State Net Capitol Journal Legislative Updates: States' Transportation Funding Needs Trumping Tax Aversion

STATES' TRANSPORTATION FUNDING NEEDS TRUMPING TAX AVERSION: This month Virginia's Republican-controlled House and GOP-Democrat-split Senate gave final approval to a $6 billion transportation funding overhaul proposed by the state's Republican Gov. Bob McDonnell that included, among other things, a new 3.5 percent sales tax on gasoline and a 6 percent tax on diesel fuel. That action highlights a developing trend across the country: States - even some controlled by usually tax-averse Republicans - are opting to increase gas taxes and other fees to provide funding for transportation projects.

Nineteen states have either already enacted or are considering tax and other fee changes to boost transportation budgets, according to the National Conference of State Legislatures. In March, Maryland lawmakers passed Gov. Martin O'Malley's (D) plan to raise state gas taxes 13 to 20 cents per gallon by 2016, which would make that state's gas taxes and fees among the highest in the nation. Wyoming, another GOP-dominated state, enacted a 10-cents-per-gallon gas tax hike (from 14 cents per gallon to 24), effective in July. And two other states, Iowa and Texas, are considering similar proposals.

"It doesn't matter whether you're Republican, Democrat, tea party," said Texas Sen. Robert Nichols (R), chairman of the Senate's transportation committee. "Everybody recognizes the need for transportation funding."

In its latest report card, released in late March, the American Society of Civil Engineers concluded that the nation's congested and deteriorating roads and infrastructure cost the economy $130 billion in 2010. And the group estimated the country needs to invest $1.7 trillion through 2020 to get things back on track but will only raise about half that amount at current funding levels.

The crux of the problem is that gas tax revenues are a diminishing resource.

"Cars are getting more efficient, and people are actually driving less," which have conspired to put less revenue into the trust funds used to pay for transportation projects, said James Corless of Transportation for America.

Another big part of the problem is that gas taxes aren't generally linked to inflation, meaning gas-tax revenues have effectively shrunk over time. And lawmakers have been loath to raise the levies. Until this month, Virginia hadn't increased its 19.9 cents-per-gallon in gas taxes and fees for 26 years. And the federal gas tax has been at 18.4 cents per gallon since 1993.

Virginia's Republicans came up with a novel approach for dealing with that issue, however. They structured the state's new gas taxes as percentages of sales instead of as flat fees, so theoretically they should rise with inflation without the need for legislated increases.

But all Republicans haven't climbed aboard the gas-tax bandwagon. In January a commission created by the Wisconsin Legislature unanimously recommended a suite of transportation funding measures, including a five-cents-per-gallon increase in the gas tax. Gov. Scott Walker (R), however, has opted instead to issue general-purpose bonds and sell some state property to raise revenue for transportation.

Even in Virginia, the new gas taxes weren't embraced without reservation.

"It was a true compromise," said Del. William Howell, speaker of the Virginia House, who helped broker the state's transportation funding deal. "As with most any compromise, no one's 100 percent happy with every feature of it. There are some things that I'm not crazy about. I'm sure there's some features that other people don't relish."

One thing keeping lawmakers on both sides of the aisle from relishing gas taxes is that despite the sorry state of the nation's roads, the taxes haven't stopped being something of a political hot potato.

"Any time you use the words 'gas tax,' there are lots of political consequences," said Iowa Sen. Tod Bowman (D), chairman of his chamber's transportation committee. And in an interview in Annapolis last week, O'Malley said there's probably no tax "more unpopular than the gas tax."

But Transportation of America's Corless said a couple of developments have forced state lawmakers to overcome their aversion to gas taxes, including Congress' failure to provide a new revenue source in the transportation bill it approved last year.

"I think states were hopeful that Congress would step up, and they didn't," said Corless. "And then secondly, really, is...the combination of the state budgets themselves getting hammered since 2007, but also really seriously a precipitous drop in revenues from the gasoline tax." As Howell said of Virginia's transportation funding overhaul, "we had to do it."

Iowa's Bowman, likewise, said finding a solution to the transportation funding problem was crucial for his state.


- Compiled by KOREY CLARK

ENVIRONMENT: The ARKANSAS Senate approves HB 1478, which would allow Razorback State residents to capture or kill a feral hog on their own land, or on public land if they have permission and follow all state or federal laws. Captured feral hogs could be transported to a facility for slaughter but not released into the wild. It moves to Gov. Mike Beebe (D) for review (ARKANSAS NEWS [LITTLE ROCK]). • CALIFORNIA Gov. Jerry Brown (D) gives the state Air Resources Board approval to link the state's nascent cap-and-trade program with a similar program in the Canadian province of Quebec. The ARB will vote on April 19 to do so or not (SACRAMENTO BEE).

ENERGY: MARYLAND Gov. Martin O'Malley (D) signs HB 226, a bill that allows Old Line State residents to be charged about $1.50 a month on their electricity bills to offset the higher cost of producing about 200 megawatts of wind energy via a proposed wind farm to be located off the state's coast (BALTIMORE SUN).

- Compiled by RICH EHISEN



