In the past three years, 16 states have increased taxes on motor fuels in order to generate new transportation revenue. Despite the challenges of increasing taxes during an election year, that number is likely to grow as several states have already begun discussing proposals for the 2016 legislative session. Below are some predictions for eight states that may attempt to increase transportation funding next year, as well as two that should be followed as discussions in those states continue into 2017.
Alabama Gov. Robert Bentley (R) voiced support on Nov. 6 for a state motor fuel tax increase in order to generate new revenue for roads and bridges. Rep. Randy Davis (R-Daphne) added, “Our bridges are in deplorable shape. The cost of road building is up. We think this is a time to look at it and be proactive about it.”
A legislative committee has begun scheduling five regional meetings throughout January 2016 in order to discuss a possible proposal to increase state taxes on motor fuel in order to maintain and improve the state’s roads and bridges.
California state lawmakers are ending 2015 in a special legislative session to discuss options for raising badly-needed transportation revenue. A Feb. 24 Senate report found 68 percent of the state’s roads are considered to be in ‘poor’ or ‘mediocre’ condition, with $135 billion worth of maintenance and repair projects currently unfunded, and conditions expected to further deteriorate without additional revenue.Proposed plans include motor fuel tax increases as well as raising various transportation-related fees. In aSept. 11 press conference, Gov. Jerry Brown (D) stated, “The roads are going to get fixed. It’s just a question of when.”
Various plans to increase transportation revenue are already being introduced in preparation for Indiana’s 2016 legislative session. A House Republican proposal unveiled Dec. 16 would index the state’s motor fuel tax to the Consumer Price Index and gradually reallocate the state’s 7 percent general sales tax, which is applied to fuel purchases, into the motor vehicle highway fund.
Indiana Gov. Mike Pence’s (R) $2 billion plan released Oct. 13 would extract $241 million from Indiana’s budget surplus, with an additional $150 million in annual general fund appropriations for three years. Additional funding would include $50 million in earned interest from the Next Generation Trust Fund, $26 million from other bonds, and $240 million financed with the backing of the state’s AAA bond credit rating.
House Democrats proposed a plan Nov. 9 that includes $1 billion for state roads and bridges over four years and adds an addition $1 billion for local roads by reallocating the state’s special fuels tax as well as sales tax paid on motor fuel purchases—currently being deposited into the General Fund—for road and bridge projects.
While a motor fuel tax increase is unlikely to occur, Rep. Dave Baker (R-Willmar) voiced his confidence onDec. 16 that a plan to increase recurring transportation revenue will be approved during the 2016 legislative session. A measure from Republicans in January 2015 included utilizing a budget surplus, various bonds, and an existing sales tax on auto parts, car rentals, and leases in order to generate $7 billion over a 10 year period for transportation funding.
Leaders of both the Missouri House and Senate agreed that increasing transportation revenue will take precedence during the 2016 legislative session. While several proposals to increase taxes on motor fuels are being considered, lawmakers say they are open to all possible avenues to provide the funding needed to maintain and modernize the state’s roads and bridges. House Speaker Todd Richardson (R-Poplar Bluff) told Missourinet on Dec. 15 that he anticipates the legislature will succeed in creating new transportation revenue within the year.
- New Jersey
If new revenue is not generated, New Jersey officials warned that the state would not be able to fund transportation construction projects or debt payments beginning July 1, 2016. Additional funds must be raised to match federal funds for the Hudson River tunnel project. Both Democratic and Republican lawmakers released plans Dec. 14 to increase transportation funding, which could result in measures on the November 2016 ballot if approved by lawmakers.
- South Carolina
South Carolina legislators are gearing up to tackle transportation funding during the 2016 legislative session. Multiple plans will carry over from the 2015 session, including increasing taxes on motor fuel and indexing the tax to the Consumer Price Index. However, several barriers may prevent the passage of new and recurring transportation funding, including a $1.2 billion state budget surplus which may be used to pay for projects in need of additional revenue.
A robust campaign by Gov. Bill Haslam (R) has set the stage for legislative action on transportation funding in 2016. Lawmakers are considering multiple proposals, including a new ‘highway maintenance fee’ and increases to motor fuel taxes.
What states do you not see on this list?
After discussions broke down on June 30, Gov. Kate Brown (D) announced that transportation funding would not be addressed again until the 2017 legislative session. With one year to go, lawmakers are calling for the legislature to begin discussions now. Rep. Caddy McKeown (D-Coos Bay) stated, “I think we’re going to need that year to be able to bring something together that would be palatable to our constituents.”
After a failed initiative in 2015, Montana lawmakers are expected to return to the table and discuss solutions to their transportation funding shortfall when the next legislative session begins in 2017.