Jan 13, 201412:59 PMTransportation Matters
with Craig Thompson
Why more states are taking action on transportation funding
(page 1 of 2)
Since it’s January and people are still reflecting on the important stories of the previous year, I figured I would put my oar in that water as well. While there were many things about 2013 I would love to comment on — including the first Packers season in more than 20 years without the team’s No. 1 quarterback under center for a significant stretch — I will confine my observations to the transportation arena.
If you look at what was occurring in statehouses across the country in 2013, you’ll definitely notice a trend in transportation. The crib note version is that states both red and blue are concluding that action, no matter how politically challenging, is preferable to inaction.
The U.S. has been in a bit of a holding pattern for a couple of decades when it comes to facing up to our transportation needs. The strategy has been to either a) wait for the federal government to come to the rescue and/or b) wait for the other party to offer a way to pay for necessary maintenance and then slam it for wanting to raise taxes.
Both of those strategies may have run their course. First, it’s not just the public at large that’s disenchanted with the federal government. State elected officials and departments of transportation have turned purple holding their breath waiting for any meaningful funding strategy to emerge from Washington. Second, pointing fingers while your transportation system becomes less and less reliable for businesses that need that reliability in order to be competitive has lost some of its political luster.
So what are states doing? Well, let’s take a look.
Arkansas: In July of 2013, the state increased its sales tax from 6% to 6.5% in order to get major projects moving. The sales tax increase is scheduled to sunset after 10 years, at which time it will have paid off the bonds used to finance these projects. The proposal went before voters in November 2012 and passed in 68 of the state’s 75 counties, receiving 58% of the overall vote. This is the same electorate that voted in a majority of anti-tax candidates in Arkansas.
Wyoming: Republican Gov. Matt Mead signed a bill last February to increase the gas tax from 14 cents per gallon to 24 cents in an effort to catch up with transportation needs.
Pennsylvania: Gov. Tom Corbett, a Republican, signed legislation that will lift the cap on the Oil Company Franchise Tax. This tax is levied at the wholesale level. The state eliminated its 12-cent-per-gallon liquid fuel tax. You can read more about it here, but the net effect is about a 9-cent increase, or more than $2 billion in additional revenue as it is phased in through 2017.
Virginia: Republican Gov. Bob McDonnell signed an everything-but-the-kitchen-sink bill to pump in about $880 million more a year to address the huge backlog of needs. Among the highlights were replacing the 17.5-cent-per-gallon tax on gasoline with a 3.5% tax on wholesale fuels and increasing the sales tax in various ways and regions.
Maryland: Democratic Gov. Martin O’Malley signed a multipronged piece of legislation that implements a wholesale tax on gasoline and indexes the traditional gas tax as well as several other revenue-raising measures.
Washington, D.C.: The city approved replacing the 23.5-cent-per-gallon gas tax with an 8.5% wholesale tax on gasoline.
Indiana: The state established a metropolitan transit district in Indianapolis and nine surrounding counties, and the participating counties adopted a local income tax of 0.3% dedicated to funding the new regional transit system.