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Road taxes are rising, even in tax-averse states
With road projects threatened, transportation taxes are rising -- even in tax-averse states
By David a. Lieb, Associated Press
August 4, 2014
JEFFERSON CITY, Mo. (AP) -- For nearly a century, Missouri has taxed drivers to pay for its roads. That's always provided enough — until now. On Tuesday, voters will decide on a historic change that would tax virtually everything they buy in order to yield more money for roads and bridges.
With Congress stymied over long-term highway funding, many states are taking it upon themselves to tackle the politically uncomfortable task of raising revenue for their aging transportation systems.
In the past year and a half, one-fourth of the states have hiked taxes, fees or fines, and at least a dozen others are studying options, according to an Associated Press review. The push comes as the traditional revenue sources — federal and state fuel taxes — have deteriorated because of more fuel-efficient vehicles, more people driving less, and stagnant tax rates.
Support for the hikes has come from Democrats and Republicans alike, even in tax-averse states such as Missouri, where the Legislature has been cutting income taxes.
"Tax increases are very, very hard to pass," said Missouri Sen. Mike Kehoe, a Republican who supports the measure on Tuesday's ballot for a three-quarters cent sales tax increase. "But I think that people do look at infrastructure differently ... as an investment."
Congress agreed Thursday to a 10-month funding patch for the federal Highway Trust Fund, which was running out of money to cover all of its commitments to the states. But a long-term plan remains unresolved, and the stalemate already has caused delays for some projects such as highway improvements in Tennessee and bridge replacements in Arkansas. Federal money accounts for more than a quarter of states' total spending on highways and transit infrastructure, according to the Pew Charitable Trusts.
"I just don't think we can count on any more federal dollars coming in than what we're currently getting, and we should assume that money is going to drop," said Rep. Dave Hinson, a Republican who sponsored Missouri's proposed transportation sales tax.
States are already facing shortfalls in their own transportation revenue.
The U.S. Department of Transportation estimates that governments would need to spend as much as 50 percent more to pay for all of the work needed on roads, bridges and mass transit.
In Michigan, two-thirds of the roads are projected to be in poor condition by 2020, yet a proposed tax hike has stalled.
Missouri's highway budget is projected to plummet from a recent high of $1.3 billion annually to $325 million by 2017. There is no Plan B to replace that money if voters don't approve a sales tax that is projected to raise at least $540 million annually.
Construction contractors, labor unions, engineering firms and others have poured more than $4 million into the Missouri sales tax campaign and have outspent opponents by a more than 100-to-1 ratio. The advertising blitz is a necessity because Missouri voters have a history of rejecting tax increases.
Opposition is coming both from staunch conservatives, who oppose most tax hikes, and strident liberals, who fear the sales tax would hit the poorest the hardest while demanding nothing from the heaviest highway users. The sales tax hike wouldn't apply to tractor-trailer rigs, which were exempted under a 2012 law.
"The absurdity of it is if you go out and buy your child a toy truck, and then you go out and buy an 18-wheeler, you're going to pay more road tax on the toy truck than you are for the 18-wheeler," said Thomas R. Shrout Jr., a St. Louis consultant who is treasurer of the opposition group.
Transportation tax increases already have run into problems in some states. Last year, voters in nine of Georgia's 12 transportation districts defeated a sales tax hike, and Seattle area voters rejected a transportation sales tax and vehicle fee increase in April.
Other states have pushed ahead with increases without putting them to a vote of the people.
New Hampshire Gov. Maggie Hassan, a Democrat, signed a 4-cent-a-gallon fuel tax increase that took effect in July, the first such increase since 1991. Republican Wyoming Gov. Matt Mead signed legislation last year raising the fuel tax to 24 cents a gallon from the 14-cent rate.
Significant transportation funding measures were enacted recently in Maryland, Massachusetts, Pennsylvania and Virginia. Texas voters will decide in November whether to divert about $1 billion annually from the state's Rainy Day Fund to transportation.
In many states, the funding plans have taken several years of bipartisan coalition-building, said Tony Dorsey, spokesman for the American Association of State Highway and Transportation Officials.
"States are realizing that they have to fund transportation projects in big ways — you know, our system is aging," Dorsey said.