Governors Talk Transportation in State of the State Addresses
Georgia Gov. Nathan Deal (R) - January 14, 2015: “We must maintain and improve our roads and bridges; we must provide congestion relief; and we must prepare for more freight and more business. We can debate how much it will cost to do something; but let us not forget how much it will cost to do nothing.”
Michigan Gov. Rick Snyder (R) - January 20, 2015: “Our roads are crumbling, 1 in 9 bridges is structurally deficient, and our safety is at stake. We can’t have a band aid approach to patching up roads, and we can’t push this problem off for future generations. I support the bipartisan plan to fix our roads and bridges, protect our schools, and provide tax relief for lower-income Michiganders.”
Building America’s Future has a roundup of State of the State infrastructure mentions. Click through to see what governors, both Democrats and Republicans, are saying about the importance of infrastructure.
The question now is what legislation will be forthcoming. Will states continue to take the lead in finding solutions to the nation's long-discussed infrastructure funding crisis?
And what will Governor Walker say during his State of the State address on February 3rd?
Will Transportation Budget Live Up to the Hype?
The anticipation for Wisconsin’s upcoming transportation budget is greater than any time in recent history.
For over a decade Wisconsin has been careening about trying to keep its transportation system and its financing system taped together.
This winding road has seen: a series of biennial budgets that have included transfers out of the transportation fund; the repeal of gas tax indexing; a sharp increase in borrowing; a legislatively created commission created to provide solutions; and a constitutional amendment to stop any future transfers out of the fund.
So, on February 3rd Governor Walker will submit his biennial budget proposal for Wisconsin which includes the much anticipated transportation budget. For his part, the governor has indicated that this budget is going to be the one where we fix our “broken” transportation funding system.
While campaigning for re-election the governor placed an emphasis on fixing this problem. In his Continuing Wisconsin’s Comeback – Scott Walker’s Plan for Prosperity for All, the governor points out, “Still, more will need to be done. The revenues that get deposited in the fund aren’t keeping up with its expenses. It is estimated that future investments will be needed to maintain our quality infrastructure.”
The governor charged his transportation secretary, Mark Gottlieb to come up with a proposal that will do just that – fix our broken system by providing a sustainable funding regime moving forward.
In November Secretary Gottlieb submitted the department’s recommendations to the governor stating,"I think there's a broad understanding in the state we need to deal with putting our transportation on a long-term, sustainable path. We feel this is a very balanced proposal."
The proposal raises the vast majority of the new revenue from (1) changes to the gasoline tax and (2) a fee on the purchase of new vehicles. The changes to the gas tax would cost the average motorist $28 more in a year. For those buying new vehicles the additional fee is on a percentage basis; as an example the fee would amount to $800 on a $32,000 vehicle.
The governor has indicated that he plans to make significant changes to the proposal. Other groups, like Wisconsin Manufacturers and Commerce (WMC) have not endorsed the DOT proposal, but have urged action. Kurt Bauer, executive director of WMC stated, “Three of Wisconsin’s most important economic sectors – manufacturing, agriculture and tourism – depend on quality infrastructure. But as automobiles become more fuel efficient the gas tax is not generating the revenue needed to maintain our roadways, let alone build new ones. Bonding isn’t a long-term solution. The simplest way to fund roads is through a modest gas tax hike and increasing the vehicle registration fee.”
So, now we wait. After all of the build-up, the governor will soon submit his proposal to the legislature and the 2015-17 biennial budget process will be underway.
Whether the governor tweaks his Department of Transportation’s proposal or follows the advice of groups like WMC or goes in a whole new direction, there are several factors we should judge the proposal against.
- Adequate. Does it allow us to keep our southeastern Wisconsin interstate projects on schedule without coming at the expense of the rest of the state and the very real needs of cities, towns and counties?
- Equitable. Does the proposed funding mechanism fairly charge those who use our transportation system?
- Sustainable. Does the proposal fund transportation in a way that will allow it to meet our short and intermediate needs in Wisconsin without increasing our indebtedness?
- Accountable. Does the proposal allow us as taxpayers the transparency to see where the money is going and measure the results we are getting?
While all four of these criteria are important, I would pay particular attention to number 3. Our short-term, politically driven solutions in recent years have created an unsustainable system that will make it harder and harder to make ends meet. In 2002 about 7% of our transportation budget went to paying off debt service for past projects. As we head into this next budget that amount has ballooned to over twice that amount and is well on its way to reaching 20%. This is a trajectory that has to change.
This budget needs to not only meet our immediate transportation challenges, but unlike the past several budgets, it has to do so in a way that doesn’t make funding our state and local transportation needs in future budgets less and less possible.
Transportation by the Numbers
The Energy Information Administration expects U.S. regular gasoline retail prices, which averaged $3.36/gal in 2014, to average $2.33/gal in 2015. The average household is now expected to spend about $750 less for gasoline in 2015 compared with last year because of lower prices. The projected 2016 average regular gasoline retail price is expected to remain below the 2014 level.
The New Congress: Challenges and Opportunities
A long-term surface transportation infrastructure bill is a priority for both the new Congress and President Obama. However, there is still no consensus on how to pay for a bill.
“Twenty-first Century businesses need 21st Century infrastructure – modern ports, and stronger bridges, faster trains and the fastest internet. Democrats and Republicans used to agree on this,” Obama said in his sixth State of the Union address. Like previous addresses, Obama’s push for infrastructure comes with no funding specifics, just a call for a bipartisan plan.
With dropping prices at the pump, some legislators have suggested an increase in the federal gas tax to shore up the ailing Highway Trust Fund. This idea is falling flat with the Republican leadership, especially in the House. Representative Paul Ryan (WI-1), now chairman of the House Ways and Means Committee, told reporters, “We won’t pass a gas tax increase.”
Chairman of the House Transportation and Infrastructure Committee Bill Shuster (R-PA) and others have mentioned funding a long-term surface transportation bill with repatriation of foreign profits as part of tax reform. It is unclear if this would generate sufficient revenue and what the timing of this reform might be.
All this means there will probably be another short-term extension after the expiration of the current May deadline for Highway Trust Fund cash and spending authority. The looming deadline and the related uncertainty are creating unusual problems for states planning their summer construction programs according to a group of state Department of Transportation chiefs.
User Fee for Barges to Increase this Spring
During the lame duck session, Congress passed, as part of a “tax extenders” bill, a 9-cent per gallon increase on diesel fuel used by the towboats operating in the nation’s inland waterway system. The bill was signed into law by President Obama.
This fee is deposited into the Inland Waterways Trust Fund and helps cover the cost of certain capital upgrades to aging locks and dams.
Currently, the IWTF receives approximately $84 million a year from the 20-cent per gallon towboat fuel tax. With the 9-cent increase kicking in April 2015, the amount is expected to rise to $120 million a year. The general fund matches IWTF expenditures. This means the increase will lead to approximately $80 million for additional trust fund-backed projects each year.
The increased fee is supported by those who pay it – just 300 commercial operators – while many industries and communities will benefit from the increased investment.
“Additional money flowing to priority navigation projects could result in earlier completion and delivery of more than $82 billion in related economic activity for the nation over 20 years,” said Michael J. Toohey, President/CEO of Waterways Council, Inc.
EPW Chair Boxer to Retire
Senator Boxer (D-CA) announced she will not seek re-election next year and will retire from the Senate in January 2017 after serving 24 years in the Senate.
Boxer is the ranking minority member on the Environment and Public Works Committee (EPW), and she was the principal driver behind the 2012 MAP-21 surface transportation law.
With Boxer leaving, Senator Tom Carper (D-DE) is next in line to take over the top Democratic spot on EPW.
Interesting News Coverage
The Huffington Post, January 23, 2015 – “The state of transportation infrastructure: breaking the stalemate on progress”
Green Bay Press Gazette, January 17, 2015 –“States look at hiking gas tax as fuel prices plunge”
Government Technology, January 15, 2015 – “7 ways self-driving cars could impact states and localities”
Statesboroherald.com, January 13, 2015 – “Ga. leaders united on transportation action. But mum on details”
Green Bay Press Gazette, January 13, 2015 – “Port of Green Bay cargo load hits 7-year high”
Duluth News Tribune, January 11, 2015 – “UWS students get inside look at Wisconsin transportation, Wal-Mart distribution center”
The Salt Lake Tribune, January 6, 2015 –“Legislators: Utah tax hikes coming for gas, roads, transit”
Transportation in the News
Michigan – On May 5th, Michigan voters will be presented with a measure to increase the state's 6% sales tax to 7%. If passed, Michigan’s annual transportation funding will increase by $1.3 billion. Other provisions will also kick in such as $261 million in tax credits for low-income families, $300 million in new funds for public education and $70 million more in revenue sharing for cities.
Of the $1.3 billion annual increase for transportation, $1.2 billion would go for roads and $112 million for public transportation.
Michigan’s existing 19-cent per gallon gasoline and 15-cent per gallon diesel taxes would convert to a wholesale version and gas would be exempt from sales tax. The fuel tax changes would, in effect, hike the state tax portion of pump prices by about 3 cents by next October.
Approximately $95 million would be raised from changes to vehicle registration fees. The 10% discount on registration fees for new buyers would be eliminated and new fees would be imposed on hybrid and electric cars, resulting in about $45 million. The remaining $50 million would come from increased fees for heavy trucks.
Governor Snyder (R) was hoping for a legislatively passed option like a straight forward gas tax increase, but the legislature could only come to agreement on this ballot initiative with a series of related funding bills that only take effect with the approval of the sales tax increase.
The campaign in support of the measure is expected to cost $12-$15 million. This target may be difficult to achieve as the members of the Michigan Chamber of Commerce are deeply divided on the issue. The chamber will take a couple months before it decides to endorse, oppose or remain neutral on the ballot measure.
Governor Snyder and members of his administration are expected to make speeches across Michigan in support of the measure.
Missouri – Missouri’s Department of Transportation recently had to deliver some tough news. The department outlined in its plan, “Missouri’s 325 System”, how it proposes to prioritize expenditures after its transportation construction budget drops to $325 million in 2017. The budget currently stands at about $700 million.
MoDOT will focus its limited resources on approximately 8,000 miles of Missouri's 34,000-mile state highway system. The department will use its annual construction budget to keep these primary roads in good condition with maintenance and rehabilitation work.
Last August, Missouri voters delivered a resounding defeat to a proposed statewide sales tax that would have raised billions of dollars to build roads, bridges and other transportation projects.
Governor Jay Nixon (D) opposed last year’s transportation sales tax proposal, but in his State of the State address put forth both the tolling of I-70 and a possible gas tax increase as options to raise more money for transportation.
Missouri received “conditional acceptance” in 2005 for one of only three slots authorized under the Interstate System Reconstruction and Rehabilitation Pilot Program. This pilot program allows tolling for rehabilitation and reconstruction of existing Interstate corridors. Recent polling shows that tolling I-70, the state’s main east-west highway, is opposed by 59% of likely voters.
According to Nixon, “If we want to leave Missouri roads better than we found them, the only thing we can’t do is sit still. This is a major, long-term challenge – so let’s get moving now.”
South Carolina – Governor Nikki Haley (R) backs increasing the gas tax, but only as a “three-part package deal.” The deal includes:
- A 10-cent per gallon increase in the state’s gas tax over 3 years
- A 30% income tax cut over the next decade (7% to
- Restructuring of the state’s Department of Transportation
“The current system, with commissioners representing congressional districts and selected by local delegations, is the ultimate exercise in parochialism. Instead of fighting for the needs of South Carolina at large, they fight for the needs of their districts, which means they fight each other. I don’t necessarily blame them – until we make wholesale changes to the system, doing so is in their best interests,” said Haley in her State of the State address.
TDA Fly-in to Washington, DC
25th 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 2015 TDA Fly-in.
The registration deadline is February 13, 2015.
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 nonstop Southwest Airlines flight #2582 to Milwaukee, which departs at 3:55 p.m.
2015 Transportation Improvement Conference
The American Council of Engineering Companies of Wisconsin and the Wisconsin Department of Transportation are partnering for the eighth consecutive year to present the 2015 Transportation Improvement Conference March 3rd-4th.
This year’s theme is “Innovation Builds Wisconsin.” The conference brings together the department and consulting engineering community for two days of transportation-related professional development programming and networking opportunities.
Click here for conference details and to register.
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