States continue to wrestle with transportation funding shortfalls, with more of an emphasis on new user fees to raise funds. Legislatures are also increasing state oversight of the freight rail industry after several high-profile train derailments and incidents. Lastly, over half of states now have handheld phone bans to combat distracted driving, as crashes and deaths continue to plague U.S. roadways.
Here’s a look at what might be in store for 2025.
NCSL Forecast ’25
This special report from State Legislatures News covers the topics NCSL’s policy experts anticipate will occupy state lawmakers’ time in 2025 legislative sessions. Read the full report here.
Hot Topic: New Transportation Revenue Sources
As fuel use has declined, so has gas tax revenue, largely due to increased fuel efficiency and the growing use of electric vehicles, or EVs, that pay no tax. According to a Pew Charitable Trusts analysis, while EVs comprise just 1.3% of current vehicle registrations nationwide, sales grew by 57% year over year in the first half of 2023 and accounted for more than 9% of all vehicle sales by the end of that year. The National Association of State Budget Officers notes that gas tax revenue now makes up 37.6% of overall state transportation revenue, compared with 41.1% in 2018, despite increases in fuel taxes in several states.
State transportation budget forecasts paint an increasingly troubled picture for the near future. In California, where EVs made up over 26% of new vehicle registrations in the third quarter of 2023, the California Legislative Analyst’s Office projects gas tax revenue will decline 64% by 2035.
But more EVs and greater fuel efficiency are not the only pressures state transportation budgets are facing: Arizona estimated a $162 billion transportation funding shortfall by 2050, mostly due to inflation-related increases in construction costs, while Louisiana anticipates a funding shortfall of $19 billion as gas tax revenue fails to keep pace with inflation.
ACTION: Some states, including Georgia, Kentucky, Missouri, New Mexico and Washington, dedicated one-time transportation funds in 2024. Many states, however, continue to explore and enact new transportation revenue alternatives.
- Four states—Maryland, New Jersey, Pennsylvania and Vermont—created new annual electric and/or hybrid vehicle registration fees in 2024; 39 states now require an additional fee to register an electric vehicle. New EV fees ranged from $89 in Vermont to $250 in New Jersey, and from $44.50 in Vermont to $100 in Maryland for hybrid vehicles. The new fees in New Jersey and Pennsylvania both incrementally increase in upcoming years.
- Two states—Maryland and Wisconsin—created a new EV public charging station fee. Wisconsin imposed a 3 cents per kilowatt-hour fee. Maryland will distribute the sales and use tax revenue from the sale of electricity to its transportation trust fund. Maryland also became the 13th state to add a fee—75 cents—for passengers riding in an Uber or Lyft, with funds dedicated to the trust fund and local government and local transit systems.
- Colorado created a new $3 rental car fee that can be used for congestion reduction purposes, including to help fund new and more frequent passenger rail.
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Hot Topic: Railroad Safety Legislation
Since the East Palestine, Ohio, train derailment, state legislatures have addressed rail safety concerns. In 2023, five states enacted legislation related to train crew member size, maximum train length, wayside or “hot box” detectors, grading separations and developing emergency response plans.
ACTION: During the 2024 legislative session, the interest in enhancing rail safety continued, with at least 20 states considering bills and six states—Colorado, Illinois, Maine, Minnesota, Tennessee and Utah—enacting legislation.
Three states created or expanded state rail safety offices within their respective state transportation departments. Colorado (HB1030) established a rail safety office to inspect Class I railroads in coordination with the Federal Railroad Administration. Additionally, two new committees will report to the governor and Legislature on rail safety compliance.
Utah (SB235) created a rail ombudsman position in the transportation department’s rail division to serve as a liaison between local communities and rail companies.
Tennessee (HB2070) created a rail and public transportation office to solicit federal grants and coordinate the improvement of freight and passenger rail in the state.
Two states, Colorado and Maine, enacted bills regarding hazardous material shipments by rail. Colorado (HB1030) required proof of sufficient insurance coverage for railroads carrying hazardous materials; railroads must also offer hazardous materials safety drills to emergency response personnel.
Maine (HB1245) required railroad companies to submit prevention and response plans for rail crashes. The bill further requires railroad companies to immediately contact emergency response personnel in a crash and offer training on hazardous material transportation.
Minnesota (HB5247) limited working hours for yardmasters, who supervise and coordinate trains within railyards, and directed the state transportation commissioner to study wayside, or hot box, detector systems, which can detect safety issues such as hot bearings or axle defects. Similarly, Colorado required railroads to report wayside detector locations, frequency of operation, their safety efficiency and how trains are notified of defects.
Hot Topic: Combatting Distracted Driving
Distracted driving can lead to deadly outcomes, contributing to at least 3,308 traffic deaths in 2022 alone. Defined as “any activity that diverts attention from driving,” it includes talking or texting on a phone, eating, drinking or even fiddling with the dashboard.
To combat this, state legislatures have been enacting handheld phone and texting bans over the last decade. Texting bans prohibit typing or sending messages, while handheld bans require devices to be used only in hands-free mode, often through voice commands or taps.
Research on the effectiveness of these laws is mixed, largely due to challenges in gathering accurate driver data. However, telematics data—gathered voluntarily through insurance apps or devices installed in vehicles to monitor phone use and other driving behaviors—shows a 6.6% decline in phone motion distraction in Alabama, Michigan, Missouri and Ohio within three months after enacting handheld bans.
ACTION: The number of states with handheld bans rose from 18 to 29 between 2019 and 2024. While these bans implicitly include texting, laws in 49 states, Washington, D.C., Puerto Rico, Guam and the Virgin Islands ban text messaging for all drivers.
Colorado and Pennsylvania enacted the most recent handheld bans in 2024, offering some exemptions, including the use of hands-free technology. Colorado’s ban is a secondary offense, meaning law enforcement can ticket drivers for device use only if they have committed another traffic violation.
Expect more states to steer toward tougher distracted driving laws in 2025.
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