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States Took Action on Transportation Funding in 2013
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.
Massachusetts: The legislature overrode Democratic Gov. Deval Patrick’s veto to implement a 3-cent-per-gallon increase in the gas tax and index it to inflation.
Texas: Lawmakers approved a constitutional amendment that requires the legislature to establish a minimum balance in the state’s rainy-day fund every two years. Once that minimum balance is reached, half of the oil and gas tax going into the fund will be redirected to roads and bridges. This amendment will have to be ratified by Texas voters in the November 2014 election in order to take effect.
Vermont: Democratic Gov. Peter Shumlin signed legislation that places a 2% assessment on the price of gas. This corresponded with a .8-cent drop in the traditional gas tax.
Washington: The state implemented a $100 registration fee on electric cars.
So as far as trends go, it would appear that there are several. The political conventional wisdom that sticking your neck out on funding for transportation is more perilous than keeping your head down is changing. The other common thread is that states are looking to mechanisms that naturally grow with inflation or the economy. The traditional gas tax is a set amount per gallon as opposed to a percentage of cost.
Another thing you won’t necessarily see when looking at what each of these states did is that it took most of them years to get to this point. For each state that took action in 2013, there were three more that hotly debated the topic and ultimately found some stopgap remedy.
I will predict that many states, including Wisconsin, will be back at it again, much like Virginia, Maryland, and Arkansas were in years prior.
Will Wisconsin follow the trend of the states I listed for 2013? 2014 is not a budget year, so we won’t really know until 2015. Gov. Walker has signaled that he is interested in providing a more stable revenue stream. There will be more discussion on the topic during the 2014 gubernatorial race — that much I can safely predict.
House, Senate Pass 2014 Appropriations Bill
Last week, the House and Senate passed a $1.86 trillion appropriations bill. The measure would fund the government through September 30, 2014. President Obama is expected to sign the bill.
Below is a brief summary by mode of some of the transportation provisions in the omnibus appropriations legislation:
Highways: The bill provides just under $41 billion in FY 2014 – the same amount as authorized in MAP-21. This represents a small increase over 2013 levels, excluding emergency relief for Sandy.
Mass Transit: The Federal Transit Administration will receive $8.6 billion in state and local transit funding grants, consistent with MAP-21 levels. New starts and small starts get $1.943 billion, slightly more than the 2013 final amount.
Aviation: The bill, for the most part, restores the cuts made by budget sequestration to the Federal Aviation Administration’s Operations account. The Operations account receives $9.651 billion, $255 million more than in 2013. Within the account, the omnibus sets aside $140 million for the contract tower program.
The FAA Facilities and Equipment account receives $2.6 billion, just $6 million more than the post-sequestration 2013 level. The Airport Improvement Program receives an obligation limitation amount of $3.350 billion, the amount authorized by law.
Rail: Amtrak receives $340 million in operating subsidies and $1.05 billion for capital and debt service. Operating assistance is down 23% from 2013 and the amount for capital and debt service is up 16%. There is no funding for high speed rail.
TIGER Grants: The Transportation Investment Generating Economic Recovery program receives a post-stimulus record of $600 million.
USDOT Adds HTF Balance Ticker to Website
U.S. Transportation Secretary Anthony Foxx addressed the 93rd annual Transportation Research Board sharing the department’s priorities for 2014.
The first priority is funding.
"Starting today, we're going to post on our website exactly how much money the Highway Trust Fund has left, and update that number every month until the fund runs out, or until it can sustain itself," Foxx said. "This is a number we share with Congress. But the American people need to know it too, because they are the ones who use America's transportation system—and they are the ones who will travel slower and less safely if it isn't funded."
According to the website, USDOT currently anticipates a Highway Account shortfall sometime in August.
The department's other priorities include: finding additional efficiencies, creating a national vision for transportation and safety.
U.S. Chamber Calls for Multi-Year Reauthorization
In his annual State of American Business address, U.S. Chamber of Commerce President and CEO Thomas Donohue listed transportation investment as one of the chamber’s 2014 priorities, linking transportation to other priorities such as trade expansion and energy.
Excerpt from Donohue’s address:
Improve America’s Infrastructure Trading around the world and moving energy across the country requires a safe, seamless, and modern infrastructure. Families, workers, visitors, tourists, and our environment need it too—to speed mobility, conserve energy, clean the air, and save lives.
The Chamber will work for a multi-year reauthorization of the nation’s core surface transportation program, which expires at the end of September. And, we’re asking Congress to complete work on a major water resources bill as soon as possible.
The chamber is on record supporting an increase in the gas tax to fund maintenance of the U.S. transportation system.
Interesting News Coverage
Milwaukee Journal Sentinel, January 19, 2014 – "It's time for a serious discussion about Wisconsin road funding" Craig Thompson, TDA opinion.
Milwaukee Journal Sentinel, January 15, 2014 –“State dilemma: More money for roads, or deteriorating network?”
Milwaukee Journal Sentinel, January 11, 2014 – “Scott Walker hopes to sell increased road funding with tax cuts elsewhere”
The Washington Post, December 26, 2013 – “The Post’s View: New gas tax can help pay for roads and transportation”
Milwaukee Journal Sentinel, December 26, 2013 – “Our View: Legislature should bring back regional transit authorities”
The New York Times, December 23, 2013 – “How to overhaul the gas tax”
Milwaukee Journal Sentinel, December 17, 2013 – “Solutions to road costs staring Gov. Scott Walker in the face”
TDA Fly-in to Washington, D.C.
24th Annual Fly-in
It’s almost that time of year again – the time of year TDA members join together to show our delegation just how important federal transportation investment is to Wisconsin.
Click here to see just a few of the reasons why you should add your voice and participate in the 2014 TDA Fly-in.
The registration deadline is February 14, 2014.
Note: Start looking for deals on your flight now. Due to dwindling demand for the air portion of the package, air transport is not included in this year's package. AAA stands by to help you find the right flight alternative for you. Industry consolidation has resulted in fewer flight options than in years past, so don't wait to book your air. The schedule will allow participants to catch the last nonstop AirTran flight (#423) to Milwaukee, which departs at 4:45 p.m.
Transportation Improvement Conference
March 4-5, 2014 in the Wisconsin Dells
The American Council of Engineering Companies of Wisconsin and the Wisconsin Department of Transportation are partnering for the seventh consecutive year to present the 2014 Transportation Improvement Conference. This year’s theme is “Inspire, Innovate, Deliver: Partners in Getting There.” The conference brings together the department and consulting engineering community for two days of transportation-related professional development programming and networking opportunities.
Professional development hour (PDH) credits will be awarded for sessions attended. Full conference attendance is eligible for an estimated 6.5 PDH credits. This includes 1 PDH credit of ethics continuing education. ACEC WI is listed as an approved provider of continuing education programs for professional engineers by the Wisconsin Department of Safety and Professional Services. Credits awarded at the 2014 Transportation Improvement Conference are eligible for Wisconsin continuing education credit.
Conference details and registration materials are available. Register by February 4 for the early registration rate.
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