By Kevin Pula
Legislatures in more than half of the states have considered more than 100 bills to increase transportation funding, either by increasing motor fuels taxes or other mechanisms, in hopes of providing additional resources for maintaining, operating and upgrading transportation networks, not to mention enabling any new financing options that may come to fruition.
In recent years, the majority of transportation funding packages have centered around the motor fuels tax. Since 2013, at least 28 states and D.C. have increased their motor fuel taxes through enacted legislation.
However, motor fuel tax increases are not the only policy options being considered. In 2018, states have passed legislation focusing on a wider scope of transportation revenues, including transit funding, bonding, transportation network company (TNC) fees and statewide ballot measures.
Transportation Funding Statewide Ballot Measures
After years of legislative debate, Colorado and Missouri each enacted legislation seeking to raise funds for transportation. However, due to strict constitution restrictions on tax increases in each state, both measures will require approval by voters.
Colorado Senate Bill 1 creates general fund transfers of $495 million (FY 2018-19) and $150 million (FY 2019-20) to be used for highway and multimodal transportation projects. Further, a 2019 ballot measure will ask voters to approve up to $2.34 billion in new bonding. This ballot measure will be nullified if either of two citizen-initiated measures on the 2018 ballot pass. Both ballot measures include similar bonding measures for transportation but only one includes a commiserate dedicated sales tax increase.
Missouri House Bill 1460 seeks, in part, to increase the state motor fuel tax by 10 cents per gallon to a total of 27 cents, generating an estimated $420.6 million. The new revenues will be used primarily for Highway Patrol, which is currently predominantly funded via the Highway Fund. The increase is subject to voter approval.
On June 5, California voters approved Proposition 69 which establishes limitations or “restrictions” on certain state revenues. The new law prohibits the Legislature from “diverting” motor fuels tax and vehicle registration funds raised by 2017 legislation.
Motor Fuel Tax Adjustments and Vehicle Registration Fees
Arizona HB 2166 establishes a highway safety fee for vehicle registrations (estimated to be $18.06 annually) which will be sufficient to fund 110 percent of the Department of Public Safety Highway Patrol (approximately $150 million). As a result, Highway User Revenue Fund revenue will be freed up for other transportation purposes. Additionally, the bill restructures the vehicle license tax for alternative fuel and electric vehicles, allowing the director of the Arizona Department of Transportation to raise the fee by as much as 1000 percent.
Oklahoma House Bill 1010 increases the state motor fuels tax by 3 cents per gallon. However, the net revenue for transportation purposes does not increase. The new motor fuel tax revenue will replace current transfers of equal amount from the General Fund, creating funding for education.
Utah Senate Bill 136 establishes a new annual vehicle registration fee for electric vehicles. The $60 fee is charged in addition to the standard vehicle registration fee and will grow to $120 by 2021.
Virginia Senate Bill 896 establishes a price floor for the existing variable-rate motor fuel tax. Virginia currently levies a “hybrid” fuels tax, established via 2013 legislation, in which urban regions of the state are charged a variable-rate tax on the price of fuel in addition to the fixed cent per gallon rate.
Georgia House Bill 930 permits 13 counties in metro Atlanta to levy (upon approval of the voters) a special purpose local options sales and use tax for transit related projects. Additionally, the legislation approved $100 million in new state bonding for public transit expansion.
Utah Senate Bill 136 earmarked a percentage of the state sales tax to be placed in a newly created Transit Transportation Investment Fund. An estimated $5.2 million is be redirected towards transit projects.
Colorado Senate Bill 1 seeks voter approval of a $2.34 billion bonding package for transportation (see above).
Connecticut Senate Bill 543 provides for $1 billion in bonding over five years for roads, bridges and transit.
Minnesota House File 4425 provides for $400 million in bonding for the Corridors of Commerce program.
Alabama Senate Bill 100 provides funding and operational guidelines for the Alabama State Infrastructure Bank. The bank is permitted to issue bonds for transportation projects and will be funded through a variety of revenue streams, including motor vehicle registration and a portion of fuel taxes.
The 2018 New York budget, SB 7509, imposed fees on ride-hailing and taxi service within New York City in the congestion zone of lower Manhattan below 96th Street. Uber, Lyft and other transportation network services will be charged $2.75 per ride, taxis will be charged $2.50 a ride and group ride services like Via and uberPOOL will be charged $0.75 per customer. The revenue raised will be used to help fund subway repair and improvements, providing an expected $400 million per year going forward for the MTA.
All of the legislation reference in this post, along with many other considered bills, can be found in NCSL’s Transportation Funding and Finance Legislation Database. For more information on this topic, visit NCSL’s Transportation Funding Deep Dive for a one-stop-shop to find all of NCSL’s related resources.
Kevin Pula is a senior policy specialist in NCSL’s Transportation Program.