voted 32-12 on May 10 to override the veto. The passage came after several years of debate over new road funding. The state chamber of commerce and local chambers from Charleston, Greenville, and Lexington counties campaigned for the tax hike, including by sending mailers urging constituents to call their legislators to show support for the funding bill.

South Carolina is the fifth state to take action to raise new revenues in 2017, joining California, Indiana, Tennessee and Montana.

The 1 thing you need to know about President Obama’s clean transportation plan

On February 4, the White House released President Obama’s 21st Century Clean Transportation System plan to be included in his FY2017 budget proposal expected out on February 9. The President asserts that his budget proposal will strengthen the nation’s transportation fund through one-time revenues from business tax reform and a $10 per barrel fee on oil, and make large investments in transit and improve funding for local and regional governments.

“This is a new vision. We’re realistic about near-term prospects in Congress, but we think this can change the debate,” one senior administration official said.

The announcement comes two months after the passage of the 5 year surface transportation bill known as the FAST Act. However, Congressional leaders have not expressed willingness to consider the proposal.

House Majority Whip Steve Scalise (R-LA) made this point clear. “President Obama’s proposed $10 per barrel tax on oil is dead on arrival in the House.”

What the plan proposes

The plan includes a wide range of innovative solutions. It would refocus federal investments to reduce congestion, reform the existing transportation formula programs, and invest in competitive programs, including the popular Transportation Investment Generating Economic Recovery (TIGER) program. It would also increase investments in mass transit funding by $20 billion annually, provide $2 billion for an autonomous and low-emission vehicle pilot, and add $10 billion per year to reform local and regional transportation programs. The latter would include new discretionary grant programs for regions that lower emissions and better link land use decisions with transportation investments.

To pay for these investments, revenues from a $10 per barrel fee paid by oil companies would be phased in over 5 years. During the development of the FAST Act, Congress was unwilling to even hold a floor vote on increasing transportation user-fees, which hasn’t been raised in over 23 years.

Day 1 Wrap Up: Congressional Conference Committee Action

This morning the conference committee for the surface transportation authorization bill met for the first time. The first order of business was appointing Representative Bill Shuster (R-PA) – chair of the House Transportation & Infrastructure Committee – as the conference chair and Senator Jim Inhofe (R-OK) – chair of the Senate Environment & Public Works Committee -as the vice-chair.

Possibly the most revealing item covered during this first official meeting was an early statement from Chairman Shuster (R-PA) that the conference plans to work diligently through the Thanksgiving recess that starts this Thursday, November 19th, to meet a self-imposed deadline of Monday, November 30. The proposed timeline will allow the House and Senate to vote on final passage for the conference agreement before MAP-21 expires on Friday, December 4th (MAP-21 expires this Friday, November 20th, but the House has already passed a bill to extend the authorization to December 4 and the Senate is expected to follow suit today or tomorrow).

There are still a few sticking points that need to be resolved and came up today during each conferee’s opportunity to speak today. Many hold differing positions on the low funding levels for this authorization as well as the non-transportation generated revenue used to pay for the bill. Those in the Northeast took issue with a House provision to remove transit funding dedicated to high-growth states in the northeast and place it in a national competitive bus and bus facilities program. And others, while not objecting to including passenger rail authorization in the surface authorization for the first time ever as expected by this bill, wanted to include greater reform at Amtrak.
We do not expect any further public meetings until the Members of Congress return on November 30, at which time the conference is expected to have finalized this bill. This means that much of the work on the conference report will happen out of view and behind closed doors. If interested, we advise that you contact your member over the Thanksgiving recess and visit them in person if you can about items of importance for you and your community.
Senate Conference Members
Environment & Public Works Committee
Republicans
Jim Inhofe (R-OK)
John Barrasso (R-WY)
Deb Fischer (R-NE) – also a Commerce Committee member
Democrats
Barbara Boxer (D-CA)
Commerce Committee
Republicans
John Thune (R-SD) – also a Finance Committee member
Democrats
Bill Nelson (D-FL) – also a Finance Committee member
Banking Committee
Democrats
Sherrod Brown (D-OH) – also a Finance Committee member
Finance Committee
Republicans
Orrin Hatch (R-UT)
John Cornyn (R-TX)
Democrats
Ron Wyden (D-OR)
Chuck Schumer (D-NY)
Other Conferees
Republicans
Sen. Lisa Murkowski (R-AK)
Democrats
Dick Durbin (D-IL) – Democratic Whip
House Conference Members 
Transportation & Infrastructure Committee
Republicans
Bill Shuster (R-PA)
Reps. John J. Duncan, Jr. (R-TN)
Sam Graves (R-MO)
Candice Miller (R-MI)
Rick Crawford (R-AR)
Lou Barletta (R-PA)
Blake Farenthold (R-TX)
Bob Gibbs (R-OH)
Jeff Denham (R-CA)
Reid Ribble (R-WI)
Scott Perry (R-PA)
Rob Woodall (R-GA)
John Katko (R-NY)
Brian Babin (R-TX)
Cresent Hardy (R-NV)
Garret Graves (R-LA)
John Mica (R-FL)
Barbara Comstock (R-VA)
 
Democrats 
Peter DeFazio (D-OR)
Eleanor Holmes Norton (D-DC)
Jerrold Nadler (D-NY)
Corrine Brown (D-FL)
Eddie Bernice Johnson (D-TX)
Elijah Cummings (D-MD)
Rick Larsen (D-WA)
Michael Capuano (D-MA)
Grace Napolitano (D-CA)
Daniel Lipinski (D-IL)
Steve Cohen (D-TN)
Albio Sires (D-NJ)
Donna Edwards (D-MD)
 
Ways & Means Committee
Republicans
Kevin Brady (R-TX)
Dave Reichert (R-WA)
Democrats
Sander Levin (D-MI)
Energy & Commerce Committee
Republicans
Fred Upton (R-MI)
Markwayne Mullin (R-OK)
Democrats
Frank Palone (D-NJ)
Financial Services Committee
Republicans
Jeb Hensarling (R-TX)
Randy Neugebauer (R-TX)
Democrats
Maxine Waters (D-CA)
Other Committees
Republicans
Mac Thornberry (R-TX)
Mike Rogers (R-AL)
Bob Goodlatte (R-VA)
Tom Marino (R-PA)
Darin LaHood (R-IL)
Glenn Thomson (R-PA)
Will Hurd (R-TX)
Lamar Smith (R-TX)
Democrats
Loretta Sanchez (D-CA)
Zoe Lofgren (D-CA)
Raúl Grijalva (D-AZ)
Gerry Connolly (D-VA)

Utah makes a bipartisan move to increase state and local transportation funding to help meet the demands of high population growth

Earlier this spring Utah became the third state in 2015 to pass a comprehensive transportation funding bill, raising the state’s gas tax and tying it to inflation. Unlike most other states acting this year, Utah raised revenues to invest in a variety of modes and also provided individual counties with the ability to go to the ballot to seek a voter-approved sales tax to fund additional local transportation priorities.

Fueled by the highest birthrate in the country, Utah’s population is expected to double by 2060. The state’s existing transportation funding sources — unchanged since 1997 and losing value against inflation — would not be sufficient to meet the demands posed by the rapidly growing population. Working proactively, the Utah Legislature and stakeholders worked together to raise new funding for transportation and ensure that the state stays ahead of the population boom.

TRAX Red Line to Daybreak at Fort Douglas Station. Flick photo by vxla. https://www.flickr.com/photos/vxla/

TRAX Red Line to Daybreak at Fort Douglas Station. Flick photo by vxla. https://www.flickr.com/photos/vxla/

What does the new funding package do?

The new law, passed in March 2015, will generate approximately $74 million annually by replacing the cents-per-gallon gas tax with a new percentage tax indexed to future inflation. The bill also enables counties to raise local option sales taxes, which, if adopted by every county, would generate $124 million in new annual revenue specifically for local needs.

In specific terms, the bill replaces Utah’s current fixed 24.5 cents-per-gallon rate with a new rate of 12 percent of the statewide wholesale gasoline price, beginning January 1st, 2016, and indexes that rate to inflation. The bill also specifies that the tax can’t dip below the equivalent of 29.4 cents per gallon (i.e. a floor mechanism) or climb above 40 cents per gallon (i.e. a cap mechanism). Additionally, diesel, natural gas and hydrogen will see an incremental rise in their taxes until they reach 16.5 cents per gallon (an eight-cent increase for diesel and natural gas).

Importantly, the bill also enables all Utah counties to ask voters to approve a 0.25 percent local sales tax, the proceeds from which can be used to fund almost any locally-identified transportation need, whether roads, transit, bicycle and pedestrian infrastructure or other related projects. Revenues from these county sales taxes would be split between the county (20 percent), cities (40 percent), and a county’s transit agency (40 percent). If a transit service area doesn’t exist in the county, the money is split between the county (60 percent) and cities (40 percent).

 

Due to a constitutional restriction, all state gas tax revenue generated in Utah may only be used on roads, so this new optional sales tax gives counties and local governments a new mechanism to raise funds for their pressing needs, whatever they may be. While the state will see a much-needed revenue increase that can be invested in the state’s Unified Transportation Plan, the local option sales tax is a very important provision that could give localities of all sizes extremely flexible resources to meet their pressing local needs.

Lynn Pace, Vice President of Utah League of Cities and Towns and City of Hollday council member

Lynn Pace, Vice President of Utah League of Cities and Towns

“There was a major push to say that we need a more multimodal transportation system,” said Lynn Pace, vice president of the Utah League of Cities and Towns. “We needed more flexibility, and that pushed people towards the [local option] sales tax because it was flexible, more flexible than the gas tax.”

Political compromises on the way to passage

At the end of 2014’s legislative session, a transportation bill that, much like this year’s bill, would have allowed counties to impose a voter-approved quarter-cent sales tax to fund transportation was defeated. There were other funding bills that died, including one that would have increased the gas tax by 7.5 cents per gallon and another that would have reduced the gas tax from 24.5 to 14 cents per gallon while adding a 3.69 percent fuel tax. In the end, there wasn’t adequate consensus between legislators to get a bill done in 2014.

This year was different, however.

The 2015 session started with an effort to raise or otherwise reform Utah’s gas tax. The Speaker of the House, Rep. Greg Hughes (R-Draper), wanted to drop the per-gallon flat tax and change it to a percentage tax so that the tax rose and fell with gas prices. Senate President Wayne Niederhauser (R-Sandy), however, felt that tying the gas tax to fluctuating gas prices was too risky. Prices could rise and fall dramatically, he said, subjecting Utah drivers to suddenly higher gas prices (or declining revenues coming to the state with low prices). To eliminate the uncertainty, Niederhauser wanted a straight increase in the gas tax.

Greg Hughes UTA Salt Lake mugshotHughes however, didn’t believe that representatives in the House would pass a tax increase, fearing political fallout. Pegging the tax rate to gas prices would allow the state to eventually see revenues increase as gas prices rise without the political risk of imposing taxes immediately. In the end, the bill indexes the gas tax rate to inflation, but with a floor and ceiling put in place to counter destabilizing fluctuations in the gas price.

The importance of including the local option sales tax

Legislators had a similar back-and-forth on the bill’s other major revenue-raising provision: the local option sales tax.

Rep. Johnny Anderson (R-Taylorsville), the sponsor of this provision, wanted to ensure that money from the sales tax went to transit before it went to roads. Rep. Jim Dunnigan (R-Taylorsville), however, wanted to put that decision in the hands of the voters and local elected officials.

As legislators moved towards the end of the session, the House and Senate passed different versions of the transportation bill. The Senate opposed allowing counties to impose a voter-approved sales tax, but the House insisted. Eventually, the chambers came to an agreement, provided that local option sales tax revenues could go to not just transit but all forms of transportation, from roads to transit, bike and pedestrian infrastructure.

Staying on message

The 2014 debate on transportation funding by Utah legislators laid some of the important groundwork for this year’s success. But this time, several ingredients (and some notable changes) came together this year to help convince formerly skeptical legislators to vote yes.

The bill’s supporters — which included the Wasatch Front Regional Council, the Utah League of Cities and Towns, and the Utah Transportation Coalition, among others — were able to present a compelling and winning message about why Utah needed to raise additional dollars to invest in the transportation system. They talked about the critical economic development connection, as well as accommodating and moving more people and goods within the booming state over the next 25 years. Supporters educated both the public and legislators about why Utah’s communities need to be able to raise funds for and invest in multimodal transportation projects.

In a conservative state like Utah, supporters found that economic arguments worked best for convincing legislators and the public that transportation is a worthwhile investment. Their argument was two-pronged: first, a state with a good transportation network can more easily attract businesses, which need solid transportation infrastructure to attract talent, get their employees to work, and ship their goods, and, second, that waiting to repair critical transportation infrastructure will make maintenance cost more in the long run.

Read T4America’s separate 2014 profile of Utah’s “Can-Do” transportation ambitions.

Utah Light Rail 1With stories of partisan gridlock making headlines every day, Utah stands out as a model of collaborative planning for a better future. State leaders and citizens have managed to stare down a recession while making transportation investments that accommodate projected population growth and bolster the economy and quality of life.

Click through to read the full story.

To make sure that the message really resonated, supporters made sure that they were all singing from the same sheet.

The Utah Transportation Coalition — a group that includes the Salt Lake Chamber of Commerce and the Utah League of Cities and Towns — conducted two years of studies to find the facts they needed for their education campaign.

“What we did differently this year versus last year — in years past — is that we worked together, we were all in lockstep together, we knew our message, stayed on message,” said Abby Albrecht, Director of the Utah Transportation Coalition. “We worked really hard to be the voice in the community and in the legislature about transportation, why it was so important for our economy, for our quality of life, to our healthcare.”

A clear, unified plan for future investment

That singular message is captured in Utah’s Unified Transportation Plan, a statewide transportation plan synthesized from several regional plans and plans from the state DOT and the Utah Transit Authority. The unified statewide plan prioritizes those needs and outlines the $11.3 billion most critical projects to fund.

Having a statewide plan in which everyone could see their needs reflected helped everyone feel that the entire state was working together to develop a holistic vision for the future instead of a bunch of regions competing against each other for the same funds. That unity of purpose across the state helped bring legislators on board.

“Every legislator has skin in the game at that point,” saidMichael (Merrill) Parker, Director of Public Policy at the Salt Lake Chamber of Commerce. “It’s not urban versus rural, or region versus region; every legislator is in the same camp trying to solve one problem, not their local district’s problem.”

With a clear vision in hand, supporters worked hard to spread that message.

“There was a [unified] plan in place, an agreed-upon plan in place, saying, ‘This is what needs to be done, we all agreed that this is the plan, and here are the gaps in funding,’” said Pace, from the Utah League of Cities and Towns. “So, it put us in the position to say, ‘We all agreed what needs to be done. Utah’s population is going to double in the next 30 years, we need funding to implement the plan, to help make it happen.’”

All of that education paid off.

The law passed the House on March 9th and in the Senate on March 12th. Governor Gary Herbert signed the law on March 27th. This provides counties the ability to place local sales tax referendums on the ballot as early as November 2015.

On to the ballot box

Supporters cheered the bill’s passage in March, but there are still important hurdles to clear to reach the bill’s full potential. The bill could raise an additional $124 million annually for transportation if adopted by all Utah counties. Groups like the Salt Lake Chamber and Utah Transportation Coalition are embarking on public education campaigns in the counties that are placing local sales tax questions on their November ballots.

110 of Utah’s 244 cities have passed resolutions urging their county governments to put the proposition on November ballots, and as of August 24th, 12 of Utah’s 29 counties have taken action to do exactly that. That list of 12 counties includes Salt Lake County, the state’s most populous county, and where, according to the Salt Lake Tribune, elected officials in all 16 cities supported the county’s action in August 2015 to place the initiative on this November’s ballot.

Salt Lake County mayor Ben McAdams

Salt Lake County Mayor Ben McAdams

The mayor of that county, Salt Lake County Mayor Ben McAdams, knows how important investing in Utah’s transportation is, especially since his region is the most populated in the state:

“We want to have a visionary approach to transport, where we look into the future and forecast what our region is going to look like. We know that a transit-oriented future will improve quality of life, save tax dollars, and really help us develop the kind of community we want to live in. That all takes forethought and planning.”

This year’s move by the legislature was a triumph of bipartisan cooperation and compromise, undergirded by the clear vision for investment that local leaders and civic groups have bought into. As a result of their successful work, the state will see an increase in transportation funding in 2015, but we’ll be watching especially closely this November as Utah counties join countless others in deciding measures at the ballot to also raise new local money for transportation.

Need a  quick summary of Utah’s transportation law? You can read it here.

Want more information on states moving to raise new transportation revenues at the state or local level? Don’t miss our page of resources chronicling the active and enacted plans since 2012.

 

US Senate Transportation Authorization – T4A Update

The US Senate continues to debate the federal surface transportation bill this week, with a series of votes taken last night by the full Senate. Individual senators filed over 200 amendments and T4America continues to track the latest developments on those amendments. We have compiled a brief update on where things stand and provide information on three amendments that we know would spur innovation, access and local control. 

**It is rumored that another manager’s amendment package will be offered in the near future. T4A will update this information as needed.

Transportation Funding Timeline Update: Transportation funding expires this Friday and the House announced this morning that they intend to pass a 3-month extension to match the Senate’s; setting up a new October 29 transportation funding deadline.

Last week, Majority Leader McConnell (R-KY) introduced what is expected to be the first of potentially two or more manager’s amendment packages. Manager’s packages serve as legislative vehicles to modify a piece of legislation in committee or on the floor, wholesale. This first manager’s package makes a number of changes, including maintaining the historic 80/20 highway and transit funding split; increases funding for the FTA High Intensity/Fixed Guideway State of Good Repair Formula program by $100 million (paid for by cutting TIFIA and the Assistance for Major Projects by $50 million each) and requires 50% of the off-system bridge set-aside funding in the STP program to be used on bridges that are not on the federal-aid highway system.

Last Sunday, the Senate dispatched a couple of non-germane amendments, but voted to allow Senators to vote on whether or not to tie the Ex-Im Bank authorization to the highway authorization. Late last night, the Senate voted and approved that plan (64-39).

Under this new modified manager’s package, T4A believes that it is unlikely that few if any of the 200+ plus amendments filed by Senators will be considered or voted on. However, we do anticipate the introduction of a third manager’s amendment which will reflect additional changes. T4A continues to work to increase local control, innovation and access to jobs and opportunity through three primary amendments. They include the following:

  1. Wicker-Booker STP local control amendment (corresponding fact sheet by USCM on changes to metro level funding)
  2. Murray TIGER authorization amendment
  3. Donnelly Job Access planning amendment (search for S. Amdt 2434, 2435 and 2436; this one is messy, our apologies)

Update: 5 Issues to Watch (for more information, please refer to T4A’s Member post on 7/23/15):

Pay-fors – Since the last post on 7/23/15, a number of items have shifted. A few provisions, considered poison pills, were removed, including the $2.3 billion that came from denying those with felony warrants social security benefits and $1.7 billion that came from rescinding unused funds for TARP’s Hardest Hit Fund. These rescissions leave the authorization with $43.7 billion, all of which are generated outside of the traditional transportation-user fee system. The measure would provide enough additional HTF revenues to provide the first three years of highway and transit investment, but Congress would be required to raise additional resources before October 2018 to be able to fund the final three years of the DRIVE Act’s authorized spending.

Transit funding – Changes in the manager’s package increased the levels of transit funding to be 24% of the authorized levels overall and 24% of any new funding generated annually.

Freight –The DRIVE Act creates a robust freight planning process that directs states to examine efficient goods movement and identify projects needed to improve multimodal freight movement. However, despite instituting a multi-modal freight planning process, the new National Highway Freight Program would require 90% of the funding go to highway-only projects rather than to multimodal projects using a performance-based system. What impact will this have?

Take, for example, the non-highway freight needs in the State of California. Ten percent of California’s funding would be only $9.3 million in 2016, growing to $23 million in 2021. Comparitively, one multimodal project at the Port of Long Beach in California to remove a railroad bottleneck and build more on-dock rail capacity cost the Port $84 million. T4A views this policy as a missed opportunity and not consistent with T4A’s freight policy.

Overall, due to removal of the TARP Hardest Hit Fund, the bill’s overall investment levels needed to be reduced. Under the first manager’s package, the freight program was set to receive $1.5 billion in FY2016 growing to $2 billion in FY2018. The program would now receive $991.5 million in FY2016 and increase to 1.9 billion in Fy2018.

Passenger Rail – No changes to note from the last update on 7/23/15.

Assistance for Major Projects (AMP) – Funding decreased by $50 million per year to increase funds for FTA’s High Intensity/Fixed Guideway State of Good Repair Formula program. AMP would now be authorized at $250 million in FY16 and rise to $400 million in FY2021.

*NEW* TIFIA – The initial manager’s package introduced early last week would cut TIFIA funding from $1 billion to $500 million per year. Removing the TARP Hardest Hit Fund and other payfors required additional cuts, which senate authorizers took out of the TIFIA program. Those cuts, plus the increase to the FTA’s High Intensity/Fixed Guideway State of Good Repair program, result in an overall authorized funding level for TIFIA at just $300 million per year over the life of the bill.

Senate Passes Cloture; 5 Things We’re Watching

***Please note, at 10:00am T4A received McConnell’s substitute amendment, which means that a number of these items may have changed. We’ll keep you updated as it proceeds.**

Last night, the US Senate passed a procedural vote called cloture. Like a starting pistol in a race, this means that they can now start debating, amending and eventually pass a federal surface transportation bill out of the Senate. While many things can, and will, happen over the next few days, there are a number of topics that Transportation for America is watching.

Want to know how your Senator voted on cloture? Click HERE.

1.Payfors – DC parlance for real and imaginary ways to pay for this bill.

At this time, there appears to be a wide-ranging list of payfors that run as small as $172 million up to $16 billion. Some of these include items like such as rescinding unused TARP funds or extending fees for TSA. There do not seem to be many that keep the traditional tie between users of the system and payments into the system.

The mass transit account appears to be running out of funding well before the highway trust fund. Initial T4A analysis seems to indicate that the legislation pulls in all 10 years of the proposed funding to pay for 3 years of the highway trust fund and 1.5 years of the mass transit account.

APTA transit run

APTA transit funding table in current Senate transportation legislation

The legislation also appears to sell 101 million barrels out of the 693.7 million barrels of the Strategic Petroleum Reserve (SPR) between 2018 and 2025 to bring in $9B over 10 years. Critics of this funding scheme assert that we are selling the oil when prices are at record lows, making it a foolish idea. Sen. Murkowski (R-AK) is reportedly one of those critics.

Originally, this legislation withheld Social Security payments from recipients that are subjects of a felony arrest warrant and for whom the state has given notice that they intend to pursue the warrant, raising $2.3 billion over 10 years. T4A has heard that Senate negotiators have removed this provision due to the advocacy of a number of social equity and civil rights groups.

2. Transit
T4A and the larger transportation community have several concerns about this title, the main ones are:

banking transit

US Banking Democrats chart on modal share under currently proposed Senate legislation

First, the DRIVE Act fails to provide public transportation with 20% of the new revenue dedicated to growth, which is a historical guarantee dating back to President Reagan’s agreement in 1982. Public transportation receives only 6% of the revenue derived from the future funding growth (see Senate Banking Democrats chart). U.S. DOT estimates that the Mass Transit Account ends the third year of the bill (FY 2018) with a negative balance of $180 million. Senator Boxer is reportedly negotiating a fix with Senate Republicans that will increase that percentage.

Second, projects with private funds get to “skip the line” for federal money, providing a major incentive for privatized service. The existence of a new expedited process could entice cities to pursue transit privatization on a large scale by using P3s to operate transit service. The labor community has expressed strong opposition and may oppose the entire bill if this provision isn’t removed.

Third, this legislation forces the Federal Transit Administration (FTA) to wait 6 months before increasing oversight of at-risk projects. Sec. 21015 requires the FTA to wait for a project to fail 2 consecutive quarterly reviews before providing more oversight to a project that is going over budget or falling behind schedule.

3. The Freight program

This legislation includes all modes of freight, including pipelines for the first time. It also requires the establishment of a new multi-modal freight network within 1 year of enactment, the establishment of which appears to be similar to the creation of the existing freight network (as well as a re designation of the existing highway freight network). It does, however, define economic competitiveness by the amount of traffic moved and not economic outcomes and will fund projects that reduce congestion, improve reliability, boost productivity, improve safety or state of good repair, use advanced technology or protect the environment on the national highway freight network.

You’ll recall that T4A sent out an action alert to keep the TIGER program multimodal and not let the US Senate Commerce Committee use it for freight-exclusive purposes. We’re happy to report that effort was successful, though the TIGER program is still not authorized or funded in the transportation bill.

4. Passenger Rail
This legislation authorizes passenger rail funding for the first time ever in a federal surface transportation reauthorization. The legislation calls for $1.44B in 2016 and growing to $1.9B in 2019. It maintains a national system and provides for clear cost accounting among the 4 business lines of Amtrak of the corridor, state-supported and long-distance trains. Provides for up to 6 new passenger rail routes on a competitive basis and for the first time makes operational costs eligible for grants.

5. AMP – Assistance for Major Projects
This is a new project for highway or transit projects that cost at least $350M or 25% percent of state highway apportionment (10% in a rural state). Applications should be reviewed based on consistency with federal goals, improvement to the performance of the system, is consistent with the statewide plan, can’t be completed without federal help and will achieve one or more of the following:

  • generate national economic benefits outweigh cost,
  • reduce congestion,
  • improve the reliability of movement of people and freight, or
  • improve safety

Grants under AMP must be at least $50M, with a rural guarantee of 20%. Eligible applicants for AMP include states, local governments (or group of locals), tribal governments, transit agencies, port authorities, public authorities with transportation function and federal land management agencies. It is not yet clear if this language is specific enough to include MPOs.

Amendments to be offered: T4A staff is monitoring a number of potential amendments. One of which (offered by Senators Wicker (R-MS) and Booker (D-NJ)) would increase the ability of communities to fund projects through the Surface Transportation Program. We strongly urge you to call your Senator and tell them to co-sponsor that amendment.

ICYMI: T4A and SGA Host Federal Policy Webinar; Materials Inside

Yesterday, Smart Growth America and Transportation for America hosted a webinar to review congressional action on the federal surface transportation authorization. If you were able to attend, you will recall that we mentioned how the US Senate is poised to consider the authorization before the full Senate next Tuesday. That continues to be the current timeframe for Senate consideration.

webinar image

Access the webinar powerpoint here.

As a T4A member, you can access the webinar anytime through this page.

Two action items stemming from that conversation include:

  • It is highly likely that T4A will be issuing a number of action alerts next week. While we don’t have legislative language on a number of potential amendments, we anticipate movement on issues of local control, freight, TAP, transit funding and TIGER. Member support would be greatly appreciated.
  • The National Complete Streets Coalition is requesting support to tell FHWA to make more inclusive streets that are designed to be more livable. You can register your comments here: bit.ly/NHSdesign (this weblink is case-sensitive).

Congress kicks into high gear on transportation — let’s summarize the action

During an extremely busy week in Congress in several key committees, a long-term transportation bill and a multi-year passenger rail authorization were introduced and passed committees, along with hearings on possible ways to keep our nation’s transportation fund afloat, rural transportation issues, rail safety, and autonomous vehicles.

For those of you who don’t regularly follow Congress, this is often how things go: nothing seems to happen for a long time, and then there’s an explosion of activity all at once. That’s certainly what took place this week in the Senate, with some important ramifications for the future of transportation funding and policy. We hope that Congress shows the same focus when they return from their weeklong July 4th recess.

Four of the five Senate committees with jurisdiction over either transportation policy or funding were active this week. Two notable transportation policy bills (and one yearly spending bill) were advanced out of committees this week, and the Senate made the first big move toward passing a long-term transportation reauthorization ahead of the July 31 expiration of MAP-21, the current law. So what happened, and what should we be expecting next?

Here’s our brief rundown of what you need to know.

First up, in news we haven’t covered here yet, the Senate Appropriations Committee this morning marked up and passed their version of the yearly transportation and housing spending bill that was passed out of the House several weeks ago — a bill that cut TIGER, passenger rail, and transit construction. Unfortunately, the news out of the Senate today was only marginally better. On the plus side, TIGER funding is maintained at this year’s level: $500 million again for competitive grants this upcoming year. But the Senate actually makes deeper cuts to New and Small Starts transit construction than the House did — $520 million in cuts over last year, and $320 million more than the House passed a few weeks ago. Passenger rail funding gets a marginal increase over last year’s level.

While we were hopeful that the Senate could possibly restore some of these cuts made by the House — as had happened in several years past — the consensus by House and Senate Republicans to stick to 2011 budget sequestration-level discretionary funding amounts for all of their FY2016 spending bills result in cuts across the board to discretionary programs like these. All Democrats on the Appropriations Committee opposed this bill.

Smart Growth America offered up this statement on the THUD bill today. T4America is a program of Smart Growth America.

The United States is in the middle of an affordable housing crisis. Rents are rising, the homeownership rate is declining, and federal housing programs are already failing to meet the need for affordable homes. Gutting the HOME program at a time like this is the wrong response. If Congress’s budget caps force this outcome, the budget caps need to be changed.

Logged-in T4America members can read our full THUD summary below:

[member_content]June 24, 2015 — The Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies (Transportation-HUD) marked up and reported its FY2016 appropriation bill to the full committee on June 23 without amendment. This is T4America’s short members-only summary of the THUD bill as reported to the full committee. Read the full memo.[/member_content]

Second up was the release and the subsequent committee markup of the Environment and Public Works (EPW) Committee’s six-year transportation bill known as the DRIVE Act. The EPW Committee is responsible for the largest portion of the full bill known as the “highway title” — more on the other portions below. In case you missed any of our posts about the EPW bill over the last few days, you can catch up with those below. Long story short? EPW released a bill with some modest improvements that represents a good starting point for debate, they approved it unanimously in committee while making a few small improvements, and important amendments that could ensure our investments best maintain and improve our transportation system are still outstanding and will hopefully be considered by the full Senate.

Statement on the release of the Senate’s long-term transportation reauthorization proposal

While this bill provides a positive starting point, there are other areas where Congress can and should do better.

Senate’s new transportation bill is a good start, but more should be done for local communities

The EPW committee marked up and approved this bill unanimously on June 24th without considering amendments (other than a package of amendments in a manager’s mark.) The amendments mentioned below were discussed or offered and withdrawn, and will hopefully be debated on the floor of the Senate. So keep any letters of support coming — this action is still ongoing!

Senate Committee rolls forward with speedy markup of six-year transportation bill

In a committee markup where the phrase “doing the Lord’s work” was invoked by numerous members on both sides of the aisle, the Senate Environment and Public Works Committee sped through a markup of their draft six-year transportation bill in less than an hour this morning, approving it by a unanimous vote with no amendments, save for a manager’s package of amendments agreed to in advance.

While the Senate Appropriations Committee marked up the transportation & housing spending bill this morning, the Senate Commerce Committee — the committee with jurisdiction over rail policy in the Senate — considered the Railroad Reform, Enhancement, and Efficiency Act — a bill to govern all passenger rail policy and authorize funding for the next several years. The RREEA bill is a good step forward, supported by T4America wholeheartedly:

Statement in response to introduction of the Railroad Reform, Enhancement and Efficiency Act

Senators Wicker and Booker are doing the nation a great service in crafting a bill that ensures Americans will see continued and improving passenger rail service in the years to come. Passenger rail service is vital and growing in popularity, and keeping the system working and safe requires investment. The Wicker-Booker bill embraces both those ideas. It authorizes necessary funding to start to return the system to a state of good repair and make targeted investments to improve service.

The committee markup of the bill known as RREEA was mostly uneventful, and it passed by a unanimous vote with mostly minor amendments and issues raised — some of which were safety-related and expected in the wake of the recent derailment in Philadelphia. The Commerce Committee is also responsible for freight and rail policy for the long-term bill, and we’ve heard that they could be releasing their draft long-term bill shortly after the July 4th recess.

Lastly, both House and Senate committees tasked with finding the funding to pay for the next long-term transportation bill (or finding the money to extend MAP-21 past July 31) held hearings this week to continue their work along those lines. In the case of the House, they were specifically discussing repatriation of corporate earnings as a possible revenue source.

Repatriation is the process by which companies can bring offshore earnings back to the U.S. at a reduced tax rate, and then all or a share of those tax revenues would be directed to the trust fund, providing revenues for a long-term transportation bill. It’s an idea that’s gotten some traction in the Senate — Senators Barbara Boxer and Rand Paul have introduced a proposal — but it’s still a one-time fix that’s still not a fee paid by the users of the transportation system.

A House Ways and Means subcommittee held a hearing today to discuss repatriation, and the overall takeaway from the hearing seemed to be that while repatriation may be the most feasible option after a gas tax increase was ruled out by Ways and Means Chairman Paul Ryan, there’s still little consensus in the House, and many representatives want to tie it to more thorny issues like corporate tax reform, reducing the chances that it could pass quickly or easily.

In the Senate, the Finance Committee held a hearing today as well to discuss the use of public-private partnerships — a growing trend in many states as they look to up-front cash from the private sector to help fund longer-term projects where the private party defers their payment or profits. Despite the way P3s, as they’re known, are frequently invoked as a possible funding solution, almost all the panelists today noted that although having a greater range of financing options will certainly be a boost to many states and cities, P3s won’t be sufficient without also increasing overall revenues. They’re not a panacea.

Which leads us right back to the elephant in the room: finding and agreeing upon a new, stable revenue source that can keep the nation’s transportation fund solvent for years to come. It was indeed a busy week, and we hope that Congress will keep up the momentum when they return from their weeklong July 4th recess.

Exclusive Member Summary – 6/18/15 Senate Finance Highway Funding Hearing

June 18, 2015 — US Senate Finance Committee — “Dead End, No Turn Around, Danger Ahead: Challenges to the Future of Highway Funding”

Witnesses: 

Dr. Joseph Kile – Assisant Director for Microeconomic Studies Division, Congressional Budget Office

The Honorable Ray LaHood – Senior Policy Advisor, DLA Piper

Mr. Stephen Moore – Distinguished Visiting Fellow, The Heritage Foundation

At this hearing, Chairman Hatch (R-UT) looked to explore every possible option to address the long-term fiscal challenges of the Highway Trust Fund. However, at the hearing he mentioned that he does not see any large-scale gas tax increase as politically possible. That said, Hatch pressed the need remove the “highway cliff” by finding funding to do a multi-year authorization.

Senator Carper (D-DE) called upon Senator Hatch to ensure no options like the gas tax are taken off the table, and referred to T4A analysis that showed state legislators who vote for a gas tax increase were not punished. Carper mentioned that at a minimum we should be able to index the gasoline and diesel tax and then come up with other creative sources to fund infrastructure.

Witness Stephen Moore with Heritage Foundation floated the idea of devolution, but the proposal was very unpopular for a majority of committee members and was shot down by former Secretary Ray LaHood as an irresponsible notion. Senators Thune (R-SD), Heller (R-NV) and Menendez (D-NJ) all voiced devolving the program. Transit came under attack for receiving gas tax dollars, but Senator Thune mentioned kicking transit out of the program is a political non-starter after it failed in the House during debate for MAP-21, and Senator Menendez and former Secretary Ray LaHood both stood up strongly for the need for more robust transit investment, not less.

Senator Thune (R-SD) mentioned that we should be treating general fund transfers as adding debt to an already debt-burdened country, since those funds ultimately do account for part of the deficit. He said it is time we stop the easy solution of general fund transfers and find a way pay for it. Senator Hatch agreed that long-term action is absolutely needed, and mentioned it will be difficult, but that the Committee will be working to look at all the different options to come up with a solution that stops the country from kicking the can down the road.

House takes first step in process to keep the nation’s transportation fund solvent

For the first time since 2012, the House of Representatives held a hearing focused on funding the nation’s transportation system. Today’s hearing focused on the elephant in the room: how to adequately fund a transportation bill that’s longer than just a few months. While it’s a relief to see the funding issue finally getting airtime in the House, keeping the nation’s transportation fund solvent is only half of the problem — we also need to update the broken federal program that isn’t meeting our country’s needs.

Rep. Paul Ryan (R-WI), chairman of the House Ways and Means Committee tasked with finding the money to pay for a transportation bill, took the most obvious funding solution off the table — raising the federal gasoline excise tax — right at the start of the hearing as the gallery was still getting comfortable in their seats, deflating some members of the committee who were eager to at least discuss this option.

“We are not raising gas taxes‚ plain and simple,” he said, while adding later that the House “does need to find a real solution, a permanent solution. We are all ears.” Chairman Ryan suggested that repatriation of overseas profits (a one-time, non-transportation user fee fix) or giving states more authority could be possible solutions, but a gas tax increase is off the table.

Before the hearing, Rep. Earl Blumenauer (D-OR) held a press conference featuring a coalition of groups who support his bill to raise new revenue in the House by phasing in a 15-cent increase in the gas tax. Civil engineers, general contractors, roadbuilders, public transportation operators and T4America director James Corless spoke at the press conference to support Rep. Blumenauer’s case that Congress’ inaction is negatively impacting our nation’s economy and action is long overdue.

James corless blumenauer
T4America director James Corless speaking at this morning’s press conference

Rep. Blumenauer carried his momentum from the morning press conference into the hearing an hour later.

“We’re not keeping up our end of the bargain for the 50 percent of capital spending on big projects that comes from the federal government. We haven’t made any meaningful adjustment since 1993 to the gas tax, relying on short-term fixes, gimmicks – and no matter how you slice it, adding to the deficit,” Rep. Blumenauer said in his prepared remarks.

Rep. Lloyd Doggett (R-TX) concurred. “What is missing from our transportation policy is money – revenue. We cannot build these highways with fairy dust,” Rep. Doggett (R-TX) said.

Rep. Renacci (R-OH), who has put forward a separate plan to index the gas tax to inflation and set up a mechanism to provide long-term transportation funding, noted that “short-term fixes cost money in delay and uncertainty.” He shared a story about meeting with constituents, including some tea party members, on transportation issues. He said that they told him, “‘Quit going to the general fund and taking dollars…what you’re doing is passing it onto our children and grandchildren. What I’d be willing to do is pay a user fee as long as I get my roads and bridges fixed.’ We have to come up with a long-term solution, we can’t continue to go down this path,” he said.

As Rep. Bob Dold (R-IL) from the Chicago area noted on the topic of buying new railcars for the CTA and Metra, “Do we buy them one at a time or ten at a time? I can get a far better deal if I buy them ten at a time,” he said. When agencies can’t reliably put together a multi-year budget because they have no idea what to expect from the federal government, projects can begin to cost more than they should.

Following on the heels of today’s Ways & Means hearing, the Senate Finance Committee is holding a hearing of its own tomorrow on transportation funding.

We can hope that the newfound willingness to discuss the challenging revenue question will lead members of Congress to build consensus around a funding proposal suitable for the nation’s need. However, simply raising new funding to pour into a broken system isn’t going to get us where we need to go either — we need to fix the broken system and update it with the kinds of policies that ensure every dollar invested by taxpayers provides the greatest benefits for the economy and our communities. It’s not enough to simply raise money and spend it on the same processes that created the crisis we find ourselves in today. America can do better, and it’s important that the decisionmakers understand this fact.

On that policy question, eyes are quickly turning to the Senate Environment and Public Works (EPW) Committee, which is responsible for the highway title — the largest portion of the bill. They are planning to release and mark up their successor to MAP-21, a six-year bill, next Wednesday, June 24th.

We are counting on the Senate EPW Committee to release a bill that can maintain our current system, complete the transportation network, incentivize the strategic investments that can provide access to opportunity for all Americans and best improve connections within the cities and towns that drive our economy.

Continuing and improving a nascent process to measure the performance of our transportation investments would allow us to better ensure that our limited resources bring the best return. And a forward-looking plan to direct more of that money down to where it’s needed most would be a great companion to any plan to shore up the nation’s transportation funding.

We’re now looking to the Senate to make progress on finding a long-term funding solution, but also to make the policy changes we so urgently need to ensure those dollars are well spent.

 

Michigan ballot measure to raise transportation & education funds goes down by a large margin

A Michigan bill that would have raised new money and overhauled how the state pays for transportation was defeated by huge margin Tuesday with 80 percent of voters rejecting the complicated proposal.

The bill would have eliminated the state’s fuel sales tax and raised the tax on wholesale gasoline sales to 41.7 cents per gallon (or 14.9 percent of a gallon of fuel’s base value, whichever is higher). This maneuver would have ensured that the entirety of the wholesale gas tax would have gone to transportation, compared to the current gas sales which does not.

To compensate for the loss of gasoline sales tax revenues currently going to municipalities and schools, the bill increased the sales tax on everything else statewide from six to seven percent and allocated the additional revenues to schools, local municipalities, and a tax break for low-income families.

The proposal would have also increased vehicle registration fees, commercial truck registration fees and would have instated a fee on electric vehicles.

While certainly disappointing to the supporters in Michigan, it reinforces the same lesson we’ve shared here regularly: transportation-related ballot measures have the best chance of passage when they are simple, specific and transparent about the money that will be raised and exactly where and how it will be spent. Voters have proven over and over again that they’ll support transportation ballot measures — if they meet some of those basic qualifications. Michigan’s measure surely suffered from the complexity and from the combination of education and transportation funding together into one proposal.

Some of the states still in play in 2015

Though there have been no new statewide funding packages passed since our last update here, other states are trying to bring transparency to the process of selecting transportation projects. Texas’s HB 20 tasks the TxDOT with creating “a performance-based planning and programming process” that would evaluate which transportation projects receive state money. Similarly, Louisiana’s HB 742 would require the Louisiana Department of Transportation and Development to rank projects according to a series of measures that highlight which projects are most vital to the state.

Also in Louisiana, the House’s tax committee approved two funding bills. The first would raise the state’s sales tax by one cent, with the proceeds going towards 16 designated transportation projects. The second bill would increase the gas tax ten cents, from 20 cents per gallon to 30.

The Missouri Senate gave initial approval to a 1.5-cents-per-gallon gas tax increase (3.5 cents per gallon for diesel). The state’s gas tax has been 17.3 cents per gallon since 1992. The bill stills needs one more vote in the Senate before going to the House. There are only two weeks left in the state’s legislative session and it is unclear whether they will vote on the bill before then.

In Minnesota, where we recently documented the state’s prevalence of structurally deficient bridges, both the House and the Senate have passed transportation-funding bills, but the two differ greatly. The Senate proposal raises new funds via a gas tax increase and a Twin Cities regional sales tax increase. The House’s version mostly shifts dollars around or borrows funds for transportation. The issue has been pushed aside as legislators must also hash out a state budget before the May 18th deadline.

Iowa was the first to successfully raise new state transportation funding in 2015 – and they did it with bipartisan support

Interstate 235 near Des Moines, Iowa.

Iowa in February became the first state in 2015 to pass a transportation-funding bill when legislators moved to raise the state’s gasoline and diesel taxes by 10 cents per gallon.  

Though seven states have now successfully moved to raise new transportation funding in 2015, Iowa made it to the finish line first. On February 25th, Republican Iowa Governor Terry Branstad signed a bill into law that increased the state’s gasoline and diesel fuel taxes by 10 cents per gallon, raising new funding to help maintain the roads and bridges crisscrossing one of the most important states for freight and agriculture in the U.S.

Iowa Governor Terry Branstad.

Iowa governor Terry Branstad.

In signing the bill, Branstad said: “This is a great example — on a difficult and controversial issue — of the kind of bipartisan cooperation that really makes Iowa stand out as a state, where we work together and we get things done on behalf of the citizens of our state. This is important for economic development. This is important for our farmers to be able to get their crops to market. I know that many people have been waiting a long time for the legislature to act.”

The increased gas tax — the rate on regular gas rose from 21 to 31 cents per gallon, and the rate for diesel rose from 22.5 to 32.5 cents per gallon — and other associated fees took effect on March 1st. Last week, Iowa’s Department of Transportation stated their plans to use the new funds toward $700 million in road maintenance and construction projects.

“I feel Iowa took a huge step forward by addressing our aging infrastructure,” State Rep. Josh Byrnes (R-Osage), chairman of the House Transportation Committee, told AgriNews. “It shows that Iowa is truly open for business and we have the leadership to make difficult decisions. Iowa is a net exporter of goods and these funds will help ensure that Iowa continues to have the needed infrastructure to transport people and products.”

HISTORY LESSON

At the start of the legislative session, Iowa was facing an estimated $215 million annual gap between revenues and needs, according to the state Department of Transportation. The state’s gas tax was last raised in 1989 to 19 cents per gallon, during current governor Terry Branstad’s first foray as governor of the Hawkeye State.

For years, key legislators and business leaders pushed for meaningful legislation to bolster transportation funding, but they never gained enough momentum to pass it, said Senator Tod Bowman (D-Clinton), chair of the Senate Transportation Committee. “We couldn’t drum up enough support. We didn’t really have the leadership from the Governor,” he said.

This year would prove to be different, however.

Iowa state representative Jim Lykam.

Iowa state representative Jim Lykam.

Gov. Branstad’s vocal support was critical in convincing Republican lawmakers that this was a must-pass piece of legislation for the state, said State Rep. Jim Lykam (D-Davenport), the ranking member of the House Transportation Committee. “We were in constant communication with the governor’s office,” he said. “You always run the risk of sending the bill down and having the governor veto it, and we needed to make sure this wouldn’t happen.”

The bill had to jump an atypical hurdle before it passed. The Senate minority leader and the House speaker required that the bill garner “yes” votes from the majority of each minority party in each chamber. This unusual requirement meant that the bill would not move without widespread consensus.

“This consumed me for the first six weeks of the session,” said State Rep. Lykam. “It was just back and forth negotiations. You try and do something — you pick up votes, but then you lose votes over here — so it was a give and take.”

IOWANS GETTING INSPIRED IN DENVER

Just before their work began in the new legislative session in January, Rep. Lykam and Senator Bowman attended Transportation for America’s Capital Ideas Conference in Denver in November 2014, which helped them find focus and fresh ideas that they brought back to Iowa. Senator Bowman learned from a group of attendees from Massachusetts about the pros and cons of tying any future gas tax increases to inflation.

Scott VanDeWoestyne, the government affairs director for the Quad Cities Chamber of Commerce — another Capital Ideas attendee — said the conference helped light a fire under him and the two legislators.

“They were able to come back from Denver, and come here to the Quad Cities region and engage in good conversation,” VanDeWoestyne said. “Good comprehensive discussions with their colleagues about, ‘Hey, these are some of the other things states are doing, and we need to be focused on this.’”

VanDeWoestyne also stressed the importance of Iowa’s transportation funding bill to the Quad Cities metro area.

“Our economy in the Quad Cities region is growing fast,” he added, “and the state’s transportation investments have had a tough time keeping pace. This is one of the reasons we have championed greater federal and state transportation investments in Iowa. So, it was very heartening to see this year that Iowa moved towards a solution, and we’re happy to be a part of the compromise.”

EDUCATING THE MASSES

As with any piece of legislation that involves new taxes, not all Iowans were on board. A coalition of stakeholders from across the state focused on educating legislators and the general public and establishing consensus that the transportation package was necessary to support economic development and provide better quality of life to the state’s residents.

Iowa state senator Todd Bowman.

Iowa state senator Todd Bowman.

“The more that people know about the issue, the easier it is to push a difficult thing like a tax increase,” said Senator Bowman. “Nobody wants to pay more taxes for their fuel. But nobody wants their roads and bridges to deteriorate, and so it becomes a point of education.”

THE GOVERNOR’S SUPPORT

Rep. Lykam cites the governor’s continuous support as one of the critical reasons why this bill gained the broad agreement needed to pass the legislature. “When the Governor grabs the microphone, you know he’s got the bullhorn for the full state,” said Lykam. “It was very, very important that we had his support.”

It took a few years, a broad coalition of stakeholders and bipartisan consensus, but Iowans have shown what can be accomplished when partisan politics are set aside to raise the necessary revenue to maintain and enhance their transportation system to support the state’s economy.

As we note here often, the Iowa legislature acted to expand their capacity to match and stretch the dollars they expect from the federal program. Congress needs to act, in turn, to stabilize and increase that funding, to ensure that the bold moves in state houses this year are not undermined by a wobbly federal partner.

And then there were seven: April update on state transportation funding legislation

A total of seven states have now successfully passed legislation in 2015 to raise new money to invest in transportation, avoid budget shortfalls from declining revenue sources and keep up with growing needs — mostly by voting to raise their state fuel taxes. 

Georgia passed a bill that will raise approximately $900 million annually mostly for state highway projects. The bill changes how the state taxes gas, switching from a sales tax on gas purchases to a 26-cents-per-gallon excise tax, indexed to both the change in the average fuel efficiency of all vehicles registered in the state and to inflation (measured by the Consumer Price Index). That double indexing will ensure the new per-gallon tax doesn’t lose future value due to inflation or improved fuel efficiency. The bill also places fees on other services, including a $5-per-night hotel fee, $300 annually in fees for electric cars and $100 annually in fees for heavy trucks. In light of this switch from a sales tax to per-gallon taxes on gasoline, it’s worth noting that Georgia is one of dozens of states with a constitutional prohibition on spending per-gallon gas tax revenues on public transportation.

Georgia counties and cities also won a modified option to raise funds for local transportation needs via additional sales taxes of up to one percent if approved by the county commission and voter referendum. Before this modification, a local option sales tax referendum could only be held on dates and in regions determined by the legislature.

Also worth noting is the passage of a separate bill that finally removes the onerous requirement that MARTA (Atlanta’s regional transit system) could spend no more than 50 percent of its locally-raised revenue to fund operations — essentially the state telling them what they could or couldn’t do with their locally-raised revenues. At one point during negotiations there was a provision that would have allowed the cities and counties that contribute to MARTA to increase the sales tax dedicated to the system by 0.5 percent via ballot measures, but this provision was removed from the final bill.

In North Carolina, legislators passed a bill to raise the minimum gas tax rate of their variable tax to 36 cents per gallon. The gas tax was previously 37.5 cents per gallon but would have dropped below 30 cents per gallon in July, which would have cost the state an estimated $266 million in funding for transportation over the next year.

Kentucky, with a variable tax rate similar to North Carolina, passed a similar bill. The state established a new gas tax minimum of 26 cents per gallon. The new minimum will prevent an estimated $250 million drop in contributions to their transportation fund for the year.

The House and Senate in Idaho both approved raising their gas tax from 25 cents per gallon to 32 cents along with increases to the state’s vehicle fees. The bill will raise an estimated $94 million for maintenance of the state’s roads and bridges. The bill is sitting on Governor Butch Otter’s desk waiting for his signature.

Those states join Iowa, Utah and South Dakota as the seven states that have successfully raised new funds in 2015. With legislative sessions and active proposals still moving in a handful of states, more could still follow this year.

Louisiana legislators have filed several bills to address the state’s transportation issues. One bill would raise the state fuel tax by 4 cents per gallon with new revenue dedicated to parish governments. Another proposal would temporarily raise the state fuel tax by 4 cents per gallon for the next three years. A separate bill would reform the way the state selects highway projects, improving the potential for return on transportation investments while adding transparency and accountability that could boost the prospects of the plans to raise new revenue.

Nebraska’s legislature has advanced a bill to increase their state gas tax by 6 cents per gallon, but Governor Ricketts said he opposes the increase and has called for a study committee to assess the state’s transportation need instead.

Lastly, for any Minnesota funding proposals to have a chance this year, they must pass out of their committees by April 24th. Check back then for results.

‘Speak up for transportation’: Analyses show the devastating impact of federal cuts

Congress has seen various proposals floated to scale back federal investment in transportation, from cutting out transit funding to ending the federal gasoline tax and shifting full responsibility to the states. We decided to take a look at what that latter move would mean for taxpayers, who would have to make up the difference in each state or accept multi-million dollar decreases in funding and deteriorating conditions on an annual basis.

Tease-State Gax Tax Increases Required Tease-State Gax Tax Revenue losses per capita

The bottom line: All states would have to raise their per-gallon gas taxes more than the federal rate of 18.4 cents to replace the lost revenue — and many states would have to raise theirs by much more. Click through to see the full analysis with graphics and data for all 50 states

There’s a reason you don’t hear state politicians calling for the end of the federal transportation program and the gas tax. That’s because every single state receives more in federal transportation funds than they pay into the federal system — in part because Congress has been transferring billions from the general fund to make up for slackening gas tax receipts and the fact that the gas tax hasn’t been raised in more than two decades.

At least 16 states have moved to raise their own transportation revenues since 2012, leading some in Congress to claim that those moves show states would be fine with accepting the full burden.

But ending federal support would be a nightmare for governors and legislators, who would have to choose between slashing repair and investment or trying to push through massive tax increases to replace federal revenues.

(The Transportation Construction Coalition released a similar analysis a few weeks ago, but, unlike the analysis here, it did not include the 20 percent of the transportation program that supports public transportation. -Ed.)

According to our full analysis: (See columns 2-3 in the table)

  • 19 states would have to raise their gas taxes by at least 25¢ per gallon, over 36 percent more than the current 18.4¢ federal rate.
  • Vermont would have to raise the state gas tax by 50¢ per gallon to break even – and that’s on top of a recent increase lawmakers passed to add the equivalent of 6.5¢ to each gallon of gas.
  • New York, which receives the highest amount of transit funding in the country, would have to raise the state gas tax by 40¢ to keep the same amount of transit money flowing into their highly-used systems.

Even if states only raised their gas taxes the equivalent of the 18.4¢ federal tax, our calculations also show that: (See column 4-5 in the table.)

  • States collectively would lose out on $8.47 billion (according to data from fiscal 2014);
  • Missouri, currently attempting to raise additional state funding to address an already large budget hole, would need to raise $144 million each year on top of their current needs;
  • New Jersey, facing the imminent bankruptcy of its state transportation trust fund, would also have to find an additional $373.6 million;
  • California would lose nearly $1 billion ($970.5 million, to be exact).
  • In Wyoming, where lawmakers just passed a 10-cent gas tax increase expected to generate $72 million per year, they’d be almost back to square one, losing $57 million.

States also would fare poorly under proposals to eliminate federal contributions for public transportation, as two proposals in Congress would do, according to an analysis out today from the American Public Transportation Association. From their release:

The analysis shows that proposals to cut federal funding for public transit would result in an average 43 percent reduction in a community’s capital improvement funding. Overall, the loss of federal capital and operating funding would put at risk more than $227 billion in economic activity over six years. … Small and rural communities would be aversely affected because a greater percentage of their total funding is from the federal government.

No matter how you slice it, dramatically reducing federal dollars, whether for roads or transit, would have devastating impacts on state’s population centers – the places where commerce happens and revenues are generated. Going in the other direction however, by increasing investment available to states and local communities, would help keep roads and transit in good repair while we build for the future economy.

Read our full analysis, including graphics and sortable data for all 50 states.

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This post and analysis is part of “Stand Up for Transportation” day today. Find out more and get involved here: http://standup4transportation.org/

Update on 17 states moving to raise money for transportation

From Washington to South Carolina, 17 state legislatures (with others likely to follow) are debating plans to raise new revenue for transportation after a decade in which their primary funding sources shrank and federal support became increasingly uncertain. See the current state of play in our freshly updated national roundup. (Updated 2/25/15)

View our updated resource tracking state transportation funding plans here.

Among those 17 states, Iowa, Georgia, and Washington have been in the news over the last two weeks due to significant progress made toward producing a funding package in their state legislatures.

In Washington, a (still contentious) plan currently before the full Senate would raise the gas tax by a total of 11.7 cents per gallon by 2018. In Iowa, Gov. Terry Branstad just signaled that he would likely support a ten-cent increase in the state gas tax if the legislature can come together to pass one and send it to his desk for approval. In Georgia, the House Transportation Committee passed a bill to replace the state’s sales tax on gasoline with a 29.2 cents per gallon tax and give counties more authority to tax gasoline; floor debate has been postponed while supporters work to round up votes.

Update: Iowa’s package passed both House and Senate on Tuesday afternoon. Link. -Ed.

Most states rely heavily on their taxes on gasoline and diesel fuel to provide their share of transportation budgets, and those sources have taken a hit as vehicles have become more efficient, per-person driving mileage has declined and construction costs rise along with inflation — the same forces that have been squeezing federal funding and the 18.4 cents-per-gallon gas tax. Unchanged since 1993, the federal gas tax has lost approximately one-third of its purchasing power. In 2012, Congress did something it had not done in decades, passing a federal transportation law that failed to increase funding. In 2014, Congress punted on a long-term solution, scouring the couch cushions once again to scrape together enough funding to keep the program hobbling along until May 2015.

Even if Congress comes through, the aging infrastructure in need of repair in many states and the demands coming from demographic and economic changes mean states need more revenue, not less. (And yes, many states also need to dramatically reform how they spend the dollars that they have, which can go a long way toward building the public confidence required to successfully taxpayers for additional money.)

One key lesson worth noting up front that we shared yesterday: Legislators who supported such moves have met with little to no pushback at the polls. Our updated analysis of November’s election data should be instructive for the legislators currently weighing action: 90 percent of legislators supporting revenue increases in ten states since 2012 won their re-election bids.

We’ll be following the action in these states closely and likely adding more to the list, so stay tuned.

Graphic - transportation tax final election results