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Tag: state funding

What’s the best role for state government in [insert your top transportation issue]?

There’s both a lot of uncertainty and disruption in America’s transportation landscape right now, from pothole-riddled roads and no money to repair them (an age-old issue) to brand new tech-enabled transportation options (electric scooters anyone?). Stuck between shifting national politics on one hand, and cities scrambling to keep up with dramatic changes to urban transportation on the other, are the states. How is the state’s role evolving when it comes to transportation?

That’s where Transportation for America’s Capital Ideas conference comes in.

What should states be doing when it comes to managing new ride-sourcing services or autonomous vehicle testing, and is there a way to generate new transportation revenues while prioritizing safety for everyone who needs to use the right-of-way? What are the state-level policy considerations for intercity rail, especially with private companies inching into the U.S. market? How are states limiting or allowing localities to control their own transportation destiny through local-funding initiatives?

Help shape our agenda

Right now (and until July 13), we’re accepting session proposals to address questions like those—and so much more—at Capital Ideas 2018. This December, your expertise and insights could gain an audience of hundreds in positions of influence, including state policymakers, transportation advocates, and service providers. And a diversity of voices and ideas will help us make Capital Ideas as useful as possible for the widest variety of people and practitioners.

Capital Ideas will cover state-level policy, campaign tactics, and provide ample opportunity for peer-to-peer collaboration. And your session could help participants come away prepared to raise new funding for transportation and ensure those dollars are wisely spent to accomplish tangible goals.

Early-bird registration deadline extended

There is now even more time for you to take advantage of early-bird discounts on Capital Ideas registration. From now until September 7, save up to $100 on your ticket to the two-day conference in Atlanta, GA. (T4America members can save an additional $100 with their special member code!)

Register now to lock down your space for Capital Ideas 2018.

The TIGER program is no more….in name


A rendering of the Multimodal Corridor Enhancement Project (MCORE) in Urbana and Champagne, Illinois is a complex street safety enhancement project that involved two city governments, the local transit agency, the University of Illinois, and the state. It wouldn’t have been possible without a TIGER grant.

Today, the U.S. Department of Transportation (USDOT) released the FY 2018 Notice of Funding Opportunity (NOFO) for the program formerly known as Transportation Investment Generating Economic Recovery (TIGER). The NOFO declares that USDOT has rebranded TIGER as the Better Utilizing Investments to Leverage Development or “BUILD” program. The criteria for funding under BUILD and TIGER are essentially the same—with one big caveat. Under BUILD, USDOT is putting a new emphasis on securing and committing new, non-federal revenue for projects requesting funding.

USDOT defines new revenue as “revenue that is not included in current and projected funding levels and results from specific actions taken to increase transportation infrastructure investment.” And any local or state revenue authorized before January 1, 2015 is not considered new revenue and cannot be applied as matching funding for BUILD projects.

Examples of “new revenue” according to USDOT are asset recycling, tolling, tax-increment financing, or sales or gas tax increases. Under this definition, bonds do not qualify as a new revenue source.

If this sounds familiar that is because it is! The criteria for funding consideration under BUILD is a lot like the requirement that the Trump administration included in their proposed infrastructure package earlier this year. As T4America’s analysis of the infrastructure package revealed, this criteria penalizes states and localities who have already raised more local revenue for transportation projects. Why are we penalizing states and cities who acted first?

Since 2012, 31 states have raised new transportation revenues and 12 of those states raised revenue before 2015—mostly by raising or otherwise modifying their gas taxes. Beyond states, many localities like Clayton County, GA and Alameda County, CA raised local funding before 2015 through ballot measures. Even if the taxes or other funding tools are producing new revenue today, if it happened before 2015, the Trump administration doesn’t care. Many of those cities (and the 12 states) would have to raise even more new funding to meet this criteria.

Asking localities to simply kick in more money would do little to guarantee better projects—it’ll just occupy more of the local funding that states or cities could invest elsewhere or spend on long-term maintenance. And the feds shouldn’t be pointing fingers about raising more money. Unlike these states and cities, the federal government hasn’t raised the gas tax (the largest source of federal transportation dollars) since 1993.

Rural communities get shortchanged by BUILD

This is especially problematic for rural communities who already have a difficult time raising new revenue. Many of the sources of new revenue suggested by U.S. DOT—asset recycling, tolling, tax-increment financing—are not feasible in rural areas because there is little to no private demand to finance infrastructure in rural areas because it’s not profitable.

The administration has talked a big game about the need to improve infrastructure in rural areas and this NOFO is on message, saying that’s a priority for this year’s BUILD program. But this new criteria actively makes it harder for rural areas to be competitive for funding because they will struggle to raise new revenue.

With this big change, the BUILD program has already built something: another obstacle to rural communities getting the transportation funding they need.

Background on TIGER

The FY 18 omnibus package enacted into law last month tripled the size of the Transportation Investment Generating Economic Recovery (TIGER) program from $500 million to $1.5 billion. The omnibus rejected the president’s proposal to eliminate the TIGER program. This NOFO makes available the $1.5 billion from the omnibus and requires applications to be submitted to USDOT by July 19, 2018.

The TIGER program was one of the only ways that local communities could apply for and directly receive federal dollars for their most needed transportation projects. TIGER enabled the development of complete streets and walkable communities, expanded intermodal access to our nation’s ports, improved our public transit network, made our highway and railway systems more efficient, and helped to strengthen our passenger ferry network. TIGER routinely had requests for three to four times more in funding than was available—making it a very competitive program—and raised $3.6 in additional funding for every dollar appropriated through TIGER. In short, TIGER has been a widely successful and popular program.

T4America members recently got the inside scoop on this next round of TIGER/BUILD via an exclusive webinar with USDOT.

Not yet a member? T4America regularly offers members more in-depth summaries of USDOT actions like this NOFO. In the days ahead, we will be helping members to make their applications more competitive.

Learn more about T4America membership here.

Oregon’s legislature just approved a transportation package that goes big for transit

The Oregon Legislature just passed a transportation package that makes historic investments in transit while also advancing congestion pricing and putting funding toward safe routes to school infrastructure, electric vehicle purchase incentives and fixing roads and bridges.

As local stakeholders, the governor, and legislators worked over the last year and a half to develop legislation to invest in Oregon’s transportation system, a common refrain emerged: “Go big, or go home!” The idea being that if legislators were going to take a tough vote to increase taxes, they might was well make it a significant enough increase to make a substantial difference for the state’s commuters, traveling public and shippers. The Oregon House passed HB 2017 yesterday (Wednesday), and the Senate approved the legislation late today, which the governor is expected to sign. If Governor Kate Brown signs the bill, Oregon will become the sixth state to raise new transportation funds in 2017, and the 30th since 2012.

Oregon puts some skin in the transit operations game

Now virtually at the finish line, the overall package isn’t as big as initially proposed, but it has gone big for transit. The legislation introduces a new statewide transit-dedicated 0.1% employee payroll tax expected to generate $103 million annually. This represents over a 200 percent increase in state funding for transit — truly a game-changer that will increase transit service in rural and urban areas across the state.

Change from 2014 state funding per capita for transit, compared to potential funding with new transit funding. Via bettertransitoregon.org

A committee created by the legislative leadership to develop the initial funding package toured the state last year and heard about the importance of transit from every community they visited, large and small, rural and urban. However, like many other states, Oregon has a very strict constitutional restriction on motor-vehicle user-fees like gas taxes, registration fees and title fees. Funds from these sources can only go to infrastructure within the road right-of-way, and definitely not to transit operations.

This wasn’t Oregon’s first recent attempt to raise new funds for transportation. An employee payroll tax to fund transit had originally been proposed in the failed 2015 “Gang-of-8” package. While there were concerns about the regressiveness of this funding source, and a more progressive income tax was floated as an alternative, ultimately, the payroll tax stuck. To mitigate the regressive payroll tax, transit agencies will be required to submit public transportation improvement plans explaining how they will improve service and/or reduce fares for low-income riders.

As part of the effort to win this component of the package, the Oregon Transit Association compiled stories about the value of transit and how additional funding could effectively be spent to improve the lives of Oregonians. The Better Transit Oregon website outlines, for example, improvements like seven new bus lines and increased service on 20 other transit lines in the Portland region, and enhancing service that Kayak Public Transit provides between Pendleton, Hermiston, La Grande and Walla Walla in eastern Oregon. Overall, the funding could provide a 37 percent increase in service hours statewide.

Many ways to skin a cat

The joint legislative committee tasked with producing the package recognized from the start that this package had to be multimodal. While there was a focus on freeway projects that would address three bottlenecks in the Portland region, many committee members quickly recognized that these freeway projects were certainly not silver bullets and possibly wouldn’t help much at all in the long term.

Senator Brian Boquist from a rural part of the Willamette Valley regularly told his colleagues and the media that, “We cannot build our way out of congestion,” and “We cannot tax our way out of congestion,” to advance tolling and congestion pricing as critical strategies to address Oregon’s congestion challenges. The legislation directs ODOT to study, and, if feasible, implement congestion pricing on the two major north-south freeways in the Portland region, I-5 and I-205.

Ironically, as the size of the package shrank due to pressure from trucking and automotive stakeholders, the funding available for the freeway projects shrank, but congestion pricing stayed in the bill along with smaller investments like $10-15 million annually for safe routes to school infrastructure, a $12 million annual program for electric vehicle purchase incentives and the aforementioned transit funding. Overall the package shrank from $8 billion over 10 years to $5.3 billion.

Recognizing the need for accountability and transparency – but coming up short

Legislators recognized the need for improved transparency and accountability but lacked the political will to fully address the issue in any meaningful way.

While the Oregon Department of Transportation (ODOT) is known for its emphasis on state of repair, and certain data-driven programs like All Roads Transportation Safety and Connect Oregon, it has stumbled significantly, particularly with more expensive projects like the failed Columbia River Crossing and the over-budget Pioneer Mountain Eddyville highway project.

A working group was specifically charged with developing policies to address accountability and transparency. T4A had worked with Representative Reardon to put forward HB 2532 modeled on Virginia’s “Smart Scale” concept as way to identify projects that maximize return on investment. It proposed to do this by giving each project a return-on-investment (ROI) score and only selecting for funding those that scored the best. In the end, the workgroup opted for “the Nevada model” which involves cost-benefit analysis of projects, a different tool aimed at the same task of evaluating project ROI.

Unfortunately, the committee didn’t make a strong commitment to this new approach, exempting all the earmarked projects in the bill, and only including modernization projects that cost more than $15 million. To put this in perspective, the draft 2018-22 State Transportation Improvement Plan (STIP) includes no projects that that clearly would be subject to the new analysis.

This means Oregon won’t be able to use this system to meaningfully compare proposed projects — including nearly $800 million in earmarks in the package — to report on, let alone prioritize, those that maximize return on investment. To make matters worse, the Connect Oregon program — renowned for its data-driven merit-based project selection process similar to the federal TIGER program — is now completely consumed by earmarks for the next two biennia.

The bill does give the governor-appointed and legislatively-confirmed members of the Oregon Transportation Commission (OTC) greater capacity and authority to oversee ODOT. OTC will be granted independent staff and the power to hire and fire the ODOT director in consultation with the governor. These changes create the some hope for administrative change to improve ODOT’s accountability, transparency and ability to make data-driven decisions that maximize return on investment toward achieving Oregon’s goals.

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.

How many states will try to do something different in 2016?

With Congress finally wrapping up their five-year transportation bill in late 2015, the spotlight will burn even brighter on states in 2016. With 40 state legislatures now in session and six more set to begin in the coming weeks, how many states will raise new funding? How many states will attempt to improve how they spend their transportation dollars? How many will take unfortunate steps backwards?

State Policy Report Jan 2016 featured graphicAs we highlighted in our most recent report that contained 12 recommendations for bringing state transportation policy out of the stone age, these state legislators will face the most critical of choices: continue pumping scarce dollars into a complex and opaque system designed to spend funds based more on politics than needs, or find a new approach that will boost state and local economies and restore taxpayer confidence in a broken system.

Here’s a short roundup of some of the states and bills that we’ll be watching.

Increases in funding on the horizon?

Louisiana’s new governor, John Bel Edwards (D), and a new legislature have highlighted transportation as a priority issue. Edwards’ transition team recommended a big ramp up in spending for transportation projects — and especially on rail, transit, freight and other key, non-highway projects that have long been neglected. The transition team also recommended that — to make those projects possible — the state will need to move ahead on staffing and setting up the new office of multimodal commerce created by the legislature in 2014 as a way to reform the Department of Transportation and Development and broaden the state’s transportation focus. A special legislative session on the state budget begins in mid-February. Transportation is unlikely to be included in this session, but legislators will be laying the groundwork for raising new funding in a later session or next year.

Following years of unsuccessful efforts, Missouri’s legislature is again looking for ways to raise new state revenue for transportation. A voter initiative in 2014 was defeated in part because it would have taxed metropolitan areas most heavily but not given cities the autonomy to spend these funds on their most pressing transportation needs. To get support for new funding — several bills have been introduced already this year — legislators will likely need to reform the way funds are distributed and spent, but few reforms have been offered.

A special transportation finance panel called by Connecticut Gov. Dannel Malloy (D) recommended multiple sources of financing to fund the state’s long list of repair needs and planned projects. But it called for the state to first implement several reforms, including setting aside fuel tax and toll revenues exclusively for transportation projects and for enabling new local or regional funding options to allow alternative funding for local priorities.

Colorado’s legislature is fielding a slew of calls for new ways to get more money to transportation projects. Gov. John Hickenlooper (D) has called for a tax swap that would allow the state to spend existing revenue on transportation projects. Some transportation advocates have called for general obligation bonds, shifting money now used for road repair to pay for new projects, or a statewide ballot measure to increase revenue for transportation.

After months of publicly calling for state legislators to boost state transportation funding and barnstorming the state to make his case, Tennessee Gov. Bill Haslam (R) has pushed the issue off the agenda until 2017. The call for new revenue got a chilly reception with state legislators, including leaders in Haslam’s own party. Fortunately, as we highlight in our report from two weeks ago, Tennessee’s DOT is already a leader in finding cost-effective solutions and saving state money by right-sizing their projects — keys to building trust and ensuring voters that any new money down the road will be well-spent.

New local funding

Local communities want and need to put their own skin in the game, and states should enable them to do so. Far too many states restrict the ability for locals to tax themselves to raise their own funds for transportation, but scores of other states are looking for ways to enable local communities to raise their own dollars for their most pressing needs.

A bill was introduced in Massachusetts by START Network member Rep. Chris Walsh (D-Framingham) to allow cities and towns to impose a payroll, sales, property, or vehicle excise tax to fund local transportation projects, including repair and new construction of streets, bridges, transit, and pedestrian or bike infrastructure. A bill in Wisconsin allows counties or municipalities to impose a temporary, 0.5-percent sales tax to raise money exclusively for street and highway repair. Both bills would require the new taxes to be approved by the local government and a voter referendum.

A 2013 transportation funding bill in Virginia added extra fuel and sales taxes for the state’s most populous urban regions of Northern Virginia and Hampton Roads to help them meet the large, complicated transportation demands. Two bills introduced this year add a new floor to the local supplemental tax equal to the amount that would have been charged in February 2013, already in place for the statewide wholesale rate, and increase the wholesale rate for the Hampton Roads region from 2.1-percent to 5.3-percent.

Measuring performance

Last month, Virginia Department of Transportation released its first list of projects scored and ranked to receive funding in the Statewide Transportation Improvement Program. This program is the result of a dogged focus by legislative leaders and the administration of Gov. Terry McAuliffe (D) to reform the state’s transportation program. START members and other local leaders have had positive feedback thus far for the new system intended to increase transparency and public understanding of transportation investments by objectively screening and scoring transportation projects based on their anticipated benefits.

Massachusetts is in the midst of implementing a similar program that was created as part of the 2013 transportation funding package.

Moving backward

While legislators in many states are looking for ways to meet diverse transportation needs, some legislators are leading efforts to entrench systems that fund highways only. A bill passed out of Colorado’s Senate Transportation committee would eliminate $15 million in state money directed to transit from a 2009 funding bill. A bill in Tennessee would limit state transportation funds, including those distributed to cities and counties, exclusively for highways and bridges.

12 transportation policies states should consider in 2016 to stay economically competitive

To remain economically competitive, states must invest in infrastructure, but state legislatures have a critical choice ahead of them: continue pumping scarce dollars into a complex and opaque system based on outdated policies out of sync with today’s needs, or follow the lead of the states highlighted in Transportation for America’s new report, Twelve Innovations in Transportation Policy States Should Consider in 2016.

State legislatures, as incubators of innovation and more flexible than Congress when it comes to enacting new transportation policies, have a golden opportunity in 2016 to reform their transportation programs to expand transparency and accountability, boost state and local economies, invest in innovation across the state, save the state money and improve safety for the traveling public.

Why this focus on state transportation policy?

Similar to Congress’s action in 2015 with the passage of the FAST Act, most of the 23 states that increased their own transportation funding revenue since 2012 have failed to update the underlying policies governing the spending of those new funds. The distribution formulas for those funds are often relics of decades-old priorities that are out-of-touch with the new needs of increasingly diverse economies and demographics.

T4America’s new report outlines 12 transportation policy solutions recently passed legislatively or instituted through administrative action in states, many of which are being pursued by Transportation for America’s START network members and other key policymakers in 2016.

These dozen policy proposals have shown the ability to:

  • increase accountability and transparency to build taxpayer confidence;
  • make states economically competitive and empower locals to do the same;
  • invest in innovation and reward the smartest projects;
  • maximize savings through better project development; and
  • improve safety through better street design

Considering the fact that the federal program is still largely a block grant given to and controlled by the states, state leadership on transportation issues will be more important than ever in the years to come.

The START Network

T4America supports efforts to produce and pass state legislation to increase transportation funding, advance innovation and policy reform, empower local leaders and ensure accountability and transparency. We do this through our State Transportation Advocacy, Research & Training (START) Network of state and local elected officials, advocates and civic leaders, providing our members easily accessible resources that arm decision makers and advocates with template policies, research and case studies from leaders nationwide. Join the START network today, and share with us any bills in your state legislature that you feel we should be tracking here.

State-level reform will be essential for advancing creative and innovative transportation funding and policy reforms to make the most of limited infrastructure dollars. Get engaged by joining the START Network and get your free copy of the report today.

Virginia launches program to remove politics from transportation investment decisions

This week Virginia DOT released a list of recommended projects across the state, the result of a new process to objectively screen and score transportation projects based on their anticipated benefits.

It may not sound like big news that a state has carefully measured the results it expects from billions of dollars in capital investments. Unfortunately, nearly all states rely instead on byzantine funding formulas and decades-old project lists, rather than measurable return-on-investment, to award funds for highway and transit projects. That means that this common sense change is a big one for the transportation system.

“This new law [HB 2 passed in 2014] is revolutionizing the way transportation projects are selected,” said Gov. Terry McAuliffe (D) in a statement on the release of the project scoring results. “Political wish lists of the past are replaced with a data-driven process that is objective and transparent, making the best use of renewed state funding.”

hb2 project apps

Fiscal year 2017 project applications and results of the analysis are mapped by location on the HB2 projects page.

It is not just the selection process itself that is novel; Virginia is also opening up its process to public review in a way that few states have. With its consumer-friendly website, virginiahb2.org, the DOT explains the process, eligible projects, and scoring factors used in ranking projects. This week, the list of recommended projects and their scores were also put online. The public will have opportunities to weigh in on the recommended projects before the final project list is approved by the Commonwealth Transportation Board in June.

Some of the top projects, based on total benefits, were adding high occupancy/toll (HOT) lanes along the I-66 corridor in Fairfax County; widening I-64 in Hampton Roads; extending Virginia Railway Express commuter rail service to Haymarket; and adding a second entrance to the Ballston Metro station. The number-one ranked project—the project with the greatest benefit per cost—is a small, locally requested road improvement project at the elementary school in the town of Altavista.

The new objective scoring process is the result of key reform bills passed by the general assembly: HB2, passed unanimously by the general assembly in 2014 and HB1887 passed last year. These bills instructed VDOT and the Commonwealth Transportation Board to create a new process to rank projects of all types, in each region of the state, on five key measures: economic development, safety, accessibility, congestion mitigation, and environmental impact. State funds are awarded to both statewide priorities and local needs that have the highest measurable benefits. We cover both bills in more detail in two Capital Ideas reports.

“We must ensure that every step we take is measured by its return on investment,” said House Speaker William Howell in 2013 prior to HB 2’s introduction. “Resources are too scarce and taxpayer dollars too precious to be thrown away on poorly planned transportation projects. Projects should have clearly defined goals and metrics that can be measured in an objective fashion. A ‘good idea’ is not good enough anymore.”

Virginia’s new process is part of a growing trend. As legislators throughout the country look for ways to get the maximum benefit out of ever-more-limited transportation funds and build trust and accountability in the way the dollars are spent, many are looking to new ways to measure project benefits and prioritize needs. Massachusetts’ Project Selection Advisory Council is developing a new process for ranking projects in that state. Louisiana and Texas each passed new laws last year to add score and select transportation projects.

Virginia’s political leadership deserves great credit for taking on this common sense reform and placing the public benefit in front of short-term political gains.

12 states successfully raised new transportation funding in 2015 — what can other states learn?

The second issue of Transportation for America’s “Capital Ideas” series, released today, takes a closer look at the states that passed new transportation funding and policy legislation in 2015, distilling it all into some notable trends, lessons learned, challenges, and recommendations for other states planning similar action in 2016.

After years of inactivity on the issue, transportation funding has increasingly become a priority in states both red and blue. 2015 was a high water mark for the number of states successfully raising new funding, boasting successful increases in 12 states, bringing the total to 23 since 2012.

Along with a big-picture overview of all the states that were successful this year, this short report takes a closer look at a state that passed one of the better overall bills (Utah), a state that suffered a defeat on the way to a final package that failed to fundamentally improve policy or solve the revenue question (Michigan), and a state that passed another round of policy reforms to build voter trust and accountability following an increase in new transportation funds in 2013 (Virginia).

Through the successes (and failures) of 2015, we pull together some practical lessons and challenges for the other states hoping to take up the issue in 2016 or 2017, like showing why instituting reforms to boost public confidence can increase the likelihood of success, why indexing fuel taxes to inflation still isn’t a long-term solution, and why states should still find ways to fund all of the diverse needs in their states — not just highways. (Something that not enough states managed to do this year.)

Many states have an uphill challenge on that last point: did you know that almost half (23) of U.S. states have constitutional restrictions on their fuel taxes that restrict their use to roads or highways only? Those are the kinds of nuggets you can expect in Capital Ideas II.

While 2016 may not be quite as active as 2015 was due to a busy election year ahead, this trend will not abate anytime soon.

Even though Congress did finally pass a five-year bill this year, states are unlikely to stand pat on transportation funding. Years of dwindling federal funding and lost revenues due to arcane, static, and declining gas taxes have left states struggling to balance their budgets, and unlike Congress did recently, states can’t sell future oil reserves, raid the Fed or rely on accounting gimmicks to cover their costs — they have to find real money.

Read the report in full online and stay tuned as we bring you more news about T4America’s work in states in 2016. While we made our name and earned our stripes working at the federal level since our inception more than six years ago, we’ve been doing more work at the state and local level, and we’re eager to tell you more about it in the months ahead.

While Congress punts on sustainable funding, local communities approve a slew of new transportation taxes on election day

In a striking contrast to the actions of Congress when it comes to transportation funding, a handful of local jurisdictions went to the ballot this week and approved new taxes for transportation investments.

This week in Washington, while debating a new multi-year transportation bill, the leadership in the House of Representatives blocked the mere mention of raising or indexing the country’s gas tax to pay for a transportation bill currently drawing 30 percent of its price tag from every source under the sun — except for the actual users of the transportation system. No proposed amendments to the House transportation bill that dealt with raising the gas tax were cleared to even receive a debate or vote on the House floor, with House leadership refusing to allow our elected leaders to hold an adult discussion about raising new sustainable revenues for transportation.

Meanwhile, in local communities across the country, even in this off-year election, a number of communities went to the ballot and approved new increases in fees or taxes to pay for numerous ambitious local transportation investments. In at least a few candidate races, transportation became a defining issue in elections between candidates.

One of the most notable victories for new transportation funding occurred in Seattle, where voters approved the extension of a property tax levy to fund the ambitious Move Seattle plan, kickstarting work on seven new Rapid Ride bus rapid transit (BRT) corridors, three new light rail access points, 150 miles of new sidewalks, at least 16 bridge seismic retrofits, and the repaving of 180 miles of arterial streets. We profiled Seattle’s story just last week and shared more about their vision for investing in transportation and transit specifically to ensure their continued economic prosperity:

Seattle making smart decisions today to continue their city’s renaissance tomorrow

Downtown Seattle has become the hot place in the region for companies to locate as employment and growth has accelerated to new highs over the last decade, but limited space downtown could stymie job growth and economic potential if Seattle doesn’t think differently about transportation. READ MORE.

Immediately north of Seattle in Snohomish County, a 0.3% sales tax was approved at the ballot to fund increased bus service, including new routes and more express buses connecting major job centers like Boeing’s Paine Field. 

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. Utah raised revenues to invest in a variety of transportation modes and also provided individual counties with the ability to go to the ballot to levy voter-approved sales taxes to fund critical local transportation priorities.

Those local votes in Utah counties happened this week, and of the 17 counties that decided to put the 0.25% sales tax increase on the ballot — including the six counties in the Salt Lake City metro and region’s public transit service area — ten approved the measures with at least one still too close to call in Salt Lake County. In the counties served by the Utah Transit Agency, 40 percent of the new revenues will go directly to UTA transit service.

Maine approved an $85 million transportation bond that will provide $68 million for highway and bridge construction and repair, $17 million for ports, rail, freight, aviation, and a share for biking and walking trails.

Along with the handful of Utah counties that rejected their sales tax measures, there was one notable defeat in Salem, Oregon, where a 0.21% payroll tax was rejected. The measure would have expanded bus service, including new evening and weekend service.

Transportation also became an issue in a handful of elections this year.

In Virginia, the state DOT is trying to make the best use of limited capacity on a busy interstate running into Washington, DC by converting a congested section of I-66 from HOV-only to HOT lanes during peak commuting hours. Hal Parrish, a candidate for a state senate seat who campaigned heavily on stopping this plan in its tracks, lost his race in the 29th Virginia Senate district. 

The election happened back in August, but in Phoenix, Mayor Greg Stanton was reelected after making the primary focus of his campaign an ambitious plan to invest in transportation with new tax revenues and expand the region’s growing light rail system. As the Arizona Republic wrote, “Phoenix Mayor Greg Stanton won re-election in a landslide Tuesday [August 26th], vowing to continue his work to reshape the city through light-rail expansion and redevelopment projects in the once-sleepy urban core.”

Once again, the overall trend continues.

Voters support raising new revenue to invest in transportation, especially when the plan and the projects are clear and transparent. Whether the support from local voters or the state representatives winning re-election after supporting tax increases to invest in transportation over the last few years, Congress would do well to pay attention to this lesson.

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.

 

Compromise in Washington State clears the way for a transportation funding package

Washington State Governor Jay Inslee and state legislative leaders indicated yesterday that they have reached agreement on a $15 billion transportation package that also provides $15 billion in local funding authority for Sound Transit, the regional transit agency for the Puget Sound (Seattle) region.

The deal looked almost dead last week, but a last-ditch compromise could give Seattle-area residents a little more control over their transportation future.

Seattle LINK light rail tunnel

From the Seattle Times piece:

The major obstacle to reaching agreement on a statewide transportation package disappeared Sunday morning, as Gov. Jay Inslee announced he would accept “poison pill” language in the measure intended to hinder one of his environmental priorities. And Sunday afternoon, Rep. Judy Clibborn, D-Mercer Island, chair of the House Transportation Committee, announced that Democrats and Republicans had reached a deal on the package itself. In addition to the approximately $15 billion in funding, the package includes the authorization sought for the full $15 billion in Sound Transit’s rail-extension ballot measure, according to Clibborn. “The deal is done,” said Clibborn. “It’s just now, do we have the votes and are people happy with the deal we struck?”

This local funding authority for Sound Transit — which would still have to be approved by Puget Sound voters in November 2016 — would fund LINK light rail extensions to Everett, Issaquah and Tacoma, Ballard and West Seattle while enhancing the region’s bus service.

This isn’t a done deal just yet.

The legislature still must approve the leadership’s deal, which includes a “poison pill” preventing future adoption of a low carbon fuel standard, a compromise that several environmental groups oppose. The low carbon fuel provision has been an important priority for Gov. Inslee, but House Republicans had made it clear that they wouldn’t vote for a funding package unless the clean fuel provision was precluded:

Inslee had sought the [low carbon fuel] standards to reduce greenhouse gas emissions, but Republicans have argued that it would raise gas prices. “I oppose that and have worked hard to find a better alternative,” Inslee said in a statement. “But legislators tell me it is essential to passing the $15 billion multimodal transportation package and authorizing an additional $15 billion for Sound Transit light rail expansion.”

While the package does raise new state revenues for transportation writ large, a majority of Puget Sound voters will have to support a Sound Transit III ballot measure in November 2016 to approve the additional revenues to support the substantial transit investment that includes the expansion of the LINK light rail system.

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.

As many states close out their legislative sessions, the latest intel on state transportation funding

As we near the midpoint of the year and some state legislatures wrap up their sessions or approach recess, it’s a good time to take a look at where a few states stand on their efforts to raise new transportation funding.

In the only state to raise new money since our last update, Nebraska’s legislature passed and then overrode Republican Gov. Pete Ricketts’ veto (30-16) of a 6-cents-per-gallon gas tax increase, to be phased in over the next four years. The additional tax will annually bring in $25 million for state roads and $51 million to be distributed to cities and counties when fully implemented.

Follow state transportation funding updates for every state as they happen with T4America's state funding tracker.

Follow state transportation funding updates for every state as they happen with T4America’s state funding tracker.

A handful of states have been searching for ways to improve transparency and accountability as a first step to raising new funding. In Louisiana, the House and Senate unanimously passed a bill in May that reforms the way the state DOT prioritizes and selects highway projects in an effort to provide greater transparency to the process. This strong piece of legislation was introduced and advanced by a member of T4A’s state advocacy network (START), House Speaker Pro Tempore Walt Leger.

(We hope to go into more detail soon on this trend of states either reforming their project selection process or expanding the use of performance measures, so stay tuned for that. -Ed.)

Additional bills that would raise gas and general sales taxes to fund transportation projects have cleared committee, though a bill to raise the state sales tax by one cent to fund major projects just fell short of the two-thirds majority it needed to pass the House last week.

Some other states are still active in their legislative sessions with transportation funding proposals on the docket, while a handful of others have failed to pass a package during this session.

California’s Senate is considering a bill that would hike the state gas tax by 10-cents-per-gallon (and the diesel tax by 12-cents-per-gallon), increase the vehicle tax to 1 percent of the value of the vehicle, increase registration fees by $35, and add a new $100 annual fee on electric vehicles.

Projections show the bill would bring in more than $4 billion annually. The bill has been cleared out of multiple senate committees. It requires a two-thirds supermajority to pass.

Just a year after Texas voters overwhelmingly approved a separate measure to set aside a portion of oil and gas royalties explicitly for highways, legislators in Texas have reached a deal that will direct a greater share of future state sales tax revenue to transportation. Specifically, $2.5 billion of the state sales tax revenue will be reserved for transportation, so long as overall sales tax receipts are at least $28 billion (approximately the collections this year). Additionally, 35% of revenue growth from taxes on vehicle sales and rentals will be set aside for transportation beginning in 2020, netting $250 million to $350 million annually.

The House and Senate have both passed the bill, and now it will need approval from Texas voters in November.

In Delaware, Gov. Markell is urging legislators to pass a $25 million annual increase in transportation funding through increased vehicle fees.

Minnesota’s legislature adjourned without reaching an agreement on how to increase funding for transportation and passed a status-quo budget instead. But with a special legislative session looming, there’s a possibility that legislators will have another opportunity to reach an agreement on new funding.

Similarly, Missouri failed to pass a transportation funding measure. The legislature had debated a 2-cent-per-gallon gas tax increase, but adjourned without passing the measure. According to that state’s DOT, legislators must come up with new state funding in their next session or the state will not have adequate money to match federal transportation dollars, leaving federal money on the table.

In Oregon, legislative negotiations over new transportation funding seem to have ground to a halt.

But Oregon is on the leading edge of testing a new mechanism for funding transportation that could serve as a model for the rest of the country, shifting away from a per-gallon tax to a tax on miles traveled. This month the state started enrolling 5,000 drivers into its new (voluntary for now) road usage charge program called OReGO. The new road usage charge program officially began Tuesday.

Will Congress reward the ambitious places that are seizing their future with both hands?

Transportation Innovation Academy with logos 2The three mid-sized regions participating in this week’s Transportation Innovation Academy in Indianapolis are a refreshing reminder that local communities – particularly a growing wave of mid-size cities — are seizing their future with both hands and planning to tax themselves to help make ambitious transportation plans a reality. Yet even the most ambitious cities can’t do it alone, and if Congress fails to find a way to put the nation’s transportation fund on stable footing, it will jeopardize even the most homegrown, can-do plans to stay economically competitive.

Following up on the first session of this yearlong academy, sponsored by both T4America and TransitCenter, that began back in March, 21 representatives from these three similar-sized cities — Indianapolis, Raleigh, and Nashville — are reuniting in Indianapolis today and tomorrow to learn from experts and from each other about how to make their ambitious transit expansion plans a reality.

Follow along today and tomorrow (May 14-15 on twitter by following @T4America, @TransitCtr, and the hashtag #TranspoAcademy. The participants will be sharing some of the helpful nuggets of info they’re hearing throughout the two-day workshop.

With Infrastructure Week events happening here in DC all week (#RebuildRenew), it’s a good reality check to hear about these forward-looking plans bubbling up from the grassroots in cities far away from Capitol Hill.

So what’s on tap in Indy that’s worth sharing with the other business and civic leaders from Raleigh and Nashville this week?

Indianapolis

Indy profile featured

Action by the Indiana legislature in early 2014 cleared the way for metro Indianapolis counties to have a long-awaited vote on funding a much-expanded public transportation network, with a major emphasis on bus rapid transit. With that legislative battle behind them, the broad Indy coalition is working toward a November 2016 ballot measure to fund the first phase of their ambitious Indy Connect transportation plan.

Read the full profile.

While the particulars vary from place to place, Indy isn’t all that different than Nashville and Raleigh. All three cities have various groups of leaders who have coalesced around the notion that big investments in transit are crucial to their long-term economic prosperity and competitiveness.

As the task force concluded in Indianapolis in the story above, a well-rounded investment in a multimodal transportation network in Indy is the long-term plan with the highest return-on-investment. Though all are in different stages of the process, all three are making plans to tax themselves and/or raise local revenue that they are hoping to pair with additional investment from a reliable federal partner.

But will the feds continue to be a reliable partner?

We’ve spent a lot of time here focusing on the trend of states raising new transportation funds over the last few years, and some have mistaken that to mean that states are ready to go it alone. The truth is far from it. While all of these states are moving to address growing needs and declining revenues, they’re absolutely counting on the feds to continue their historic role as a partner. And shouldn’t those efforts be rewarded, rather than using it as an excuse to pass the buck down to states or localities?

In a story detailed in our longer “can-do” Indy profile, Indy is counting on the feds to support their efforts to get started with their bus rapid transit network.

The Red Line won’t get off the ground without a grant from the Federal Transit Administration, and if Congress fails to keep the nation’s trust fund solvent this summer and pass an annual appropriations bill with robust funding for infrastructure, neither will happen. Not only is Indy hopefully raising their own local funds, they’re also leveraging other investments to support the corridor and help it be as successful as possible — like prioritizing their federal block grants for community development into the soon-to-be Red Line corridor.

Red Line Indy slide

Indy, Raleigh, Nashville, and dozens of other cities and regions have been putting their own skin in the game as they make their bets on smart transportation investments. Yet Congress has shown no sign of either settling on a long-term funding source or coming up with an authorization proposal that lasts more than a couple of years. (Or a couple of months!)

Infrastructure Week, happening now, is a great time to hear from leaders of all stripes about the importance of investing in our nation’s infrastructure, but it can feel a little vague or hard to wrap your head around. Which infrastructure? What kind of infrastructure? To what end?

Hearing more about these very specific plans in Raleigh, Nashville and Indianapolis is a great way to bring the point of Infrastructure Week to a specific, understandable, local focus. For these three cities, transit = continued economic prosperity.

Mark Fisher, vice president of government relations and policy development at the Indy Chamber, made this connection clear in the Chamber’s press release for today’s event. “Other regions are using transit to attract talent and investment, connect workers to jobs and spark new development. We must move forward or we will continue to fall behind,” he said.

Hopefully the leaders on Capitol Hill will take note of the things happening in Indianapolis this week — and in Nashville and Raleigh and countless others — and finally come up with the fortitude required help our local economies prosper.

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/

States continue to take action to solve transportation funding crises

https://flic.kr/p/FFvy6

This year started with a transportation bang for many states across the country. In the last few weeks, four states in particular have made major strides in funding transportation and infrastructure projects as gas prices continue to remain low.

Georgia transportation officials have said they are facing an annual, billion-dollar funding gap to maintain their existing roads and bridges in good condition.Last week, the Georgia House passed HB 170which would make a few notable changes to their current funding structure, where they currently use both a sales tax and a per-gallon excise tax on gasoline. HB 170 would remove the current sales tax on gasoline entirely and increase the current 8.2 cents per-gallon rate by 21 cents for a new rate of 29.2 cents per gallon. The bill also requires the rate be adjusted annually to adapt to growing vehicle fuel efficiency and inflation in the cost of highway construction.

Besides the excise tax, the legislation would also impose new fees on private electric cars and commercial electric vehicles. The bill has been sent on to the state Senate.

In North Carolina, where gas tax rates are pegged to fuel prices, the House and Senate are moving competing bills to address an expected multi-million dollar shortfall resulting from cheaper gas and growing efficiency.

The Senate’s version, SB 20, eventually would raise the floor for the sinking gas tax from 21 cents per gallon to 35 cents per gallon, and increase the percentage rate on fuel from 7 percent to 9.9 percent. But it actually would cut the fuel tax by 2.5-cents per gallon between now and December. This would reduce transportation funding by $33 million between now and July, but is expected to raise an additional $237 million next year and $352 million a year by 2018.

Last week, the House passed a version of this bill that would reduce the current rate of 37.5 cents a gallon to 36 cents and hold it at that rate until the end of 2015. Delaying an expected drop in the adjustable, percentage gas tax rate (a consequence of falling gas prices) would bring in an additional $142 million during the next fiscal year (or approximately half of the Senate’s version).

In Utah, the Senate acted Monday to raise gas taxes for the first time in 18 years, increasing it by 5 cents per gallon this year, with an additional penny added each of the next four years. The state is currently looking at a deficit of $11 billion over the next two decades if the legislature does not act now. Consideration of the plan now moves to the House, where leaders are considering a slightly different approach.

Coming off a bold call to action in Governor Jay Inslee’s State of the State speech, Washington’s Senate on March 2 passed a $15 billion transportation package paid for by raising gasoline taxes by 11.7 cents over the next three years. It also would allow certain localities, including Seattle, to ask their voters for additional transit funding in the coming years.

Iowa, in the meantime, already has passed and enacted a transportation revenue package. Strongly supported by Governor Terry Branstad, the bill increases Iowa’s state gas tax by 10 cents per gallon. New funds will go entirely to highway projects, as required by a restrictive state constitutional requirement in place in Iowa and dozens of other states.

Watch this space for a more in-depth look into how business community and other supporters, along with legislative leaders, helped move the package to passage.

After years of depressed revenues and growing needs, states are making big moves on transportation this year. Whether or not they have long-term economic payoff will hinge on the degree to which their cities and towns get the resources and latitude they need to compete in the 21st century.

Make sure to check back with our resource that tracks state transportation funding for the latest updates; you can also sign up to receive the latest news and updates.

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